The recent surge in regulatory action against cryptocurrencies in the United States has a surprising underlying reason, according to Charles Hoskinson, co-founder of Cardano. Speaking out about the Illinois Senate Bill, which requires blockchain miners and validators to alter or rescind transactions if ordered by a state court, Hoskinson pointed to the collapse of Sam Bankman-Fried’s FTX digital asset exchange as the real trigger for regulators to stiffen their stance on crypto.
Illinois Senate Bill: A Step Too Far?
The Illinois Senate Bill, also known as the Digital Property Protection and Law Enforcement Act, would permit the reversal of blockchain transactions executed via smart contracts on any network that processes a blockchain transaction in the state. Drew Hinkes, a Florida-based attorney, described the bill as “the most unworkable state law” related to blockchain and crypto assets he has ever seen. The Act is also a notable departure from Illinois’ previously pro-innovation stance.
FTX’s Demise: A Catalyst for Change
Charles Hoskinson stated that FTX’s collapse was the pivotal moment that alerted regulators to the need to take action. FTX was a cryptocurrency exchange based in the Bahamas, with Sam Bankman-Fried as its founder. Hoskinson explained that when the exchange crumbled, he knew that the entire industry was in for a rough time.
Regulators’ Grand Agenda
Hoskinson concurred with Jesse Powell, the co-founder and former CEO of Kraken, that regulators turn a blind eye to bad actors like FTX because it serves their grand agenda. Powell highlighted that the failures of these bad actors resulted in extensive capital destruction in the crypto industry, leading to a decline in adoption rates. Eventually, regulators use this as an opportunity to attack entities that crypto veterans deem to be the “good guys.”
The Lessons Learned
The crypto industry must now face the harsh reality of the broader pattern of U.S. crypto regulation, which has given fair notice to the majority of companies that have imploded months or even years before the events. Hoskinson warned that there are many difficult lessons to be learned, as the industry continues to evolve in response to changing regulations.
In summary, the recent surge in regulatory action against cryptocurrencies in the United States is rooted in the collapse of FTX, according to Cardano’s Charles Hoskinson. He believes that the regulators’ grand agenda, coupled with the failures of bad actors, has resulted in extensive capital destruction within the crypto industry, leading to a decline in adoption rates. As the industry continues to evolve, difficult lessons must be learned about U.S. crypto regulation.