Elizabeth Warren’s anti-crypto crusade has continued this month, with the heat seemingly turned up as industry leaders like Coinbase CEO Brian Armstrong arrived to lobby for common-sense regulation.
Senate Banking Chair Sherrod Brown has been speaking about the “high-profile failures [that] resulted in lost consumer assets,” and Warren has been strong in her convictions as she criticizes FTX, Celsius, and Voyager and how they collapsed “under the weight of their own fraud, deceit, and gross mismanagement.”
The vibe in DC isn’t great for crypto, despite Ripple’s recent court victory which is not nearly as clear, definitive, or far-reaching as many think it is.
But there is hope outside of the US, where crypto builders continue to build. Even more promising is the fact they all seem to be taking an approach that addresses the major issues raised by Senator Warren’s crew.
DeFi Solutions Are DC’s Friend, Not Foe
ChangeNOW responded to criticisms of FTX by building trading tools that aggregate liquidity through a non-custodial experience that features a multichain bridge.
This experience ensures users can trade crypto pairs and participate in the ecosystem without being forced to accept the risk that comes with centralized exchanges.
These decentralized finance (DeFi) platforms are increasing in popularity amongst users due to the options and flexibility in trading strategies. The potential is immense and has already been recognized in the form of products like peer-to-peer lending.
But the greatest feature is that they are decentralized, not controlled by any central authority. On the surface, many in government will meet this concept with anxiety, wondering how could something with no authority (or point of control) be aligned with its goals.
The truth is a multichain bridge, which enabled interoperability between different blockchains, offers increased visibility into transactions which can help address regulatory concerns about money laundering.
If a government agency is concerned about nefarious transactions, their agencies will have an easier time sniffing out such a thing if these transactions happen “out in the open” on a decentralized financial instrument, as opposed to the black box that one might find with a centralized authority.
With a decentralized finance stack, there would be no surprise balance sheet at FTX/Alameda, and government agencies may not have to spend time and resources subpoenaing records from exchanges.
Someone let Senator Warren know: the sunlight that comes with decentralization is the best disinfectant.
It remains to be seen if platforms such as these are the complete answer to regulatory concerns, but it is worth noting the stark difference between the approach of ChangeNOW and Coinbase or Gemini, who are more focused on lobbying (or relocating) than building their way to peace.
The question remains where the boundaries will be drawn in decentralized finance as it relates to anti-money laundering. This is where the bulk of the debate rests as far as I’m concerned - this is where someone is going to have to give.
And while I see the path for crypto-maximalists, it’s not going to be an easy one and will demand far bolder leadership than the industry is currently putting forward.
The fact that some crypto builders - the ones who see their long-range opportunity to become the leaders of tomorrow - are actively addressing these concerns and providing solutions is certainly a reason to be optimistic.