es mainstream as more companies embrace digital currency
Sarah Brennan, a seasoned US corporate and securities lawyer, serves as the General Counsel for Delphi Ventures, a venture capital firm focused on Web3 investments. With 14 years of experience in corporate securities law, she has been actively involved in the digital assets space since 2017. Brennan is also a co-founder of the LeXpunK project, which advocates for decentralized communities from a legal perspective.
In an exclusive interview with crypto.news, Brennan discussed her views on crypto super PACs, failed regulations, and the risks of replicating the traditional financial system within the crypto industry.
## Table of Contents
1. Major Institutions as a “Double-Edged Sword”
2. “Monopolists like We Have Never Seen”: Centralized Crypto Explained
3. A Failed Legacy: Where SEC Regulation Hasn’t Worked
4. Radical Advocacy: How Crypto Lawyers Are Fighting Back
### Major Institutions as a “Double-Edged Sword”
Crypto companies like Ripple and Circle have collectively raised over $100 million for congressional campaigns in the past year, forming a crypto super-PAC in response to stringent regulations from the SEC and the Biden administration, such as the controversial SAB 121 crypto bill that Biden recently upheld.
“I personally think SAB 121 reflects the Biden administration’s attempts to isolate us from the broader financial system,” Brennan tells crypto.news. “While they seek our votes, they avoid accountability on policy.”
Though Brennan supports younger, digitally savvy political candidates, she is wary of the lobbying efforts by major players in the crypto industry.
“We need innovative regulatory approaches that acknowledge the paradigm shifts in crypto,” she says. “Large centralized institutions dominating the crypto narrative pose the risk of replicating traditional financial market structures,” which she finds contradictory to the ethos of the crypto space.
“Our current regulatory framework is built on layers of intermediaries, all licensed gatekeepers, all rent-seeking. It’s a helluva drug, right?”
### “Monopolists like We Have Never Seen”: Centralized Crypto Explained
Brennan elaborates on the dangers of power consolidation among a few major crypto players.
“Without legislative or regulatory counterbalances, we risk creating a dystopia where large centralized actors become monopolists like we’ve never seen,” says Brennan.
“They could vertically integrate and control everything from infrastructure—L1s, nodes, wallet apps/custody solutions, miners, validators, governance token supply monopolies—to traditional businesses like trading platforms, market-making arms, proprietary VC firms, and dev shops.”
She warns that even without centralizing regulations, the concentration of ownership by dominant institutions could destroy the crypto industry.
“People often forget that crypto (Bitcoin) emerged in response to the 2008/09 financial crisis, as a counter to ‘too big to fail’ monopolists and the failures of the traditional financial system.”
### A Failed Legacy: Where SEC Regulation Hasn’t Worked
Brennan believes large institutions in crypto should be regulated, but the challenges mirror those in traditional finance.
“Regulating large centralized crypto actors, especially those with inherent conflicts of interest posing systemic risks, makes sense,” says Brennan. “If you’re decentralized in name only (DINO), you should be treated like any traditional actor under the law.”
She criticizes the lack of regulatory clarity to date, which she believes encourages bad business practices, largely blaming SEC Chair Gary Gensler.
“Gensler’s legacy, if you can call it that, involves targeting good actors and discouraging positive practices in the space,” Brennan asserts. “Compliance often conflicts with business goals.”
“The damage he caused stems from the lack of a policy framework that offers a path for compliance.”
### Radical Advocacy: How Crypto Lawyers Are Fighting Back
As a co-founder of LeXpunK, Brennan is part of a group that brings together lawyers, crypto industry professionals, developers, and investors to create new legal frameworks for regulators.
In 2022, Brennan and her co-authors drafted an SEC framework to allow token projects to legally issue crypto tokens. This framework aims to support token creation without violating securities laws or endangering end-users, even for projects not qualifying for the SEC’s “safe harbor.”
The proposal was discussed in a congressional committee on Fintech in 2023. While drafting improved proposals sounds like a solution, the initiative has yet to gain significant traction.
Brennan advocates for crypto regulation that focuses on pre-emptive antitrust enforcement to prevent institutions from becoming ‘too big to fail.’
She believes that preventing monopolies, supporting decentralization, and targeting criminals rather than the technologies they use could reverse recent damages and foster a safe, thriving digital assets economy. However, getting regulators to heed experts from the crypto space remains a challenge.
Currently, Brennan is working on a new advocacy initiative to continue her support for decentralized communities.
You might also like:
– Biden vetoes bill aiming to ‘undercut’ SEC crypto authority
– New stablecoins law proposed in the US — but what are the pros and cons?
