And Then They Fight You - The Daily Gwei #330
The battle for crypto is heating up.
The crypto ecosystem has had a lot of regulatory scrutiny thrust upon it over the last 6-12 months and the regulators have not been kind (to say the least). Yesterday, Coinbase announced that the SEC is pursuing legal action against them for their Lend product (which allows customers to earn a 4% APY on their USDC). This move from the SEC is very bizarre, to say the least.
I don’t think it’s farfetched to say that regulatory agencies like the SEC have been captured by the incumbents - why else would they be pursuing such egregious legal action against U.S-based crypto companies? I mean, these incumbents include the existing political power hierarchy and the entire traditional finance system - they aren’t just small fry. And unfortunately, as pathetic and unfair as this is, these regulatory agencies have a lot of power and can do serious short-term damage to crypto if allowed to enact draconian regulations and pressure the ecosystem to basically “adapt or die”.
Though what really brings this all home is the fact that politicians like Sen. Elizabeth Warren are calling the crypto ecosystem the new “shadow bank” which is amazingly ironic. The real shadow bank is the opaque, closed off, and unfair traditional finance system that exists solely to enrich the few at the expense of the many. Meanwhile, DeFi is decentralized, transparent, open, permissionless and allows everyday people to break free from the chains of centralization. But of course, the incumbents don’t want this, they want to keep your money in a bank account earning 0.1% APY a year while inflation eats away at your savings and everything around you gets more expensive.
The funniest thing about all of this is that no one in the crypto ecosystem is asking for these regulations nor are they asking to be “protected” by these agencies. What’s even more insane is that the SEC has plenty of scams, rug-pulls and ponzis that they could go after but they’ve prioritized going after the honest companies like Coinbase and Uniswap Labs. So it really isn’t about protecting anyone - it’s about intimidation tactics and stifling innovation so the incumbents can keep their positions of power for as long as possible. Though this “and then they fight you” stage is a one-sided battle because the incumbents have already lost; they just don’t know it yet.
Lastly, I think what politicians and regulators have miscalculated is just how big the crypto ecosystem now is. Our community isn’t just some fringe thing that can be swiftly dealt with - there are tens of millions of us (and growing) all around the world willing to fight tooth and nail to ensure the success of this ecosystem. I think the ruckus around the infrastructure bill was a wake-up call for these politicians and they may now finally realise that crypto has become something that many people would be a single-issue voter on.
At the end of the day, if the U.S continues down this path then people will quite literally just leave the country and go set up shop elsewhere. The beautiful thing about the crypto ecosystem is that it’s extremely mobile - you can work from anywhere in the world and have your entire “company” just exist as a DAO on Ethereum. This is the future that we’re barreling down towards at a rapid pace anyway and this increased regulatory scrutiny and pressure is just accelerating the move.
So to the regulators and incumbents I simply say: bring it on. We will out-build you, we will out-innovate you, we will work around you, and we will destroy you.
Have a great day everyone,
Anthony Sassano
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