Solana's Co-founder on Crypto's Regulatory Crackdown

The current regulatory backdrop for crypto is ... not great.

Sure, the Chair of the Securities and Exchange Commission Gary Gensler has been clear that he doesn't think that Bitcoin is a security. But as for every other cryptocurrency, Gensler has indicated that he thinks many should be regulated as securities — even perhaps Ethereum, following its transition to proof-of-stake.

Could a different consensus mechanism really be the deciding factor in giving one crypto a pass and the other the label of "security?" Solana co-founder Anatoly Yakovenko certainly doesn't believe so.

"If the only difference between proof-of-stake and proof-of-work is a Sybil-resistance mechanism, then there is absolutely no way that that could be the deciding factor, whether something is security or not," Yakovenko said. "That's just, like, absurd to me."

Since a large swath of Solana's team is based in the United States, some have wondered whether they'd make an easier target for federal regulators than cryptocurrencies based elsewhere. Solana has already been the target of a lawsuit claiming that the tokens represent an unregulated security.

Yakovenko, however, doesn't seem fazed by the prospect of the SEC cracking down.

"Fundamentally, I think that publishing open-source code that implements these protocols is a First Amendment right," said Yakovenko. "There's no way that you can stop people from just writing software, and that's really all that Solana Labs does."

And what about Tornado.Cash, an autonomous mixing smart contract that landed one of its developers in jail? Some in the community have claimed they, too, were just writing software. But even Yakovenko agrees that projects promising financial upside begins to wade into uncertain territtory that could become easy targets for financial regulators.

"These are really gnarly problems," said Yakovenko.

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