XRPL Labs Founder Critiques Crypto “Wild West,” Calls for Regulation

XRPL Labs founder Wietse Wind criticizes the current “wild west” environment observed within the crypto scene and advocates proper regulatory and consumer protection measures.

In the wake of the recent Atomic Wallet hack, industry experts have engaged in thought-provoking discussions regarding the role of regulation and consumer protection in cryptocurrency. Recall that Atomic Wallet suffered an exploit on June 3, which resulted in the loss of $100 million.

A Deterrent to Mass Adoption

In a recent tweet, Wietse Wind, the founder of XRPL Labs and self-custodial wallet Xumm, recently shared his perspective, asserting that the incident highlights the urgent need for diligent regulation.

“The future of finance”.

And we (crypto space) wonder why regulators are coming after ‘us’.

I call for diligent and considerate regulation but let’s not fool ourselves. The wild west we’re in is not OK for mass adoption.

Protocol opt-in/out consumer protection is the way. https://t.co/9fNY3Eq8YZ

— WietseWind (🛠+🪝 Xumm @ XRPL Labs) (@WietseWind) June 23, 2023

“The future of finance,” he remarked sarcastically, referring to how crypto proponents often tout the crypto industry as the financial paradigm of tomorrow. Wind emphasized that the crypto landscape’s existing “wild west” environment is unsuitable for achieving mass adoption. 

He advocated for protocols that allow consumers to opt-in or out of protection measures. According to Wind, incidents such as the Atomic Wallet hack elicit the sustained crackdown on the industry by the SEC and other regulators.

However, Panos, the founder of Digital Generation Finance, expressed skepticism about the efficacy of regulations in preventing such incidents. 

How can regulations prevent this? Other than tracking the criminals and charge them under the existing laws? Similar thefts also happen in cash and the banking system all the time. Better tracking tools, insurance, and better education is the solution.

— Panos 🔺 {X} 🪝 (@panosmek) June 23, 2023

He queried, “How can regulations prevent this? Other than tracking the criminals and charge them under the existing laws?” 

Panos contended that thefts occur regularly within traditional cash and banking systems, suggesting that enhanced tracking tools, insurance, and educational initiatives could serve as a solution.

XRPL Labs Founder Advocates Regulation

In response to Panos’ remarks, Wind acknowledged the value of the freedom that self-custody brings to the cryptocurrency ecosystem. He passionately stated that his brainchild, Xumm, would cease to have a meaningful existence without the ability to exercise self-custody. 

Let me say first: I appreciate and love the freedom self custody brings. No self custody means we have no right to exist with Xumm (imo).

You own everything and have full responsibility. But this responsibility isn’t for everyone. Not for most people, to be fair.

Regulations…

— WietseWind (🛠+🪝 Xumm @ XRPL Labs) (@WietseWind) June 23, 2023

Nevertheless, he acknowledged that not everyone is suited to assume the responsibility that comes with self-custody, particularly the majority of individuals.

Wind stressed that sensible regulations are crucial in establishing robust systems with adequate checks, defenses, and protection mechanisms. 

By making it more difficult for stolen funds to be utilized elsewhere, such regulations could increase the chances of recovering stolen assets and serve as a deterrent against scams. 

Furthermore, responsible software development and consumer protection measures should be prioritized to strike a delicate balance between freedom and safeguarding consumer interests.

Calls for Clear Rules

Wind’s remarks echo the sentiments of most industry leaders in the crypto space. While blockchain and crypto present an opportunity for financial freedom, key players have championed introducing proper regulations and consumer protection measures.

The recent slew of hacks and implosions have underscored the necessity of sound regulations. However, these incidents have instead triggered various enforcement actions by the U.S. SEC without enacting clear regulations. 

As The Crypto Basic recently disclosed, amid the heightened calls for clear rules, the U.S. House Committee on Financial Services plans to decide on a regulation that will create a specific difference between crypto securities and commodities. This is set for next month.