Outside View: Crypto doesn’t need a whole new set of laws

For at least eight years, Congress has been trying and (mostly) failing to create a special set of rules for digital assets and the markets they trade on. It’s worth asking how much, if any, of that was advisable.

The latest effort, the 635-page Clarity Act, collapsed this month over an attempt to limit conflicts of interest among federal officials. The bill’s failure was a blow to the industry, which had lobbied and donated to legislators in hopes of winning a new legal framework for blockchain-based tokens and business models.

Why did crypto entrepreneurs care so much? After all, even without a consistent framework – and despite the industry’s reputation for hacking, fraud and other unsavory conduct – the global market value of spot cryptocurrencies has risen above $2.8 trillion, with trading turnover in related derivatives contracts reaching nearly $86 trillion last year.

The reason is that the industry knows that its future isn’t in the speculative coin frenzy. To go mainstream, and win broad public adoption, crypto companies need to provide familiar financial services like loans, payments and securities trading – indeed, their software can provide real advantages in that regard, including instant trade settlement and automated interest payments.