Bitcoin ETF: What the Regulation for Automobiles and Trains Tells Us Why Web3 Is Here to Stay

The imminent approval of a Bitcoin Exchange-Traded Fund (ETF) is more than a milestone for Bitcoin; it symbolizes the burgeoning acceptance and legitimization of the entire blockchain and Web3 industry.

The final stage of legitimization for an industry’s longevity in the United States of America is regulation. Every household industry we know today– automobiles, insurance, or the railroad– has been concretized through regulation. Blockchain and Web3 technology are no different. Receiving a green light for approval of an ETF is a sign that Web3 is headed toward sticking around.

Just as regulations for automobiles and railroads grew more complex and comprehensive over time, the current patchwork of Web3 regulations is likely to evolve into a more robust framework. Studying the historical progression of regulatory responses in previous industries can offer insights into potential future directions for managing the evolving Web3 landscape.

First, let’s examine the relationship between the invention of mainstream American industries (e.g., the year they were invented) and the history of their regulation.

Regulation in the Automobile Industry:

• Year of invention: 1769 (first self-propelled steam-powered road vehicle built in France)
• Year of first regulation in America: 1901 (Connecticut enacted the first statewide traffic laws limiting motor vehicle speeds)

However, it's important to note that regulation of the automobile industry was gradual and progressed in stages, with regulations introduced at different levels (local, state, and federal) over time.

For example:

• 1910: New York introduced the first laws penalizing drivers for operating a vehicle under the influence of alcohol.
• 1913: New York and Massachusetts issued the first driver's licenses.
• 1930: The Bureau of Public Roads (predecessor to the Federal Highway Administration) was established, marking the beginning of significant federal involvement in traffic safety regulation.
• 1966: The National Highway Traffic Safety Administration (NHTSA) was created to consolidate federal automobile safety standards.

Regulation in the Railroad Industry:

• Year of invention: 1827 (the Baltimore and Ohio Railroad became the first passenger and freight railroad line in the United States)
• Year of first regulation in America: 1871 (Illinois passed the first state-level regulatory legislation for railroads, followed by other states)

Similar to the automobile industry, federal regulation of the railroad industry came later and developed in increments :

• 1887: The Interstate Commerce Act established the Interstate Commerce Commission (ICC), the first federal regulatory agency for any industry, primarily to address problems of unfair pricing and discrimination by railroads.
• 1920: The Transportation Act of 1920 strengthened the ICC's powers and regulated other forms of transportation besides railroads.
• 1935: The Motor Carrier Act brought trucks and buses under federal regulation.
• 1970: The Railroad Revitalization and Regulatory Reform Act significantly reformed the regulatory framework for railroads, reducing the ICC's role and promoting rail competition.

Moving Toward Regulation for Web3

Both automobile and railroad regulations were enacted to quell public safety concerns arising from accidents and unfair practices. Similarly, concerns about fraud, scams, and market manipulation drive calls for regulating the blockchain industry.

By comparing the evolution of regulations in these established industries, we can learn how to balance enabling technology advancement and protecting users from potential harm in the evolving world of blockchain.

As you’ll notice, compared to the railroad or automobiles, Web3 has had a much shorter window to when it was invented to the regulation that followed.

Pre-regulation (2009-2013):

• 2009: Bitcoin, the first blockchain, is launched.
• 2011: FinCEN releases guidance classifying Bitcoin as a "convertible virtual currency" and requiring exchanges to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.
• 2012-2013: Mount Gox hack and Silk Road closure raise concerns about illegal activities in the blockchain space.

Early stage regulation (2013-2017):

• 2013: FinCEN issues additional guidance, clarifying AML/KYC requirements for digital asset businesses.
• 2014: IRS defines blockchain as property for tax purposes.
• 2015-2016: New York's BitLicense framework attempts to regulate virtual currency companies, sparking debate over state vs. federal oversight.
• 2017: Securities and Exchange Commission (SEC) starts issuing subpoenas to Web3 exchanges.

Heightened scrutiny and framework development (2017-present):

• 2017-2018: Initial Coin Offerings (ICOs) boom and subsequent crashes lead to increased regulatory scrutiny.
• 2018: SEC clarifies its stance on digital tokens, classifying some as securities.
• 2019-2020: Stablecoin regulation discussions emerge, focusing on potential systemic risks.
• 2021: Infrastructure Investment and Jobs Act includes tax reporting requirements for Web3 transactions.
• 2022-present: Ongoing discussions and proposals emerge at federal and state levels, covering AML/KYC, consumer protection, taxation, and central bank digital currencies (CBDCs).

Current Status:

• The US currently needs a comprehensive regulatory framework for Web3.
• Multiple government agencies have jurisdiction over different aspects of the industry.
• Legislative proposals seek to address gaps in regulation but face challenges in balancing innovation with consumer protection and financial stability.

Regulation can act as a form of validation and contribute to a new industry's public acceptance and legitimacy. As seen with automobiles and railroads, regulation can enhance consumer trust and attract investment, ultimately bolstering the industry's long-term sustainability.

Drawing parallels with these historical examples can strengthen arguments for developing a clear and effective regulatory framework for Web3, potentially promoting its integration into the mainstream financial system.

The Bitcoin ETF's approval confirms the staying power of blockchain and highlights platforms like Kadena that are prepared to address the high demands of a global financial system. This development is pivotal for Kadena, the industry's only scalable Layer-1 Proof of Work (PoW) blockchain.

Embracing the Era of Web3 with Kadena

Kadena's Chainweb technology, an infinitely scalable PoW blockchain, and its human-readable smart contract language, Pact, are breakthroughs in blockchain technology. These innovations allow Kadena to transcend conventional blockchain limitations, enabling devs to create practical solutions to real-world challenges.

The Human Layer: Kadena's Unique Approach

With the introduction of the #NewKadena initiative, Kadena has redefined its brand and focus, emphasizing the "Human Layer" or "Layer H." Our approach underscores Kadena's commitment to making blockchain technology accessible and beneficial to all, from blockchain novices to seasoned blockchain veterans who’ve been through several bear markets.

By facilitating a decentralized, multi-chain experience, Kadena sets a new standard in community empowerment and transparency in the Web3 space.

Read more about Pact and Chainweb on our website right here.

Kadena at the Forefront of Blockchain Evolution

From steam engines to smart contracts, industry longevity in America thrives on the backbone of regulation. As automobiles and railroads found legitimacy through gradual legal frameworks, the Bitcoin ETF's approval signals Web3's path toward long-term stability. Platforms like Kadena, built for scalability and accessibility, stand poised to usher in a new era of decentralized innovation and empower everyone to participate in the future of finance.

Read more about Kadena’s technology on our website today!