Regulators are choking the crypto industry in the US, but major policy decisions should be made by Congress and state legislatures, not by unelected officials
Katie Haun / Wall Street Journal :
Context & Ripple Effects
Katie Haun's argument lands after years of the industry asking for exactly what she now demands. Back in 2018, crypto, Wall Street, and venture leaders asked Congress for clearer rules while regulators themselves acknowledged they lacked power over exchanges. Congress didn't deliver — it instead became transfixed by FTX's collapse — leaving the vacuum to statehouses and regulators.
First-order effects
- Crypto firms operating in the US face the written and unwritten regulator policies that advocates say make domestic operations unfeasible, and Haun's op-ed gives that grievance a high-profile VC voice with $1B across two new funds at stake.
- Congress is the named addressee: the piece shifts responsibility for crypto rules onto legislators who per the coverage moved slowly and were absorbed by the FTX fallout.
Second-order effects
- Absent congressional action, the battleground shifts to state legislatures, where lobbyists and executives are already helping draft and pass favorable bills — fragmenting the rulebook jurisdiction by jurisdiction.
- An enforcement-first posture from regulators accelerates the innovation-flight risk industry leaders flagged to Congress back in 2018, pushing crypto activity and capital toward more permissive jurisdictions.
Third-order effects
- If the pattern holds, US crypto legitimacy gets settled by enforcement and state patchwork rather than statute — a legitimacy gap that determines which firms can operate at all and where.
- The episode shows venture capital becoming a direct policy actor: a fund manager targeting startups that blend financial services, AI, and alternative assets argues the jurisdictional question because her portfolio's addressable market is defined by who writes the rules.
The trend: US crypto policy is drifting from a legislative question Congress deferred into an enforcement-driven status quo, with venture capital and state legislatures filling the vacuum Congress left.