Coindesk Viewpoint: Can the value of cryptocurrency survive the regulatory wave?

Article | Coindesk

Author | Ivo Entchev

Compiled by Portal Labs

It is often said that cryptocurrency is both a technological revolution and a spiritual belief. For this reason, it is not surprising that two currents of thought have emerged in this field at the same time when the regulatory system is undergoing a comprehensive reform: on the one hand, there is a deep introspection on the core value of cryptocurrency (which often carries anti-establishment genes), and on the other hand, there is a real expectation for the emergence of potential new application scenarios.

With the support of CoinDesk, I interviewed the panelists who will speak at the Consensus 2025 forum on civil regulation - veterans of the cryptocurrency space and advocates of reasonable regulation. We discussed how to protect the core values of the industry in regulatory reform and what innovative opportunities will emerge under the new regulatory framework.

The following is a transcript of the experts’ opinions.

What core crypto values are most important to you? How can you ensure they are respected amid regulatory reform?

Kayvan

Personal freedom and autonomy are core values in the crypto space. Privacy protection and decentralization are essential because they are the fundamental means to achieve this autonomy. Without these mechanisms, surveillance systems and centralized control nodes will gradually undermine individual sovereignty.

To ensure that these values are respected in regulatory reform, we need to reframe the discussion: focus on proving that new technologies can achieve the fundamental goals of existing laws not only "in different ways" but also "in better ways." For example, a large number of financial regulatory rules were originally designed to prevent abuse of power by asset custodians, but once humans have control over this power, the risk of greed and corruption is as difficult to eliminate as a genetic imprint, and similar problems are destined to repeat themselves.

Implementing high-intensity supervision on intermediaries is certainly a feasible path, but the problem can only be fundamentally solved if the role of "human intermediaries" is completely eliminated through technology. Analogy: Strictly controlling alcohol sales and increasing road inspections to curb drunk driving are just temporary bandages for superficial symptoms; the application of autonomous driving technology is the scalpel that can truly eradicate the chronic disease of drunk driving.

The practical application of new technologies will inevitably be accompanied by growing pains, and its risk characteristics will be very different from the traditional human intermediary model. However, as long as we always discuss a core proposition - "how to use technological innovation to provide better solutions for the existing governance goals of the law", the core value of the crypto world can survive in the evolution of supervision.

Connor

Blockchain technology has the potential to provide users with unprecedented transparency, reliability, and security—provided that policy frameworks enable it to flourish by incentivizing decentralization.

Under reasonable supervision, blockchain projects will continue to advance the process of decentralization, allowing users to truly control their own financial assets and digital property, thereby reducing dependence on unauthorized institutions. Beyond financial application scenarios, decentralized blockchain networks will serve as the underlying infrastructure to support multiple fields:

Data sovereignty social platform: users fully own and control the flow of personal data
Community-based governance platform: competing with tech giants through decentralized governance mechanisms
Anti-AI forgery protocol: Building a digital identity protection system to resist AI deep forgery attacks

We believe that "control" is the most effective entry point for defining decentralization at the legal level. The "control test" can greatly eliminate the information asymmetry problem caused by the concentration of token control, thereby obtaining regulatory exemptions or downgrades for projects under the securities law framework.

Lewis

When we talk about core values, I always focus on the values of developers and users who are attracted to the crypto world, rather than the attributes of the technology itself. According to my observation, this group is certainly called by the concepts of personal sovereignty and decentralization, but their spiritual totem is far more than that.

Over the past decade, what really drives me forward is the deep collaboration with this diverse and innovative community - they are building the "value internet" with an almost paranoid passion, and are determined to make the world more closely connected. We must clearly realize that the essence of the crypto ecosystem is a set of bottom-up tool systems, and each line of its code condenses the time, wisdom and creativity of countless individuals, rather than the top-level planning of technology giants. This grassroots nature is the most moving footnote to the spirit of crypto.

Michelle

Decentralization is the core value that I cherish most, because only by distributing power, control and decision-making power to network nodes rather than centralized entities can we truly realize the autonomy and free trading of digital assets. For the links that still have centralized control, it is necessary to tailor legal and regulatory protection mechanisms to the unique complexity of the blockchain system.

The key to ensuring that the principle of decentralization is respected is that legislators and regulators must have a deep understanding of the underlying technical architecture - only in this way can the dual goals of protecting consumers from financial losses and asset depreciation risks, while effectively preventing financial crimes such as money laundering from eroding the ecosystem, be achieved when formulating rules.

David

As a corporate lawyer with more than 20 years of experience, I have always been a believer in the free market. The legal recognition of transferable property rights, the right of entrepreneurs to freely try and fail, and the "principle of freedom of contract" (that is, mentally sound adults have the right to exchange goods and services at will) - these cornerstones of American corporate law (also the legislative foundation of other liberal democratic regimes) are essentially the core values of the crypto spirit.

Although encryption technology is revolutionary, the paradigm of "innovation needs to be balanced with reasonable regulation" has historical precedents. When commercial aircraft first appeared, we established pilot qualification and safety airworthiness standards based on safety considerations; today, the prosperity of the aviation industry and the regulatory framework have coexisted and prospered. Similarly, regulators can maintain an open attitude towards new software business models while developing targeted protection mechanisms to strike a balance between preventing risks such as financial crises and terrorist financing.

