The Fight for Crypto's Decentralized Future

Over the past four years, the crypto industry has been engaged in a fierce battle for survival in the United States, facing off against a hostile administration and unprecedented legal challenges. Despite these obstacles, the industry has emerged victorious. However, a new and more pressing challenge now lies ahead: shaping the legislation and policies that will govern the industry for decades to come. At the heart of this challenge is the concept of decentralization. In essence, decentralization refers to the distribution of control and decision-making power, eliminating the need for a central authority and providing users with greater choice, transparency, security, and resilience. This core principle of blockchain technology promotes competition, creativity, and collaboration while safeguarding freedom and value - both financial and reputational. So, why is it essential to enshrine decentralization in law? By adopting policies that encourage decentralization, we can achieve three critical outcomes. Firstly, we can prevent large, centralized companies from dominating the blockchain ecosystem, thereby promoting a more diverse and vibrant landscape. Secondly, we can reward founders and builders for creating decentralized systems that function like public infrastructure, rather than proprietary technologies. This approach can unlock a world of possibilities, similar to the rapid evolution of the internet. Thirdly, we can protect consumers and promote long-term investment and growth by establishing minimum standards of decentralization, which would help to reduce volatility, scams, and the 'casino culture' of pump-and-dump schemes. Without these incentives, the allure of centralization can be overwhelming for builders, leading them to prioritize convenience and profit over decentralization. To address this challenge, we need a new regulatory framework that is tailored to decentralized technologies like blockchains. This framework should reduce regulatory burdens and enable broader market access for projects that disseminate ownership and control, while also providing tailored disclosures. By reframing decentralization in terms of control and combining control-related decentralization requirements with disclosure requirements, this new framework can empower founders to build decentralized technologies, resist the convenience of centralization, and protect consumers from risks. This approach is not new, but rather builds on the SEC's 2019 Framework for Digital Assets, addressing one of its key paradoxes. The new framework would mitigate risks to users by limiting reliance on centralized actors, while also incentivizing projects to prioritize decentralization and transparency. As the industry evolves, this approach can adapt and foster innovation, accelerate the progress of decentralized technologies, and enable the crypto ecosystem to thrive in the U.S. over the years to come. Despite potential pushback from those with vested interests, it is essential to remain focused on the benefits of blockchain technologies, not just for crypto users, but for everyone.