On Tech, Business, Society.

Category: Leadership

US Policy on Cryptocurrency Is Lopsided: It is Solely Focused on Mitigating Risks while Suffocating Innovation, Leadership and Growth

It’s a fact. The March 2022 Executive Order on Ensuring Responsible Development of Digital Assets set the wheels in motion.

I was already alarmed by the tone and direction of this EO due to its extreme bias in doing whatever it takes to mitigate risks. Yet, simultaneously, it brushed off the growth, innovation, and leadership potential of the U.S. in this emerging field. 

When that Executive Order came out, I analyzed the frequency of words used, and it was telling. There was an emphasis on Payments/Stability/Risks, and much less importance on Blockchain/Innovation/Crypto.

“Risks” was mentioned 47 times, Payment 30 times, CBDC 34, Cooperate/Coordinate 21, Stability 19. In contrast, Innovation was mentioned 12 times, Stablecoin 6, Cryptocurrency 6, and Blockchain just 4 times.

Sure enough, that edict reverberated across related US government agencies as intended. In the ensuing months, they all focused on identifying, amplifying, and taking enforcement actions towards all risk-related aspects at the expense of promoting innovation and growth of the industry.

Six months later, the White House Released the “First-Ever Comprehensive Framework for Responsible Development of Digital Assets,” bragging about the nine reports that responded to the Executive Order. 

What is wrong with this picture is that while we need to fix the negatives, we shouldn’t denigrate the whole blockchain thing…which is what this ill-conceived direction has accomplished. 

What is misleading about this “comprehensive framework” is that it started with a good setup:

“The digital assets market has grown significantly in recent years. Millions of people globally, including 16% of adult Americans, have purchased digital assets—which reached a market capitalization of $3 trillion globally last November. Digital assets present potential opportunities to reinforce U.S. leadership in the global financial system and remain at the technological frontier.”  

U.S. White HOUSE (Sept 2022)

Then it went downhill with: “But they also pose real risks as evidenced by recent events in crypto markets.” The rest of the report focused on the risks. Little to nothing was said about facilitating the enablement of U.S. leadership…and how it can remain at the “technological frontier”.

Essentially, they paid lip service to innovation, growth, and U.S. leadership.

Last month, the Economic Report of the President dedicated 30 pages to the field of cryptocurrency and blockchain, essentially downright bashing it, and concluding that “Crypto Assets Are Not Bringing Any Benefits.”

Another substantial and equally damaging report was just released this week by the U.S. Department of Treasury, Illicit Finance Risk Assessment of Decentralized Finance basically throwing DeFi under the bus, proposing that DeFi protocols should be regulated similarly to financial institutions, and exaggerating risks. 

We can’t expect anything good or new to change until there is a change of direction from the White House. The current U.S. Administration has already set the tone and guidance about what they think of crypto, and all U.S. government agencies and regulators are marching to that drumbeat. 

Unless a strong Congress can steer us in a different direction, or at the least try to limit the harm that is ongoing, there will be more damaging consequences to the U.S. cryptocurrency and blockchain industry, at least for the next 18 months. 

The Best Leadership Is Having The Right Person At The Right Time

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Choosing the best leadership should not be just a discrete decision that is made without a key reference point. It is a relative choice about having the right person for the particular times.

Unfortunately, we often don’t think of the relationship between choice and situation as being an important skewing factor, because we tend to get uniquely fixated on the person instead.

With the United States election coming to a crescendo, the US voters are making a choice on November 8th 2016. But that choice should not be just about the right candidate. The choice should be about the “right candidate at this particular time”, because when the right leadership is matched with the current needs, then the best outcomes typically emerge. And that can make a big difference.

I’m not taking a public position on the US presidential election, because I am not a US voter, and don’t believe in cross-border political interference, out of principle. But the point of this post is that matching leadership to the current situation applies not just in the context of politics, but also to companies, startups and technology ecosystems.

