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Key Takeaways
- While the technology is clever, Web3’s culture of crime-funding rails, rule dodging and reckless leverage has eroded public trust.
- Founders and institutions must reject the idea that compliance is optional and transparency is negotiable.
- Institutions must also ensure people understand what’s going on — plain language summaries that clearly outline what can go wrong, how you make money, how users lose money and who gets paid first in a crisis.
Let’s be blunt: The crypto industry didn’t just “enable innovation.” It also built the fastest payment rails criminals have ever used, normalized jurisdiction‑hopping to dodge basic rules and got high on leverage like it was oxygen.
Prices are up, institutions are circling, and regulators are finally moving — but if we don’t confront the rot, this bull run will just fund the next blow‑up.
Stop gaslighting the public
Yes, the technology is clever. Yes, there are real experiments worth protecting. But the ledger doesn’t lie: Web3 has repeatedly been the easiest on‑ramp for romance scams and “pig‑butchering,” for laundering hack proceeds and for wash‑trading dressed up as “community growth.” FTX was not a “one‑off bad apple;” it was the most visible outcome of a culture comfortable with opacity, conflicts and offshore theater.
Meanwhile, the public isn’t buying the hype. Roughly 63% of U.S. adults still say using crypto isn’t reliable or safe. Sixty-four percent call investing in it “gambling,” and about half refuse to invest because they’re worried about getting scammed. That’s not a minor brand problem; that’s a mainstream indictment. If your industry can’t convince the median consumer that the product isn’t a rigged casino, adoption will stall — and politicians will run from you.
The industry’s favorite fantasy: Rules don’t apply here
For a decade, too many founders played regulatory arbitrage: Form a “DAO,” control the keys in a group chat and pretend you’re software, not finance. Spin up a token that quacks like equity but call it “utility.” List it on an exchange that lists everything. When asked about compliance, wave at decentralization and privacy.
Here’s the hard take: If your business model dies the moment you implement basic KYC/AML, you didn’t build a business — you built a laundromat. If you custody customer assets, you’re a financial institution. If you make markets, you’re in market structure. If you solicit deposits for yield, you’re in shadow banking. Choose your license and live with it — or accept that regulators will choose for you.
Leverage: The unpriced externality
Crypto’s growth hack was leverage — overt (perpetuals at 50-100x) and hidden (rehypothecated collateral, cross‑margin contagion and “points” incentives that nudge retail into risk they don’t understand). The result: reflexive bubbles on the way up, forced liquidations on the way down and a constant drain of retail trust. Call it what it is: systemic risk exported to your users under the banner of “financial freedom.”
“A few bad actors” isn’t a strategy
The industry loves to say the criminals are a rounding error. Maybe in percentage terms. In brand terms, they’re the whole story. If you want governments, institutions and everyday customers to treat Web3 like serious infrastructure, act like a serious industry. That starts with rejecting the idea that compliance is optional and transparency is negotiable.
What good actors must do
So, in a market where there’s a bad reputation, what can good actors do to stop being tarnished with the same brush? Fundamentally, it’s about not having an excuse when it comes to how the system operates. KYC/AML processes should be a product requirement, not a grudging checkbox, while institutions need to apply real governance, not midnight pushes approved by the same people who profit.
In combination with treating governance seriously, institutions need to ensure people understand what’s going on. That means one page, plain language summaries that clearly outline what can go wrong, how you make money, how users lose money and who gets paid first in a crisis. This, combined with the industry self-policing that no longer soft‑gloves serial offenders, will ensure the market finally takes accountability.
Related: Web3 Is Here to Stay — But Here are 2 Key Elements Holding It Back
The upside of growing up
I’m not anti‑crypto. I’m anti‑excuse. The same traits that made this space explosively creative — composability, global access, permissionless innovation — can power real, durable businesses. But durable businesses require adult supervision: capital discipline, compliance and governance.
Institutional engagement and price recovery don’t absolve the past or sanitize the present. They raise the bar. If Web3 wants a future beyond hype cycles, it has to confront the inconvenient truth: We built amazing technology and, too often, weaponized it against the public’s trust. The fix isn’t a think piece; it’s execution.
The market is giving crypto another shot. Let’s earn it — by making crime harder, regulation a given and leverage a controlled tool, not the business model.
Key Takeaways
- While the technology is clever, Web3’s culture of crime-funding rails, rule dodging and reckless leverage has eroded public trust.
- Founders and institutions must reject the idea that compliance is optional and transparency is negotiable.
- Institutions must also ensure people understand what’s going on — plain language summaries that clearly outline what can go wrong, how you make money, how users lose money and who gets paid first in a crisis.
Let’s be blunt: The crypto industry didn’t just “enable innovation.” It also built the fastest payment rails criminals have ever used, normalized jurisdiction‑hopping to dodge basic rules and got high on leverage like it was oxygen.
Prices are up, institutions are circling, and regulators are finally moving — but if we don’t confront the rot, this bull run will just fund the next blow‑up.
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