This promises to be a month of reckoning in the world of crypto as Sam Bankman-Fried, the former cargo-clad-golden-geek turned alleged crypto-hustling fraudster, appears in court to face conspiracy and fraud charges. With the media spotlight firmly fixed on the unfolding courtroom drama, there’s a real risk that legitimate crypto businesses will be tempted to weigh in on deception and bad actors rather than focusing on their customers and business strategy.
Katherine Snow is the Head of Legal at Messari, the leading market intelligence platform for the crypto economy, where she drives policy and legal strategy in key jurisdictions worldwide.
Bankman-Fried’s trial is igniting a media spectacle – from FTX’s customers and investors suffering staggering losses, to his own swift ascent and descent as the world’s youngest billionaire, and the scandalous whispers of drug-fueled Bahamian benders and polyamory. Piling on will be at least eight Hollywood projects, affiliated books (*cough* Michael Lewis), and podcasts about FTX that have been waiting in the wings for this moment. The frenzy promises to surpass even the recent, meme-fueled Gwyneth Paltrow ski case or the Depp vs. Herd spectacle.
Meanwhile, against all odds, the industry has begun to find its footing in a wary Washington, and the kick-off of the trial risks new headwinds. Instead of playing into the distraction, it must not allow the actions of Bankman-Fried to tarnish the good faith work of the sector to advance common sense regulation.
The crypto industry has rapidly shifted from the periphery to the forefront in D.C. in a remarkably brief span. The sector has established a host of trade associations, think tanks, and political action committees, enlisted a significant cadre of seasoned lobbyists, and formed in-house policy teams. These initiatives have attracted the attention and engagement of policymakers and regulators, underscoring the undeniable promise of blockchain technology and the passion of its proponents.
This advocacy culminated in a remarkable “crypto summer” in June, with four promising regulatory bills successfully voted out of a Congressional committee for the first time. While this is an incredible milestone, unveiling glimmers of regulatory certainty, the journey to enacting any of these bills into law remains formidable.
This is a turning point. The industry can’t afford to let the Bankman-Fried trial divert its focus. The crypto community must recognize the gravity of the moment and respond decisively. It’s a rallying cry for all industry players – developers, protocols, investors, startups, and established firms alike.
It’s crucial for the industry to disassociate from rogue actors and showcase its dedication to ethical conduct and responsible practices. The crypto community has proven its capability to do exactly that. Swift reactions to regulatory hurdles, active initiatives to educate lawmakers, and a readiness for constructive discussions all reflect the industry's maturity and promise. However, the crypto industry risks erasing these achievements if it lets the Bankman-Fried saga dominate the narrative.
So, as the trial unfolds and the world watches, the industry must ignore the sensationalism and get back to business. The shot clock for progress in D.C. in 2023 is ticking ever closer to zero and every stakeholder in the crypto ecosystem should be hustling to amplify its collective voice in Washington. The crypto industry must continue to show the U.S. legislature that, beyond the outliers, blockchain technology is tangible and worth championing.
The goal is clear: to establish a regulatory environment that fosters innovation, protects consumers, developers, and innovators while ensuring that the United States remains a player in the Web3 revolution. And to Washington policymakers: delve deeper than the headlines. America’s hegemonic power is at stake, and you play a pivotal role in protecting our digital future.