Are regulatory reforms unlocking valuable new business models/products?

Kayvan

A reasonable regulatory framework has far-reaching significance for business models that rely on community participation and network effects. Current technological developments have greatly lowered the threshold for individuals and small teams to create and distribute content, allowing them to compete with centralized giants. Effective regulation can further empower individuals through two paths:

Democratization of capital access: Opening up a channel for compliant entities to directly obtain capital allocation
Popularization of ecological participation: Promote mainstream groups to participate in ecological construction and share the network effect dividends of their communities

Connor

There is no definitive answer to this question! As legislation such as the Market Structure Act and the Stablecoin Act gradually outline the regulatory outline, we have seen a significant increase in the interest of mainstream institutions in blockchain technology. However, before these bills are officially implemented, many highly promising blockchain projects will still face difficulties in scaling.

I am optimistic about new projects in the following areas:

Decentralized AI: Building censorship-resistant AI training and inference networks
Digital Identity Protocol: Building a user-managed on-chain identity system
Social Media 3.0: A content ecosystem that realizes the return of data sovereignty

At the same time, we expect new structures such as DAO (decentralized autonomous organizations) to obtain legal status certification. The Decentralized Nonprofit Association Act (DUNA) recently introduced by Wyoming has provided an important model for the experimentation and evolution of such organizations. Only a clear regulatory sandbox can unleash the full potential of organizational innovation.

Lewis

The door to innovation is never closed! Ideally, regulation should be like a spring breeze and rain - it can promote innovation in a balanced and sustainable way, and be sensitive to new business models that the community actually adopts.

The perfect regulatory paradigm in my mind is like the evolution of automobile civilization: when private sector innovators created the "horseless carriage", these mechanical monsters that initially staggered on muddy horse trails forced the government to start paving hardened roads and drawing traffic markings. Admittedly, the rules constrain driving behavior to a certain extent, but they allow vehicles to run more safely. The real technological breakthroughs always come from the private sector: it is the car companies that continue to develop new engines and new models, rather than the government dictating what kind of rubber should be used for tires.

Any regulatory measures that attempt to artificially intervene in the balance and force support for a specific technology route - even if the original intention is good - will ultimately backfire and distort the market. The mission of innovators is to continue to create, and the role of regulators should be to protect and adapt, rather than to interfere.

Michelle

In the past ten years, I have been deeply involved in the cryptocurrency industry, and my work has always focused on areas with high regulatory intensity, such as financial integrity and consumer protection. I have witnessed how new business models such as stablecoins have grown wildly in the absence of regulation; I have also witnessed how prudent supervision has promoted innovative products to the mainstream with developer confidence and user trust by clarifying the boundaries of rules. Compared with ten years ago, the current level of attention paid to compliance by crypto projects is no longer the same.

This transformation is creating a historic opportunity for regulatory technology (RegTech) - to reconstruct financial infrastructure by building automated compliance tools and process systems. At Change Agents, our daily mission is to optimize processes, reduce costs and increase efficiency based on an AI-driven secure automation platform. In contrast, the core systems of traditional financial institutions were mostly built decades ago without considering compatibility with modern technology interfaces, resulting in:

Data silos: Fragmented information stored in heterogeneous systems
Regulatory fragmentation: Differences in compliance standards across jurisdictions increase operational complexity

The encryption platform is inherently compliant:

Transparent ledger: Blockchain technology ensures traceable transaction records
Automated risk control: Smart contracts enable real-time compliance verification
Anti-tampering audit: on-chain data is permanently stored and irreversible
API-first architecture: seamless integration with RegTech products
Data straight-through processing: Automatically generate regulatory reports directly from the transaction data layer to avoid manual summary errors

These technical characteristics give crypto companies a compliance advantage over traditional finance: while providing regulators with more accurate information, they also significantly reduce compliance costs.

David

The crypto world contains multiple revolutionary narratives: Bitcoin has been around for 16 years as a censorship-resistant value storage tool, which is almost an antique in today's rapidly changing technology; but what excites me more is the wave of stablecoins and tokenization of real assets. The disruptive potential of capital flows deeply coupled with Turing-complete global programmable ledgers has not yet been fully recognized.

Money is the blood of commercial civilization, and encryption technology is redefining its circulation system - whether it is near-zero friction instant payment or allowing 1.7 billion people without bank accounts to access digital dollar equivalents for the first time, these are just the beginning of the change. Although stablecoins have begun to take shape, the upcoming US regulatory framework will trigger their large-scale application. The key lies in building the "golden triangle" regulatory principle:

Minimizing the risk of bank runs: Building a solid foundation of trust through reserve transparency and stress testing
Blocking Illegal Fund Flows: A Technical Solution to Balance Privacy Protection and Anti-Money Laundering Monitoring
Cross-chain interoperability: breaking the silo effect and building a unified liquidity pool

Only in this way can stablecoins truly become the financial primitives of the digital economy era.