Among some crypto journalists, there is a sense the ongoing criminal trial of disgraced FTX founder Sam Bankman-Fried may be the last great crypto trial. FTX’s implosion, and the subsequent market contagion and negative feedback loop of media coverage it kick started, has done the blockchain industry irreparable damage. The size of the estimated losses to FTX investors and users would, if convicted, place Bankman-Fried among the largest financial frauds in history. And, as many said, for better or worse, crypto is on the stand alongside him.

This op-ed is part of CoinDesk's State of Crypto Week sponsored by Chainalysis.

Still, for many crypto policy experts, the worst effects of FTX may already be behind this mercurial industry. According to two industry lobbyists based in Washington D.C. who could not go on the record, November and December of last year were likely the darkest months crypto will see, in terms of a backsliding political landscape. “For lawmakers who didn’t have an opinion or hadn’t made up their minds on crypto, FTX forced them to have an opinion,” one lobbyist told CoinDesk. The outlook wasn’t good.

These were the months when what some now refer to as “Operation Choke Point 2.0” came into focus. President Biden’s earlier commitment to taking a “whole of government” approach to managing crypto began to mean siccing the full force of the U.S. regulatory apparatus against this nascent technology. Within the span of weeks, the Federal Reserve, Treasury Department and the nation’s foremost finance and banking overseers seemingly did what they could to stifle the industry in the immediate aftermath of FTX’s collapse.

Bank accounts were closed. Working agreements were scuttled. And major lawsuits were filed. Two of the most important crypto companies, Binance and Coinbase, were accused of illicitly offering securities. U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler spoke before Congress as the legislative body ramped up efforts to pass crypto-appropriate rules it has spent years putting off, advocating for a licensing system that crypto critics and proponents agree would be unworkable.

While the U.S. government has floundered on creating clear rules of the road for crypto, jurisdictions across the globe have passed comprehensive policy reforms. MiCA, the most considerate guidance yet, coming in at over 150 pages, was ratified by the European Union, while Hong Kong and the United Emirates have passed legislation intended to make them into regional crypto powerhouses (while keeping consumers safe). An emerging realization among some U.S. political players is if the U.S. continues to fumble on regulating crypto, the already-global industry can innovate elsewhere.

CoinDesk’s “State of Crypto” Week will take on many of these live debates and legal arguments, to get down to the bottom of what type of reforms does crypto need. Do new rules need to be written, or do the century-old financial guidance in the U.S. just need updating? How can industry participants help lawmakers decide what crypto’s “market structure” should look like, and which organizations should oversee it. Where are self-regulatory organizations operable and where does the burden of preventing money laundering fall? Stablecoins, perhaps crypto's most successful singular innovation, need rules and oversight. Can AI help?

All of this is background to the question of where crypto goes from here, now that the ring appears to be closing in on so-called “industry villains,” including SBF. People, like LUNA’s Do Kwon and 3AC’s Su Zhu, who built (and lost?) fortunes reinserting middlemen and backroom agreements into a technology that could create a radically different way of doing business lost for all the reasons crypto could one day win. Thankfully, crypto’s remaining builders and founders have realized the idea that “code is law” isn’t enough on its own to keep out or punish bad actors, and that the government still has a purpose yet.

These are exactly the type of questions and live debates that CoinDesk’s “State of Crypto” will consider, as the world watches SBF’s unfolding legal drama. While FTX has shown that one person, or a polycule of people, can wreck a lot of havoc, building back needs to be a collaborative effort between crypto founders, policymakers and users. It’s not clear whether U.S. regulation could have prevented FTX, though worth noting some jurisdictions around the world appear to have been harmed less.

It’s unlikely fraud will ever be totally eliminated out of crypto. Such a goal would never be set for any other industry. As with anything where people are still a fundamental part of operating a technology, things can go wrong. The goal, instead, is how to better prevent people like SBF from taking as much control as he did.