The entrepreneur's dilemma in crypto: You might not care about regulation, but regulation certainly cares about you
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The entrepreneur's dilemma in crypto: You might not care about regulation, but regulation certainly cares about you
For the crypto industry to achieve genuine growth and influence, it must embrace the formalization of its regulatory status and the consequences that come with it.
Navigating Web3 tides with focused insightsAuthor: Mario Laul
Translation: TechFlow
The foundation of public blockchains was laid by the Cypherpunks. While the crypto industry has always been destined to embrace diverse ideas and practices, core principles such as decentralization, open-source software, cryptographic security, privacy protection, and self-sovereignty have remained the bedrock of its most disruptive achievements.
However, the field also faces a central challenge: in the absence of regulatory frameworks that support innovation and recognize blockchains as administrative infrastructures with unique capabilities, crypto entrepreneurs are forced into a difficult choice—either adhere strictly to purist ideals, making their project's structure and operations more complex, or compromise on original ideals to gain regulatory approval and access more conventional, mainstream paths to success.
I call this predicament the “Cryptopreneur’s Dilemma.”
Since their inception, blockchains have carried grand ambitions: separating money from the state, building censorship-resistant global payment and coordination networks, developing software services without single points of failure, and creating entirely new forms of digital organizations and governance. Achieving such revolutionary change requires a particular historical context.
For the crypto industry, this context has been shaped by the aftermath of the global financial crisis and the evolution of Big Tech’s data and business models. At the same time, the global spread of digital technology and built-in token incentive mechanisms created nearly ideal conditions for the rapid development of the early crypto ecosystem. Since then, as individual blockchain networks and the industry as a whole accumulated social and financial capital, crypto has gradually become a force impossible to ignore—a fact made especially evident during the 2024 U.S. presidential election.
Yet driving revolutionary change requires not only courage but also a certain degree of “sociological naivety.” Any attempt to disrupt social structures—especially those grounded in law—is far more likely to fail than succeed.
By challenging established institutions, the crypto industry has indeed captured public dissatisfaction with traditional systems. But this confrontational stance is difficult to reconcile with the goal of building digital platforms serving global users. Similarly, narratives around blockchain transactions bypassing regulatory requirements within their jurisdictions—whether operators of underlying infrastructure or transacting parties—are inherently vulnerable to intervention by local law enforcement.
If the crypto industry wants real growth and impact, it must accept the formalization of its regulatory status and all the consequences that come with it. As a famous saying goes: "You may not be interested in the state, but the state is certainly interested in you."
While many aspects remain fluid, this is precisely what we observe in practice. From taxation of crypto-related activities and classification of tokenized assets, to enforcement of anti-money laundering and counter-terrorism financing (AML/CTF) rules, and clarifying legal liability within DAO governance, the crypto industry is gradually being integrated into existing regulatory systems centered on national jurisdictions.
More importantly, this process is giving rise to new case law and customized regulatory frameworks—frameworks that now serve as critical battlegrounds for defending the industry’s original values, preventing them from being overlooked or destroyed—intentionally or unintentionally—through ideological and political contestation. The “Cryptopreneur’s Dilemma” exists because, like any transformative innovation, legalization is slow and contentious. For crypto, this process is particularly difficult, as the actions of malicious opportunists have led to misperceptions about the industry and unnecessary collateral damage.
Another notable trend is the growing integration between blockchain and traditional business and financial systems. For those who view crypto as a parallel system designed to replace traditional institutions, this convergence blurs boundaries and may trigger cognitive dissonance and internal conflict. For others, however, this integration is precisely a sign of success—the only sustainable path for blockchains to become systemically important infrastructure. As the industry matures and risk decreases, its practitioners, operators, and user base will continue to expand and diversify. While this trend attracts interest from traditional enterprises, it may also further blur the narrative of crypto—especially when legacy institutions attempt to control infrastructures that were ostensibly neutral. The risk of “institutional capture” increases proportionally with the adoption of crypto.
So, as public blockchains enter the next phase of their adoption curve, how should the “Cryptopreneur’s Dilemma” be redefined?
On one hand, mainstream success in crypto appears to depend more on deep integration with existing systems than on clinging to an idealized, fully decentralized vision. Accepting the reality—that most “crypto projects” may ultimately resemble traditional businesses or open-source software initiatives, or that most blockchain users are unlikely to fully adopt cypherpunk ideals, let alone base consumer decisions on them—is not inherently problematic. As long as these systems remain open and verifiable, and are more resilient than existing alternatives, the performative aspect of “decentralization” becomes largely irrelevant, and centralized entities leveraging and operating public blockchains is unobjectionable. Thus, once the regulatory status of crypto is clearly defined, this dilemma may cease to matter for most entrepreneurs.
Yet it would be wrong to see this as the end of crypto’s original vision. Technologies such as autonomous agents and artificial intelligence (AI) are injecting powerful, far-reaching momentum into the digital revolution, and the need for robust computing and information management services is more urgent than ever.
As an innovation platform, blockchain can offer alternatives to traditional systems vulnerable to corruption, mass surveillance, and single points of failure. Blockchain will endure only if enough entrepreneurs and supporters persist in the difficult journey of building truly decentralized, privacy-preserving, and censorship-resistant systems. While commercial success in crypto may no longer depend on these ideals, its long-term societal impact undoubtedly still does.
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