The crypto industry is still deeply concerned about the ongoing “war in crypto” in Washington. In his latest article, Michael Casey, the Chief Content Officer of CoinDesk, explores the perceived increase in animosity towards crypto by U.S. regulators and suggests that this may be motivated by a desire for retaliation.
It’s important to keep in mind that governments, like any group of people, are comprised of complex individuals whose emotional responses can sometimes hinder their ability to make rational decisions when observing Washington policymaking. After a series of regulatory enforcement actions taken against the cryptocurrency industry in the United States, I previously cautioned against a concerning trend of politicization in crypto policy. However, my perspective has since become slightly more nuanced after speaking with two individuals who have strong connections in Washington D.C. They provided insight into how emotions such as anger and embarrassment played a significant role in driving these policy actions.
The statement brought to my attention the significance of well-defined rules of governance that cannot be violated. These rules are essential components of democratic systems, such as the U.S. Constitution, and agreement mechanisms used by open-source software communities, including those associated with blockchain protocols.
Over the past five months, there have been several instances of gratitude expressed towards Sam Bankman-Fried, but one particular event stands out. It is possible to argue that the actions taken against Kraken, Coinbase, Paxos, Binance, and other companies were motivated by a desire to penalize Bankman-Fried for his role as the former founder of FTX. The abrupt and drastic fall of FTX in November had a significant impact on the cryptocurrency industry.
According to a source, officials of the Biden Administration and lawmakers from both political parties are upset about the large sums of money being offered by FTX, which has caused embarrassment and may result in a significant backlash. The source pointed out that prior to the FTX scandal, politicians, primarily Democrats but also some Republicans, had received over $74 million in political contributions from FTX, and had established relationships with Bankman-Fried, who had appealed to progressives with his “effective altruism” commitments. A CoinDesk investigation discovered that one third of Congress received money from SBF or his associates. Despite the fact that Bankman-Fried’s actions have caused numerous problems in the industry, most people now believe that stricter regulations are required. The primary issue is that SBF’s actions have delayed the creation of a clear regulatory framework, leaving agencies like the Securities and Exchange Commission frustrated.