Daily Briefing: Fortune Favors the Brave
Recent regulatory developments have shaken the crypto space. Jacob Oliver explains why now is the time to act.
- Several alarming updates regarding crypto regulation have emerged over the past few weeks.
- Crypto enthusiasts should prepare to fight for the future of the industry.
- Blockchain advocates can support the space by attending meet-ups, donating to advocacy groups, contacting senators, and even running for Congress.
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As regulation looms, crypto enthusiasts can support the industry by attending community meet-ups, donating to advocacy groups, and calling their senators.
Crypto Regulation Is Coming
Over the weekend, I did some pretty heavy thinking about the future of this industry, its underlying technology, and the social movement that has sprung up around it. I’m sure I’m not alone because recent news regarding crypto regulation has shaken the space to its core.
As we entered the autumn months of a year that’s been all too cruel to this space, we were caught off guard last week by some bone-chilling developments in U.S. crypto regulation. A proposed bill that would put a two-year ban on “endogenously collateralized stablecoins” notwithstanding, what set the space on fire was a pair of lawsuits from the country’s chief financial assets regulators—the SEC and CFTC.
The former regulator, in bringing suit against an ICO-era YouTuber who failed to disclose his token holdings properly, made a truly head-spinning claim about Ethereum transactions. The suit said that all Ethereum activity should be considered to have taken place on American soil and fall under the jurisdiction of its regulators because Ethereum nodes are “most densely” located in the U.S. Never mind that the U.S. only holds 42% of Ethereum nodes—the SEC has suggested that every transaction counts.
The CFTC, meanwhile, brought suit against Ooki DAO (formerly bZx Protocol) for illegally offering margin trading, which does explicitly require proper licensure in the U.S. But this suit doesn’t just target Ooki DAO’s founders—it also goes after everyone who participated in governance. The reasoning is that because the DAO is an “unincorporated association” with no recognized legal structure, there is no liability protection for its members. Not only does this likely come as an extremely unpleasant surprise to DAO members, but it also puts the very idea of decentralized governance in jeopardy.
This is a level of aggression we’ve never seen from U.S. regulators, and it has rightly sent a chill down the community’s collective spine. It gives pause to anyone looking to jump into crypto, and for good reason. While I typically prefer a calm response to these things over sounding the alarm, this is exactly the kind of innovation-stifling attempt at regulation that does cause actual damage to the space.
It’s Time to Act
So after we pull ourselves together, the question we must ask ourselves is what we can do about it. The days of active crypto enforcement being a distant worry are over; these battles are underway right now. Now is the time to mobilize, donate, vote, organize communities, and plan runs for office—midterm elections are only 42 days away, and the minute they are decided is the minute the 2024 season kicks off.
We know that regulation is coming; the best thing we can do is prepare ourselves. That means familiarizing yourself with your local political landscape, getting involved in council meetings, and making yourself known to the people in your community who can make a difference. It means learning the rules as they are written so you can understand the best ways to change them for the better. It’s about making the effort to persuade rather than antagonize.
“Fortune favors the brave,” Matt Damon infamously quoted in a (much-maligned) Crypto.com ad earlier this year that brought the ancient Roman proverb back en vogue for a new century. A favorite saying of generals, mercenaries, and other stern souls who charged headlong into danger, “fortes fortuna iuvat” were the last known words of Pliny the Elder before he sailed to his death at Pompeii. It would be almost two millennia before the turn-of-phrase was modified by Louis Pasteur to “chance favors only the prepared.”
So, get prepared. Read. Talk to your friends and family. Go to meet-ups. Donate to advocacy groups. Call your senator and leave an angry message. Consider if a run for city council, the state legislature—hell, even U.S. Congress—is a viable option for you or someone in your community. Be active.
Stay calm, but brace yourselves. There’s a storm on the way.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. The information presented in this newsletter is for educational purposes only and is not financial advice.