“I like to call myself a future or aspiring cult leader,” Meltem Demirors, chief strategy officer at CoinShares, a public equity firm with about $5 billion in assets, told Cryptooshala.
Demirors, who first entered the Bitcoin (BTC) space in late 2012, further mentioned that it was “fun to see how big the crypto sector has become”, noting that people from all walks of life are now interested in the cryptocurrency space. Thus, Demirors explained that “cryptocults” bring people together in a positive way, especially because they give people a sense of purpose and belonging.
When it comes to regulation — one of the most important topics facing the crypto industry today — Demirors expressed skepticism. “After working in this industry professionally for eight years, I am tired of talking about the rules, especially in the United States,” she said. As U.S. regulators continue to spread digital asset guidelines, Demirors noted that there has been “too much talk and not enough convincing action.” Moreover, Demirors noted that a number of cryptocurrency bills are trying to minimize consumer use of encryption, which she believes is the backbone of the Internet.
Demirors elaborated on this topic as well as the development of Decentralized Autonomous Organizations (DAOs) during an interview with Cryptooshala at Consensus 2022.
Cryptooshala: What do you think of the recent regulatory framework in the United States?
Meltem Demirors: I do think that the Lummis-Gillibrand bill and the Token Taxonomy Act of 2021 were good attempts to categorize and classify digital assets. But the problem I have with a lot of cryptocurrency laws and regulations is that they all focus on financial services and taxation. They focus on where and how we manage, tax and benefit the government. So the biggest issues I care about are consumer privacy, sovereignty and free speech, which are not addressed in these bills.
Unlike many bills that focus solely on financial services, the industry should focus on crypto infrastructures like data centers, communications, computing, semiconductors, and the actual plumbing that powers any technology. We also need to make sure that the US is a favorable jurisdiction to develop not only software, but also hardware that can be deployed on a large scale. Today we do not see any cohesive action on this issue. The industry is seeing a phased approach, with New York State taking a very draconian approach, while states like Texas and Wyoming want to be the home of crypto mining.
In addition, the right to consumer and financial privacy is also not considered. In fact, most of these bills require increased financial oversight. It is important for us as an industry to continue to resist this, especially in a world where central bank digital currencies (CBDCs) are being explored.
CT: Any suggestions on what the crypto industry can do to maintain privacy and financial freedom?
M.D.: I think the biggest move we’ve seen has been the crypto wars – and I’m talking about crypto. In the early 90s, there was a massive debate about encryption and the use of encryption for various consumer-facing applications. Encryption is indeed the backbone of the Internet and we are now seeing a number of bills trying to minimize consumer use of encryption and create back doors.
However, once encryption loopholes are created, they will be used not only to spy on consumers, but also against our government. Now it’s a matter of national security. So I think the encryption war is still alive and well. I also think that we as an industry can do more to preserve and promote encryption instead of using taxpayer money to run trials that try to break encryption algorithms like SHA-256 which is the backbone of Bitcoin.
I also think that code and speech preservation is important. For example, open source makes up the majority of the crypto community, along with anonymous developers. Unfortunately, there are a number of attempts to bring open source developers to criminal liability for using their software, which runs counter to the entire open source movement.
In addition, we need to consider attitudes towards virtual asset service providers or VASPs. For example, if someone is running a node, or if two people are doing peer-to-peer transactions on a public blockchain protocol, classifying them as VASPs and forcing them to comply with the rules is a concern. There is now a bill that forces people to give out their social security numbers to anyone who sends more than $10,000 worth of cryptocurrencies. This is ridiculous and we don’t have the same rule for cash. All of these privacy-related factors make it easier for the government to crack down on people working in the crypto space, which is why it’s important that the industry fights back.
CT: You mentioned DAO during your Consensus talk, could you share your thoughts on this please?
MD: Yes, DAOs were interesting because a lot of what I do at CoinShares is focused on strategy, which means investing, but also what is happening in the crypto industry and how it relates to the investment world. So, I’m experimenting with things happening in cryptocurrencies. For example, I recently joined several DAOs. I joined the Friends with Benefits program last year and it was my first experience with DAO. I also started two DAOs with friends. One Hashes DAO, which is a DAO focused on collecting art. The second is a DAO called DAO Jones, it’s a fun game but it’s an investment DAO that uses Syndicate, a platform that allows users to create investment clubs like DAOs that fit into the legal framework.
I learned a lot about the DAO tools, infrastructure and exciting features associated with DAO, as well as their inherent limitations. However, the most important thing I’ve learned is that all communities need leadership. In particular, communities need strong principled leadership to uphold and reinforce the values of the community and to move the community forward. We have seen many communities in crypto start with strong leaders, but then those leaders leave and problems arise that split the community. We have seen this with bitcoin – we have seen a power struggle five years after Satoshi left the bitcoin community.
Overall, I think the DAO is an exciting area to experiment with, but from an investment standpoint, I think the DAO is still very early. A lot of people are building DAO tools right now without understanding what emerging behavior we need to focus on. Governance is not a problem of technology or cryptography, but rather a human problem that has existed since the early days of civilization. While I’m excited about the future of the DAO, I think there’s still a lot of work to be done before DAOs can be scaled and implemented in ways that enable effective governance.
CT: What are you most excited about in terms of the development of the crypto space?
MD: I’m really excited about community owned infrastructure or physical infrastructure. Today, crypto is so dependent on centralized service providers like AWS that are used for utilities. But there are a number of efforts currently underway to build peer-to-peer networks that will allow us to do computing, improve telecommunications, improve broadband, and decentralize and make the grid more resilient. I am excited about the opportunity to use cryptography and combine it in new ways with energy calculations and connectivity. It will also make our global systems more resilient, which is usually associated with decentralization.
I’m also excited about the additional developer tools and infrastructure. Right now, the area of cryptography is so large that it was difficult for people to enter the space to build. Standardization, modulation and convergence around the core consensus algorithms are really important. Experimenting was fun, but now we’ll find out what works and what doesn’t. Also, I am inspired by the thoughts of decentralized identities and verifiable credentials, and the use of bitcoin as a communication protocol.
Credit : cointelegraph.com