That said, Obama might have been a better peace-time president than what he has been in the last 8 years during a time when we saw an increase in global conflicts and issues, none of which he was good at solving.

Let’s look at more examples on the business side. Startups typically begin by being led by their founders, but sometimes the founder doesn’t grow their capabilities commensurably with the evolution of their company. In essence, they stop being the right leader for the right time. Twitter is having a crisis of sorts, and one could question if they currently have the right leadership for the situation they are experiencing. If Twitter had the right leadership, rumors of its sale wouldn’t be buzzing, and many of its issues would have started to get resolved. When Jack was chosen over a year ago, I recall he was touted as being the right leader for Twitter at that time. Sadly, the evidence doesn’t validate that, today. Either his time has passed, or he wasn’t the right leader to begin with.

Yahoo’s Marissa Mayer didn’t move the needle much during her reign at Yahoo, so one could argue that maybe she wasn’t the perfect CEO for the stage Yahoo was at.

In contrast, Mark Zuckerberg at Facebook has exhibited a continuous leadership evolution, and clearly, there is no mismatch between Facebook’s needs and what its leadership is doing. Maybe he was aided by Sheryl Sandberg, other coaches and self-help based on self-awareness, but that’s OK.

Ethereum, as an ecosystem has had a good balance between internal and external leadership, resulting in a vibrant flow of innovation and influence over its future. External leadership is distributed and decentralized (as expected), and it manifests itself via an abundant contribution by its ecosystem. Internal leadership by the Ethereum Foundation has allowed it to properly navigate organizational and legal challenges.

Bitcoin’s internal leadership has been (recently) mostly steered by the Blockstream related core developers, but their strong handed (and headed) stances have stifled external software applications innovation, especially when ideas didn’t fit their direction. In sum, the internal vs. external leadership of that ecosystem isn’t as vibrant as it could be, despite the rise in Bitcoin’s currency price.

Leadership is about evolution. If leaders don’t evolve or adjust, the mismatch between their capabilities and their environment’s needs will result in lower performance outcomes; and that’s true in politics and in business. But the tough part is that much of this is more visible in hindsight than in foresight.


Failing Right: Ego and Entrepreneurial Failure

Screen Shot 2013-07-10 at 8.48.58 AMThomas Eisenmann, professor of Business Administration at Harvard Business School teaches the management of ventures and startups. He recently published his famous annual compilation of best blog posts on startups into a book/ebook entitled Managing Startups: Best Blog PostsO’Reilly was generous in their willingness to publish it, while donating all of their profits to Endeavor Global, a global organization that fosters entrepreneurship. So, if you click on that link and buy the book, you would be doing yourself a favor and helping a good cause. His seminal collection has been an inspiration for me, and is a must read for any entrepreneur. Managing Startups BookTom just wrote an excellent article, Head Games: Ego and Entrepreneurial Failure (original link, and reposted here with permission), where he talks about the causes of entrepreneurial failures, whether they are ego-driven or coming from other reasons, and he ends by suggesting how to “fail right”. In the article, Tom draws on recent blog posts from Mark Suster, Paul Graham, Peter Thiel, Steve Blank, Brad Feld, Jerry Colona, etc…and puts it all into a cohesive and practical context. This is a MUST Read, let alone for the extensive links in it.

Partitioned Command: Divide and Conquer

Ben Horowitz penned a convincing, but speculative prognosis on the outcome of Zynga’s recent announcement to install outsider Don Mattrick as CEO. In case you haven’t read it, here’s is the article Shared Command, so you can get the full context of my counter-argument. Don Mattrick and Mark Pincus Basically, Ben gave it the proverbial DOA summation (dead on arrival), on the premise that “Shared Command” doesn’t work, based on his experience and complemented by anecdotal examples. But I am of another opinion on this potential outcome, and I’m basing my assessment on a depth of operational experience,- in my case with small, medium and large companies over the past 31 years. The summary of my viewpoint is: this seems more like Command Partitioning, with a Divide and Conquer approach.

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