U.S. regulators are choking the crypto industry. Instead of providing a clear regulatory framework, they are pursuing regulation by enforcement. Done under the guise of consumer protection, the attack on crypto is hindering innovation and denying Americans a path to new economic opportunities.
Home ownership has long been a hallmark of the American dream, representing a key life achievement and a route to wealth building, but with interest rates and inflation at their highest levels in two decades, coupled with a nationwide housing shortage, that dream is fading away for many.
Crypto offers a new way for Americans to build wealth through ownership of the internet products they use. Tokens, or digital assets, enable value to be distributed and tracked digitally, so consumers can benefit from owning things just like in the physical world.
In the last big wave of the internet innovation, centralized Big Tech players owned users’ data and monetized it through advertising. In the crypto-based internet, users have much more control of their own data and which products they use. Big Tech and their shareholders alone won't be the main beneficiaries of this new wealth creation, rather it will be the users who have a stake in the products they use.
Crypto’s massive potential has certainly been overshadowed recently by scams, grift, and speculation. Though crypto has been exploited for negative aims, that has always been present in new technologies—from the early internet being rife with phishing attacks and email fraud, to electricity being touted as a medicinal cure-all during the Victorian Era.
Though it is early in this user-owned iteration of the internet, there are already countless examples of digital ownership resulting in more equitable outcomes, lower barriers to entry, and greater access to economic opportunities.
Crypto enables artists and their fans to benefit in new ways. In 2021, emerging musician Daniel Allen raised over $180,000 for his first album through a crypto crowdfunding and gave backers 50% of his royalties, which allowed him to retain more control and economic rights over his music—and let fans obtain ownership and upside as well. “Traditionally, to make it in the music industry, you had to follow a one-dimensional trajectory: get really lucky by posting a song online, or sell rights away,” he told me. Since then, many musicians have implemented similar playbooks, bypassing industry gatekeepers to better align their interests with those of their fans.
In September 2020, more than 250,000 users received a surprise distribution of 400 tokens from Uniswap, the leading decentralized crypto exchange. The airdrop, worth $1,200 at the time, represented a life-changing sum for many users, allowing them to pursue professional interests or remodel their homes. But the event signified something even more profound: that users, rather than just founders or shareholders, could earn ownership of a platform and benefit from its success.
Braintrust, a decentralized freelance marketplace, enables programmers, designers, and illustrators to work on a contract basis with employers such as Nike and NASA. Since there is no central company taking a large cut of freelancers’ earnings for providing the service, workers retain more.
You might retort that all these examples apply to digital natives taking advantage of bleeding-edge technologies on the fringes of the internet. Today, crypto is indeed an emerging phenomenon, but down the road, it will extend to the products and services we use on a daily basis.
Crypto has already helped internet users form communities, access work and income, and capture more of the value they create. For business builders, crypto offers a new tool kit to build networks faster by sharing value with users. By embracing crypto, the U.S. has the opportunity to foster more stories like these, with tangible benefits for everyday Americans.
But regulators have so far provided no clear roadmap for crypto companies and projects to build in a compliant manner. Instead, they've hindered innovation with restrictive enforcement actions. Now America risks losing out to other parts of the world, like Europe and Asia, that are welcoming crypto companies more openly.
We implore U.S. policymakers to provide a clear regulatory framework for the industry, one that fosters responsible innovation to provide benefits for all citizens. We have an opportunity to empower the American dream—not just the version that has existed for centuries, but a newly updated dream for the era of digital natives.
Li Jin is a cofounder and general partner at Variant, an early-stage crypto investment firm. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
