For years, the crypto industry has been wrestling with regulators and the Wall Street establishment over the future of money and finance — a restless upstart pushing against the forces it was created to displace. But for the moment, that wrestling is starting to look more like hugging. The price of Bitcoin has returned to levels not seen since last April’s crypto crash, and crypto boosters have been feeling some of their old bubble-era euphoria. One feature of the pre-crash era that has not fully returned: the crypto vs. establishment hostility. Instead, market observers are pointing to the role of institutions like the SEC and asset manager Blackrock, which crypto backers had long treated as antagonists, in fueling the euphoria. Those shifting dynamics are a sign that in fights over the future of financial tech, the battle lines remain in flux. Less than two years ago, crypto booster Peter Thiel projected Blackrock CEO Larry Fink’s face on a screen at a glitzy Bitcoin conference as part of his Bitcoin “enemies list” — voicing his suspicion that the head of the world’s largest asset manager wanted to crush the cryptocurrency on behalf of the financial establishment and its allies in government. Yesterday, crypto news outlet Coindesk ran a profile headlined “Larry Fink: Wall Street’s Biggest Bitcoin Believer.” So what changed? In June, the asset manager filed for permission to sell Bitcoin on stock exchanges. That put gigantic Blackrock on the same side of a key debate as crypto startups. Then a federal court struck down the SEC’s rejection of a similar application to launch a Bitcoin exchange traded fund -- fueling hope among crypto investors that the SEC will soon begin approving Bitcoin ETFs. The prospect of federal approval for new Bitcoin investments is the most commonly cited driver of the current rally. Suddenly, the government looks like a potential friend of the crypto movement, or at least an enabler. Today, the Financial Times detailed the French government’s long-running efforts to woo Binance to invest in the country. This, despite the exchange’s founder, Changpeng Zhao, pleading guilty to federal money laundering charges in the U.S. last month. France’s crypto embrace includes another blast from crypto’s pre-crash past: State subsidies for blockchain training courses with diplomas issued in the form of NFTs. Not that the politics of crypto have been turned completely upside down: an SEC approval in those circumstances would be only a begrudging concession to the federal judiciary, not a true embrace by the establishment. And industry backers remain at loggerheads with the agency over several issues, like what sort of digital tokens qualify as securities. Crypto critics in government, like Sen. Elizabeth Warren, continue to view the technology as as a vehicle for money laundering and fraud with little legitimate utility. And governments around the world continue to pursue their own digital currencies — a trend opposed by crypto’s libertarian boosters, who consider the separation of money from government authority to be most of the point of the technology. Earlier today, the central banks of Italy and Korea unveiled a memorandum of understanding to formalize cooperation on their digital currency projects. And it wouldn't be crypto without a good conspiracy theory: True believers in crypto’s anti-establishment ethos view the interest of Blackrock and other institutional investors as something of a Trojan Horse: a way for big financial institutions (and regulators) to wrangle control over unruly blockchain networks. So as governments figure out how to regulate existing networks, cypherpunk activists keep cooking up new crypto technologies to stymie oversight — and the wrestling match continues.
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