The crypto industry must accept the formalization of its regulatory status and the various consequences that come with it in order to achieve true growth and influence.
The foundation of public blockchains was laid by Cypherpunks. Although the crypto industry was destined to embrace diverse ideas and practices from the very beginning, core principles such as decentralization, open-source software, cryptographic security, privacy protection, and self-sovereignty have always been the cornerstone of its most disruptive achievements.
However, this field faces a core issue: without a regulatory framework that supports innovation and recognizes blockchain as an administrative infrastructure with unique functions, crypto entrepreneurs are forced to make a difficult choice—whether to adhere to pure ideological principles, making the structure and operation of projects more complex; or to compromise on original ideals in exchange for regulatory recognition and a more traditional path to mainstream success.
I call this dilemma the 'Cryptopreneur’s Dilemma.'
Since the inception of blockchain, it has carried a grand vision: to achieve the separation of money and state, to establish a censorship-resistant global payment and coordination network, to develop software services without single points of failure, and to create new forms of digital organization and governance. Pushing for such revolutionary changes requires a special historical context.
For the crypto industry, this context is shaped by the aftermath of the global financial crisis and the evolution of data and business models of Big Tech companies. At the same time, the global proliferation of digital technology and the built-in token incentive mechanisms provided near-ideal conditions for the rapid development of the early crypto ecosystem. Since then, as social and financial capital have accumulated within individual blockchain networks and the industry as a whole, the crypto industry has gradually become a force that cannot be ignored, particularly evident in the 2024 U.S. presidential election.
However, driving revolutionary change requires not only courage but also a degree of 'sociological naivety.' Any attempt to disrupt social structures, especially those based on law, often has a much higher likelihood of failure than success.
The crypto industry has indeed captured the public's dissatisfaction with traditional systems by challenging existing institutions, but this confrontational stance is hard to reconcile with the goal of building digital platforms that serve global users. Similarly, blockchain transactions attempt to circumvent the regulatory requirements of the jurisdiction in which they operate (whether it be the operators of the underlying infrastructure or the transaction parties), and this narrative always faces the risk of intervention by local law enforcement.
In order to achieve true growth and influence, the crypto industry must accept the formalization of its regulatory status and the various consequences that come with it. As a famous saying goes, 'You may not be interested in the state, but the state is certainly interested in you.'
Although many aspects are still changing, this is precisely what we see in practice. From taxing crypto-related activities, classifying tokenized assets, to enforcing anti-money laundering and counter-terrorism financing (AML/CTF) rules, as well as clarifying legal responsibilities in DAO governance, the crypto industry is gradually integrating into the existing regulatory framework centered on national jurisdiction.
However, it is more concerning that this process has also spawned new case law and customized regulatory frameworks—these frameworks have become critical battlegrounds for defending the original values of the crypto industry, preventing it from being overlooked or destroyed (whether intentionally or unintentionally) in ideological and political games. This 'Cryptopreneur’s Dilemma' exists because, like any innovation with far-reaching impacts, its process of legitimization is both slow and contentious. For the crypto industry, this process is particularly difficult because the actions of some malicious opportunists have led to misunderstandings of the industry's image and unnecessary collateral damage.
Another noteworthy trend is the increasing integration of blockchain with traditional business and financial systems. For those who view the crypto industry as a parallel system aimed at replacing traditional institutions, this integration blurs the boundaries between the two and may trigger cognitive dissonance and internal conflict. For others, this integration is precisely a sign of success and the only sustainable path for blockchain to become systemically important infrastructure. As the industry matures and risks decrease, its practitioners, operators, and user groups will also expand and diversify. While this trend attracts the attention of traditional enterprises, it may further exacerbate the ambiguity of the crypto industry narrative, especially as traditional institutions attempt to control those seemingly neutral infrastructures. The risk of 'institutional capture' will proportionally increase with the proliferation of the crypto industry.
So, as public blockchains enter the next stage of their adoption curve, how should the 'Cryptopreneur’s Dilemma' be repositioned?
On one hand, the mainstream success of the crypto industry seems to rely more on deep integration with existing systems rather than clinging to some idealized, fully decentralized vision. Accepting the fact that most 'crypto projects' may ultimately be no different from traditional enterprises or open-source software initiatives, or that most blockchain users are unlikely to fully embrace the principles of cypherpunks and even regard them as the primary basis for consumption decisions, is not unacceptable. As long as these systems can maintain openness and verifiability and are more resilient than existing alternatives, then 'decentralized performance' is of little practical significance, and it is also reasonable for centralized enterprises to utilize and operate public blockchains. Therefore, once the regulatory status of the crypto industry is clarified, this dilemma may no longer be significant for most entrepreneurs.
However, to regard this as marking the end of the original vision of the crypto industry is incorrect. Technologies such as autonomous robots and artificial intelligence (AI) are injecting new and profound transformative power into the digital revolution, and the demand for powerful computing and information management services is more urgent than ever.
As an innovative platform, blockchain can provide alternatives for traditional systems that are vulnerable to corruption, mass surveillance, and single points of failure. Only when enough entrepreneurs and supporters persist in the difficult path of building truly decentralized, privacy-protecting, and anti-control systems can blockchain continue to exist. Although the commercial success of the crypto industry may no longer depend on these ideals, its long-term social impact undoubtedly still relies on them.