Cardano co-creator Charles Hoskinson has outlined the real reason regulators in the United States are going after crypto in recent weeks. Several recent regulatory actions — including a new Illinois Senate Bill which plans to force blockchain miners and validators to do outlandish things such as altering or rescinding transactions if ordered to do so by a state court.
According to Hoskinson, the incredibly violent collapse of Sam Bankman’s FTX digital asset exchange in November is forcing the hand of regulators, who are now stiffening their crypto resistance.
U.S. Crackdown On Crypto
In a year of crypto upheavals, the recently introduced Illinois Senate Bill entitled the “Digital Property Protection and Law Enforcement Act set off yet another tremor.
The bill, introduced quietly and only noticed by Florida-based attorney Drew Hinkes, would authorize the reversal of blockchain transactions executed through smart contracts. The legislation would apply to any “blockchain network that processes a blockchain transaction originating in the State.”
Hinkes portrayed the bill as “the most unworkable state law” related to blockchain and crypto assets he has ever witnessed. The Act is also a notable change of tune for a previously pro-innovation state.
Cardano’s Charles Hoskinson responded with similar ridicule of this bill proposed by Illinois Senator Robert Peters. When asked what triggered the increased assault on crypto by U.S. regulators, Hoskinson astutely stated that it was FTX’s demise. FTX was a Bahamas-based crypto exchange and the crown jewel in the multi-billion-dollar empire of Sam Bankman-Fried, its once-feted founder.
“The minute it happened, I knew the entire industry was in for a seriously hard time,” Hoskinson explained.
Hoskinson Echoes Ex-Kraken CEO’s Comments
Hoskinson also concurred with Kraken co-founder and former CEO Jesse Powell, who observed that regulators intentionally turn a blind eye to bad actors like FTX because it serves their grand agenda.
Powell highlighted the sequence of events wherein the bad guys’ blowups resulted in extensive capital destruction within the crypto industry. This burns investors badly and discourages adoption as a result. Eventually, regulators get “air cover” to attack entities many crypto veterans deem the good guys.
Kraken, for instance, has been a pillar of the crypto sector for a decade and has been a routinely honest actor. Nevertheless, the exchange was recently forced to pay a $30 million fine to settle charges lodged against it by the U.S. Securities and Exchange Commission (SEC).
Hoskinson suggested that Powell’s opinion was beginning to feel real as fair notice was given for the majority of companies that imploded months or even years before the events. That reality holds many difficult lessons about the broader pattern of U.S. crypto regulation.