Recent news headlines continue to illustrate the consequences that can occur when regulation fails to prevent harms to the public, which is widely considered to be the primary purpose of regulation in the first place. Theoretically, the process seems simple: after a risk of harm is identified, new regulations are put into place to stop the harm from occurring. But in reality, it’s never that easy or straightforward.
In addition to properly understanding the risk(s) involved – a complicated task in itself – there are a host of factors that regulatory decision-makers must consider when adopting new measures to control them, including the constraints of existing legislation, the costs vs. benefits of new regulations, and the ability of regulators to enforce them.
But the complexity involved in assessing and addressing risks is no excuse when regulation (or lack thereof) fails to protect citizens from serious harm. Two recent incidents – the powerful earthquake that struck Turkey on Feb. 6 and the Feb. 3 derailment of a train that released hazardous chemicals over the town of East Palestine, Ohio – have once again highlighted the sometimes-devastating consequences of regulatory failure. And as the fallout from last year’s crypto crash continues, we have also seen the failure to effectively regulate digital assets negatively impact both consumers and crypto companies.
Over the last month, Ascend Magazine has explored these themes in detail with insightful articles on how regulatory non-compliance contributed to the devastation wrought by Turkey’s recent earthquake, how our perception of risk influences regulatory policy, and the challenges of regulating cryptocurrency in the U.S.
Turkey earthquake reminds us regulation is only as effective as compliance and enforcement
It’s hard to comprehend the magnitude of a disaster like Turkey’s recent earthquake, which critically damaged almost 25,000 buildings and – according to the most recent numbers – has claimed more than 46,000 lives. What makes it even more tragic is that much of the devastation could have, and should have, been prevented.
Following a similar earthquake in 1999, Turkey shored up preparedness and introduced new regulations for building standards in 2018. “But as with all regulation, rules are only as strong as their compliance and enforcement,” writes Paul Leavoy in his recent piece examining what went wrong. As Leavoy explains, although the regulatory changes required new buildings to adhere to updated standards that would allow them to absorb the effects of future seismic activity, poor enforcement and government-sanctioned exemptions thwarted the preparedness effort. Furthermore, barely any retrofitting of old buildings – also called for in the new regulations – actually took place, leaving the country ill prepared for the recent catastrophic earthquake. Read the full piece in Ascend Magazine.
GovTech lawyer Sean Gellis on cryptocurrency regulation in America
With the recent collapses of crypto lenders such as Celsius Network, Voyager Digital, FTX, BlockFi, and others, it’s been an extremely tumultuous year for cryptocurrencies. But although almost 15 years have passed since the birth of Bitcoin in 2009, the U.S. still lacks a coherent framework for regulating cryptocurrencies and digital assets.
So what makes effective crypto regulation so challenging? And what might a better way of regulating digital assets look like? GovTech lawyer Sean Gellis joined Paul Leavoy on a recent episode of Ascend Radio to discuss these questions and more. “It seems, as always, the regulation is lagging the tech and we’re stuck in this spot in the middle,” says Gellis, who believes that a fundamental lack of understanding around the technology lies at the heart of why regulating cryptocurrencies has been such a challenge for lawmakers.
Listen to the full podcast here, and also check out Gellis’ recent articles in Ascend Magazine for a comprehensive timeline of cryptocurrency regulation in the U.S. Part 1 looked at the burgeoning years of cryptocurrency – mainly Bitcoin – and the attempt to regulate it through criminal enforcement actions. Part 2 covers the birth of the Ethereum network, the 2017 Bull Run, and the long crypto winter that followed it.
When perception trumps science in assessing regulatory risk, we all lose: Cayton
Experts like Malcolm Sparrow commonly assert that regulation is about the prevention of harms. But in order to prevent harms, we must understand risk – and this is where it gets complicated for policymakers. In this recent Voices column, Harry Cayton discusses how our perception of risk in many parts of our lives differs from the actual risk of harm, and how this can distort regulatory policy. “What or who we choose to regulate and to what extent is driven as much by sentiment, lifestyle, and politics as it is by facts,” he writes, arguing that that decision-makers must weigh the potential risks of harm, actual risks of harm, and their own and others’ perceptions of the priority of action against the causes of harm when shaping regulatory policies.
More from Ascend Magazine
To learn more about recent day-to-day happenings in the world of regulation and digital government, catch up on the most recent installments of our weekly regulatory briefing:
- Sununu calls for sweeping occupational licensing reform
- Minnesota considers veterinary technician licensure
- Legislation to regulate midwifery in Mississippi fails
- Ohio lawmakers consider bill to localize licensure appeals
Want to stay up to date on the latest developments in the world of regulation, digital government, and professional licensing? Make sure to subscribe to Ascend Magazine for news, insight, and more.