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Web 3.0: 1930s Edition

The SEC was formed in 1934. Almost immediately senior employees were speaking publicly about issues which sound remarkably similar to those facing us today.

Marriner S. Eccles building, October 20, 1937 (Board of Governors of the Federal Reserve photo)

Now that US regulators are stepping up their pace of action, everyone seems to have an opinion on what they are doing, or have done, wrong. Some folks think they are late to the party and should have squashed a lot of blockchain projects years ago. Others think they are unjustly, even illegally, shutting down brilliant new business ideas.

The SEC was formed in 1934. Almost immediately senior employees were speaking publicly about issues which sound remarkably similar to those facing us today. Every quote here comes from the 1930s.

Decentralization in Finance

In 1938, SEC Commissioner Douglas gave a talk with this title. The big concern then was how to consistently-but-fairly regulate a range of regional stock exchanges with different histories and issues.

[T]he problems of the regional exchanges vary so much from each other that a formula for one will not necessarily suffice for another. Yet there is a common denominator. That is the principle of cooperative regulation... when government polices exchange trading, it does it less effectively than an exchange can do it. A corps of Federal investigators can never be as efficient as an exchange management in policing exchange members. We are subject (and quite properly) to detailed and laborious requirements of the legal process. An exchange is not. Exchanges, of course, needed time to adjust themselves to these new laws. But we have now arrived at a point where action rather than talk is the necessity.

That sounds remarkably familiar: exchanges need to find their own ways to conform to a standard set of rules. And the regulators are interested in reaching reasonable compromises when it comes to the precise mechanics of how they get there.

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