When the Tide Goes Out: Big Questions for Crypto in 2019

Gary Gensler is a former chairman of the Commodity Futures Trading Commission under President Barack Obama, a Senior advisor to the MIT Media Lab Digital Currency Initiative and Senior Lecturer at the MIT Sloan School of Management, where he currently teaches several classes on blockchain technology and crypto finance.

For any chance of a lasting role in the long evolution of money blockchain applications and crypto assets have to deliver real economic results for users.

While bringing the crypto finance markets within public policy norms is critical, the greatest challenge remains the seriousness of commercial use cases.

In particular, any token offering must address how it will sustainably lower verification or networking costs - how such crypto asset benefits users more than simply using broadly accepted fiat currencies.

In essence, how might any blockchain technology project or any initial coin offering's proposed token be more than simply a means to raise cheap money from the public? In 2019 and beyond, venture capitalists, large incumbents and crypto investors will likely be more discerning and rigorous in their investments and projects.

The crypto finance markets can only gain public confidence and reach their potential by coming within long-established public policy frameworks.

Safeguards to date - treating crypto exchanges and digital wallet providers through money transmission laws in the same manner as Western Union or MoneyGram - are unsatisfactory.

Crypto exchanges are trading venues and need be treated as such, with mandated investor protections in place.

Central banks are studying blockchain technology and crypto markets with one eye on financial stability and another eye on what it means for the fiat currencies they issue and oversee.

What about open blockchain projects and crypto tokens? Will users find real economic value in the native crypto tokens associated with such projects? With the break in the crypto markets, we just might start to find out.