The Dangers of Deregulation: How Lax Rules Fuel Cyber Risks
The world of cryptocurrency is no stranger to hackers and cyber threats. However, the recent push for deregulation in the United States has raised concerns that it may create more victims than hackers. By flooding the market with unprotected and inexperienced users, deregulation can lead to a surge in cyber attacks, compromising not only financial infrastructure but also national defense and digital identity.
According to experts, deregulation does not breed hackers, but rather creates an environment that allows them to thrive. With weak guardrails and a lack of consistent security standards, the target area for hackers expands, creating systemic weaknesses that can have far-reaching consequences. The integration of AI-controlled finances further increases the risk, as autonomous agents managing funds can be susceptible to kidnapping on a massive scale.
The Consequences of Deregulation
The consequences of deregulation can be devastating. By removing the systems that monitor, contain, and prevent abuse, malicious actors can use the vacuum to their advantage. This can lead to a collapse of the borders between financial infrastructure, national defense, and digital identity, creating a wider digital risk. AI systems, which are being integrated into this fabric at an unprecedented pace, can conduct financial decisions on a scale and cross-border without human intervention, increasing the potential for catastrophic violations.
Developers and companies are also being set up to fail, as they are forced to compete without a clear regulatory framework, consistent standards, or protection infrastructure. This creates a fragmented ecosystem where every company builds in isolation, making its own rules, and competing against those who cut corners or ignore security altogether. The message is clear: if you want to survive, take shortcuts, which can lead to a systemic error.
The Alarm Calls We Ignored
In the past 12 months, we have seen several high-profile hacks that have triggered serious reforms, but not enough has been done to address the issue. The Bitbit hack alone cost $1.5 billion, not due to incorrect blockchain infrastructure, but due to social engineering and verification errors. Phishing attacks have also been on the rise, with almost 60% aimed at both retail users and institutions. Demanding deepfakes are being used to output managers, convert funds, and deceive entire organizations.
The common thread among these exploits is that they aim at the human layer, exactly where deregulation leaves the greatest exposure. As the United States commits over $500 billion to AI research and development, we are entering a new chapter in digital finances, where AI-operated programs will manage wallets, carry out shops, and interact with DeFi protocols on behalf of users and institutions.
A Call to Action
To secure the future of digital financing, we need a public-private partnership that prioritizes safe security and finances an open-source security infrastructure. This can be achieved by standardizing exploit open-air programs, incentivizing zero-day reporting, and supporting identity frameworks that verify users without revealing sensitive data. Security must be recognized as a growth driver, not a cost center, as a secure ecosystem is a trustworthy ecosystem, and trust is the real catalyst for scale.
As Michal Pospieszalski, CEO of American Fortress, notes, “Hackers don’t wait. They are already in smart contract environments and using AI to imitate users. They use fragmented infrastructure to move value invisibly and instantly.” Deregulation alone is not a strategy; it is a recipe for disaster. We must prioritize security before scaling, or every step forward will be another risk waiting to be exploited.
Michal “Mehow” Pospieszalski is an experienced technology leader with a success story of pioneering innovative solutions in the crypto world. He has two decades of experience as a white-hat hacker and is the CEO of American Fortress, the first human-readable, stationary wallet, and secure transaction infrastructure for digital assets for people, AI, and institutions.
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