Scenario 2: Crypto Kumbaya

In this scenario, the Federal Reserve recognizes Bitcoin and Ethereum as fast-growing digital Commodities; Congress crafts legislation to establish the United States as the global capital of Web 3.0.

Characterizing the early days of Silicon Valley was an anti-government, libertarian-loving ethos. Early innovators like Bill Gates looked down on federal agencies, believing tech—not government—was best suited to solve society’s greatest problems. That is, until those three-letter agencies came knocking on Gates’ door, deposing him in a multibillion-dollar antitrust case that garnered global attention in the late 1990s.

Today, Microsoft has a much different attitude toward the state. The company counts the federal government among its largest clients and has an army of lobbyists in Washington to boot. Microsoft is emblematic of the cultural transformation that has taken place within countless Silicon Valley companies over the last two decades as the government has sought to tame tech. For example, companies like Facebook—which once flaunted its anti-establishment bravado with the motto “move fast and break things”—now moves slowly and works with the government on a daily basis. In the end, the suits in Washington brought the hoodie-clad millennials to heel.

Could the government do the same with crypto and blockchain companies? This is the question that drives the Crypto Kumbaya scenario.

In Crypto Kumbaya, regulation waters down the original libertarian vision of many crypto organizations and early investors. But in exchange, the industry gets the stamp of government approval and no longer needs to operate in legal grey zones. In short, industry and government embark on a years-long courtship.

There is give and take on both ends of this relationship. The industry, for its part, recognizes the utility of regulation in eliminating the widescale fraud that has plagued the space almost from its inception. Some blockchain companies even partner with the government to crack down on money laundering and other illicit uses of cryptocurrency. Overall, the industry’s evolving attitudes toward the state mirror the attitudes of high-growth Silicon Valley companies in the 1990s and 2000s: initial hostility followed by reflexive resistance followed by gradual acceptance.

The government, for its part, recognizes the economic benefits (and substantial tax revenue) to be gleaned from the blockchain revolution. And so, it takes a light-hand approach to regulation, looking to the legislative frameworks that boosted tech in the 1990s as a model for regulating an emerging industry. By so doing, the United States establishes itself as the global capital of Web 3.0, ensuring its dominance over global tech in the twenty-first century.

This scenario would be driven by five factors:

Investors’ Need for Regulatory Clarity. From their inception, Bitcoin and the cryptocurrencies that followed have staked their identity in an anti-establishment narrative. The purpose of protocols like Bitcoin is, after all, to displace the government’s most powerful tool: fiat currency. But some Bitcoiners have softened their stance in recent years with the realization that institutional adoption is necessary to bring Satoshi Nakamoto’s vision of widescale adoption to life. And to its credit, the U.S. federal government has opted not to ban Bitcoin outright but to weigh its potential benefits within the larger global economy.

To the surprise of both parties, industry and government appear to be meeting in the middle on blockchain regulation. In a congressional hearing in December 2021, the nation’s leading crypto CEOs even testified before lawmakers on the need for regulation to provide greater clarity to the industry. These same companies have also appealed to the SEC and CFTC to determine if Bitcoin and other cryptos are commodities or securities. Coinbase has even asked that the SEC create a new “digital asset security” classification to “allow for a more efficient and effective allocation of capital in financial markets and create new opportunities for investors.”

Imminent Classification of Bitcoin as a Commodity. While blockchain investors are still waiting for the regulatory clarity they have been clamoring for, all signs point to Bitcoin and possibly even Ethereum being regulated as commodities with greater regulatory guidance to come over the next few years. SEC Chair Gary Gensler even signaled his personal belief that Bitcoin is a commodity and should be regulated as such.

Regulatory Capture Deepens. Crypto companies have also done what some early Silicon Valley companies failed to do in their early years by mounting a strong lobbying effort to secure favorable legislation. Consider that crypto lobbying has more than quadrupled since 2018. And the results speak for themselves, having won over vocal champions of blockchain such as Senators Debbie Stabenow, Cynthia Lummis, John Thune, John Boozman, and Cory Booker. Blockchain companies have also developed close personal relationships with key officials in the SEC and CFTC, increasing the likelihood of blockchain-friendly legislation and regulation over the coming years.

