By Dominique Jacquet

In an illuminating article published in 1970, George Ackerlof shows that a market disappears if the seller knows much more than the buyer about the real (and not announced) quality of the property sold and can, therefore, deceive him about the real value of the object sold. He applied his theory to the used vehicle (car in questionable condition translates as “lemons”, hence the title of the article – The Market for “Lemons”) and transformed the automotive industry which offered manufacturer’s warranties to used vehicles to boost the sales of new vehicles! In 2001, the Nobel Prize in Economics was awarded for this considerable contribution to the concept of information asymmetry.

For there to be a transaction, each of the parties must be confident about the quality, and therefore the value, of the object exchanged. This is true for goods as well as for services. When the service consists of selling stablecoins, i.e. tokens whose value must rigorously follow the price of a fiat currency into which it must be permanently convertible, we can imagine the underlying trust capital.

The 2022 debacle, which saw cryptos collapse (Bitcoin sees its value fall from €50k to €15k) and firms disappear (FTX), has cast significant doubt on the potential of a market whose trust capital had fallen sharply…

As a result, some operators have understood the challenge of reducing the asymmetry of information with stakeholders, in particular customers and control and regulatory bodies, and have played the game of transparency. Circle, whose IPO we describe in this month’s vidcast, made it clear that every token representing one US dollar has its fiat counterpart whose value and liquidity are guaranteed (investment in “risk-free” and liquid assets such as US Treasury bonds. Of course, there have been incidents along the way, such as the failure of Silicon Valley Bank, where no one had imagined that an institution holding T-Bonds could present a risk. The professionalism of Circle’s reaction has ultimately strengthened its reputation and the firm is now the preferred operator for institutional holders of USDC tokens and looking for reliable business partners.

At the same time, the SEC has filed a number of lawsuits against operators whose actions contravened the laws and rules of the market while working with the authorities and legislators to build a coherent and effective legal set.

But, in 2025, the SEC dropped actions against Coinbase, Binance, Consensys, Kraken, RobinHood and others as, in his words, a way to accelerate the implementation of relevant regulation via its new “Crypto Task Force”.

On the face of it, these decisions are relatively well-founded, as the regulatory arsenal relating to cryptocurrencies apparently lacked precision and consistency.
However, it has not escaped the reader’s notice that the concept of regulation has lost its attractiveness in recent months in the United States and that the trend is to unleash market forces to allow it to achieve its own equilibrium deemed effective. The new head of the SEC, Paul Atkins, has been appointed by Donald Trump, and it is expected that regulatory burdens on crypto players will be eased.

Is it a good service to do them?

Clearly, this move will allow them to develop the service offering in order to attract customers and boost revenue and EBITDA. For stakeholders (customers, investors, society in general), the impact is more uncertain. We remember the negative effects generated by the considerable deregulation of the 80s. Uncontrolled increase in risk-taking, acceleration and amplification of crises and considerable losses in value.

The predictable easing of constraints on the crypto world is sure to create value for some. But, if the consequence of deregulation is a loss of confidence in the entire system, the market can disappear or, worse, expel the more customer-oriented operators according to the well-known principle: bad money drives out good money…

If excessive regulation constrains innovation and initiative, the absence of regulation creates a kind of jungle whose optimality has not been demonstrated. As usual, everything is a matter of “balanced approach”, but this is not a time for nuance or balance.