I know, I know. It seems like every day, we are hit with another crypto headline predicting the industry’s doom. The DOJ just released a new enforcement guidance, and it’s breaking the internet. Crypto players have been screaming from the rooftops that “regulation is killing crypto! But before you add your voice to the doomsayers, let’s stop, take a minute, and get some context. Instead I see not a disaster, but a massive opportunity.

I'm not a lawyer, nor am I a financial advisor. I'm just someone who believes in the transformative power of blockchain technology, and I'm tired of seeing its potential squandered by scams, rug pulls, and outright lawlessness.

Here’s one that I just discovered, but which may be familiar to many of you. It’s a relatively new, small, defi protocol aimed at long-term, sustainable yield farming. What made me take notice was not the APY (which was good), but rather their clear and detailed commitment to compliance with existing regulatory frameworks. They are diligent about engaging outside legal counsel, keeping everything documented in writing, and being transparent at all costs. They recognized that the keys to long-term success lie in winning the support of the community and that winning that support requires establishing legitimacy. They’re not only talking the talk, they’re walking the walk.

Imagine back at the beginning of the internet. It was a complete Wild West of unregulated innovation, scammy as hell and full of security vulnerabilities. When regulations started to appear, when laws were passed and enforced, the internet certainly didn’t perish. It thrived. Why? Because clarity creates confidence.

Clarity Creates Opportunity For Growth

Consider the pharmaceutical industry. It's heavily regulated, and for good reason. As Americans, we require a guarantee that the drugs we consume are both safe and actually work. Those regulations might seem like a hassle, but they’re important. Together, they embolden investors and consumers alike, increasing their confidence to engage and catalyzing tremendous innovation and economic activity.

The same principle applies to crypto. However, at this moment, the industry finds itself consumed by uncertainty. Institutional investors are loath to enter the fray because they don’t have clear guidelines about where the lines are drawn. It’s not a great picture – far from it – but the DOJ’s guidance, at a minimum, begins to clarify that picture. This is an important signal that the U.S. government is getting serious about cryptocurrency. It reflects a real commitment to rooting out bad actors in the industry.

Let's be honest: the crypto space has become synonymous with scams. The industry is rife with opportunities for the unscrupulous to take advantage. They are scamming everyone in sight from the mom and pop investor through pump-and-dump scams to sophisticated Ponzi schemes posing as DeFi protocols.

Cleaning Up The Wild West Is Vital

The DOJ’s focus on investor victimization — embezzlement, fraud, hacking and smart contract vulnerabilities — should be the top priority. Congress must protect Americans from losing their life savings to these scams. The prioritization of investigating the criminal use of digital assets— criminal first, national security 2nd —is concerning. No wonder crypto’s reputation is sullied by its ties to cartels, terrorism and money laundering— an image that further erodes crypto’s PR prospects and prevents mainstream adoption.

The new memo states the DOJ will generally not target exchanges, mixing/tumbling services, or offline wallets for end-user actions or unwitting regulatory violations, unless consistent with DOJ priorities. Prosecutors don’t typically charge these kinds of regulatory violations, such as unlicensed money transmitting, BSA violations, unregistered securities offerings. They only seek an indictment when the defendant knowingly violated the regulatory duty. This is a good thing. That’s a good thing; it means they’re really serious about this, about the intent behind the actions, not just the nitty-gritty.

I get it — nobody wants to see heavy-handed regulation killing all the cool innovation we’re excited about. Personally, I think that a well-regulated crypto industry is a more resilient, more developed, and healthier crypto industry. That is a big deal, because this industry attracts a LOT of institutional investment. It enhances mainstream adoption and lives up to its decentralization and financial empowerment promise.

Embrace Regulation, Build Trust

The DOJ’s new guidance is not a death sentence for crypto. It's a wake-up call. This is our golden opportunity to clean up our act and restore public’s trust. Support smarter, cleaner innovation so we can put this transformative technology to work! Let's not squander it. Let's embrace it. Let's build something that lasts.

Yes, DOJ, you can and should still bring charges against companies like Binance. This is only allowed because in the past they’ve pled guilty to willfully violating the Bank Secrecy Act. And that's okay. Together, with this settlement, it sends a strong message that illegal and willful violation of the law will not stand.

  • Engage with regulators. Don't treat them as enemies. Work with them to develop sensible regulations that protect investors without stifling innovation.
  • Prioritize compliance. Invest in legal counsel, implement robust AML procedures, and be transparent about your operations.
  • Educate the public. Help people understand the risks and rewards of crypto investing.

I realize this view is far from the majority view out there, but I still think it’s the right one. The future of crypto will be defined by our collective commitment to regulation, building that trust, and ultimately fostering a more responsible industry. And that, as my friends at NRDC like to say, is an opportunity of a lifetime. Let's not let fear paralyze us. Let's get to work.

Yes, the DOJ could still bring charges against companies like Binance, given their previous guilty pleas for willfully violating the Bank Secrecy Act. And that's okay. It sends a clear message that willful violation of the law will not be tolerated.

I know this opinion might not be the most popular one, but I believe it's the right one. The future of crypto depends on our ability to embrace regulation, build trust, and create a more responsible industry. And that, my friends, is an opportunity worth seizing. Let's not let fear paralyze us. Let's get to work.