Increasing Institutional and Mainstream Adoption. Once the fringe investment of internet hobbyists and cypherpunks, crypto has now found its way into the American mainstream. An NBC poll recently found that one in five Americans has invested in or used crypto. Moreover, major hedge funds, banks, and even publicly held companies have done the same: Tesla, Microstrategy, Blackrock, and Goldman Sachs are just a few examples among many. Privately wealthy individuals are also dipping their feet in the crypto markets. And Fidelity rolled out a crypto investment option last year as more investors consider allocating a small portion of their 401k to Bitcoin. With dozens of businesses and tens of millions of Americans invested in crypto, the government is much more likely to accept rather than ban it.

Need to Maintain America’s Global Economic Competitiveness. The United States today is the tech capital of the world. To secure that status in the coming decade, it has an economic incentive to establish itself as the global capital of Web 3.0. Web 3.0 describes the third generation of the World Wide Web—an internet that returns power to users through “decentralization, token-based economies and blockchain.”

China is arguably the United States’ closest tech competitor, but the United States has a natural leg up in the race for blockchain supremacy since China banned crypto in 2021. To pull further ahead of China in this sector, American regulators could craft blockchain-friendly policies to entice innovators to do business on U.S. shores. There is also already a deep well of tech talent in the United States that stands ready to transition from Web 2.0 to Web 3.0 jobs, further securing America’s status as the global hub for blockchain enterprise.

Relative Certainties	Relative Uncertainties
The SEC, CFTC, and Congress will provide regulatory clarity to the blockchain industry in the next two to three years, if not sooner.	Exactly how the federal government will regulate crypto. Will the power to regulate ultimately fall to the CFTC or the SEC? And if Bitcoin is classified as a commodity, what does that make other cryptocurrencies?
Mainstream adoption of crypto continues apace, especially among younger generations, which are more inclined to buy Bitcoin than gold.	Whether Bitcoin will achieve parity with gold’s market cap and whether its volatility will decrease as global adoption increases.
The continued growth of Web 3.0 businesses and technologies and the U.S. government sees an opportunity to increase its tax revenue by aiding in that growth through friendly regulation.	The extent to which Web 2.0 companies will adapt to a more decentralized internet or seek to stifle Web 3.0 innovation through public policy campaigns against it.

The above drivers lead to our Crypto Kumbaya scenario—a laying down of arms by entrepreneurs and regulators alike to advance the interests of both parties involved. In short, industry and government opt to make love, not war.

In 2030, Bitcoin and other well-established cryptos make up a small portion of millions of Americans’ retirement plans. Some (like Bitcoin) are seen as a form of digital gold while others (like Ethereum) are seen as a form of digital oil, powering payments and authentication on the third generation of the internet known as Web 3.0. The United States has now established itself among the most crypto-friendly nations in the world.

So how did we get here?

The crypto economy made a powerful recovery after the Bitcoin halving of 2024 precipitated a new bull cycle. And in the year 2025, regulators looked at the investment landscape and recognized that crypto (similar to certain entities during the 2008 financial crisis) was simply “too big to fail.” Tens of millions of Americans—not to mention a growing number of banks, companies, and hedge funds—were already invested in digital assets. Therefore, banning them or issuing harsh regulations against them made little financial sense. Not wanting to draw the ire of their constituents, members of Congress lined up in bipartisan fashion behind legislation that finally offered regulatory guidance to the industry, classifying Bitcoin and Ethereum as commodities and other crypto tokens as “digital securities.”

Thanks to this regulatory clarity, the number of crypto investors grew exponentially just as it had in the decade prior. With clear regulation in place, major banks and corporations became more comfortable entering the space, thereby increasing institutional adoption. Following the US’ lead, other countries increased their adoption of crypto as well. Soon, Bitcoin became globally recognized as a digital commodity, with trillions of dollars in trading volume every day. Similar to gold, nation-states began seeking to stake a claim in this newly established asset class, sparking global competition to attract Bitcoin miners. The United States was an especially attractive destination, not only for miners but for blockchain entrepreneurs of all stripes.