Crypto Council for Innovation CEO Sheila Warren on how the industry is cracking down on bad actors

For anyone skeptical about crypto hype, Sheila Warren explains why it’s here to stay and what you might be overlooking. As CEO of the Crypto Council for Innovation, Warren takes us inside today’s crypto resurgence, in which one out of five Americans hold crypto in some fashion. Warren shares the story behind Congress’s recent bipartisan crypto bill, and how the industry is cracking down on bad actors and get-rich-quick schemes. Plus, how crypto is part of the underlying tech behind a “new internet.” 

This is an abridged transcript of an interview from Rapid Response, hosted by former editor-in-chief of Fast Company Bob Safian. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with today’s top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode.

Understanding crypto culture

You just got back from the Coindesk Consensus Conference, the annual crypto gathering in Austin. How was it? 

They had a bunch of different members of Congress who came down. They had RFK Jr.—who’s come out as a crypto guy—speaking [and] lots of discussions about former President Trump, about President Biden. It was a more policy- and politics-oriented conference than usual. Crypto has become a little bit more mainstream over the last five years or so. But there’s still a culty element to it, so you see some funny things for sure. 

People often conflate crypto, blockchain, and Web3. Can you explain the differences? 

Blockchain is a technology—an underlying technical architecture. It is essentially a way of creating a decentralized and distributed system for tracking the exchange of value from a place to a place. And crypto is a tool. Usually when you refer to crypto, you’re talking about a token that is a marker of a thing. And with a blockchain, you can track the movement of the crypto marker from place to place. Web3 is an ecosystem built on top of a blockchain. If you think about Web2 as kind of like we’re all using apps and giving our data away all the time, et cetera—kind of the traditional web experience. Web3 is a different experience—user-owned information, user-controlled/owned data, user-controlled/owned money, whatever it is. We’re transitioning into a Web3 world.

The crypto industry bounces back

A couple of years ago, crypto was in the midst of a crash—prices were down, FTX was dominating headlines. This year, it feels like all of that has shifted. Why is that?

I didn’t find the mood at Consensus to be as euphoric as people on the outside of the industry might imagine. I think that’s because so many of us have been through these cycles before, so enthusiasm is a bit more tempered than in the past. There’s been some maturity, I think. 

But I think it’s different because we’re finally seeing some movement in the United States in terms of understanding that this technology is not going anywhere. It’s very sticky. It’s around, so everyone has to figure out what they’re gonna do about it, or with it. And there is a desire to make the United States competitive when it comes to the innovators and builders in this space, whereas two years ago, particularly in the wake of the FTX scandal, the United States pushed the technology offshore as much as possible. And that was very demoralizing for people. FTX didn’t represent an entire industry. I think we’ve now fully exited the FTX era—Sam [Bankman-Fried] is in jail, Ryan [Salame] is apparently going to jail. So consequences were issued and the industry has grown so much. 

Inside the bipartisan crypto bill

Just before Consensus, the U.S. House passed a bipartisan bill about the regulatory environment around crypto. I know you worked on this bill. Can you explain how it came to be? 

So this bill really tries to lay out a path forward, not necessarily to settle the question of whether any individual token is a security or commodity, but to say, here are the options. And it gives the CFTC [Commodity Futures Trading Commission] a clear role in the regulation of digital assets. There’s a lot of other stuff in there. It’s been in the making for two years. And in fact, the original version of this bill was set to move through when the whole FTX thing blew up. So it didn’t really go forward until now. There’s a lot more to do before this becomes law but I can’t overstate how much of an accomplishment it is to see bipartisan alignment. It demonstrates tremendous progress. 

The industry was getting very fatigued by the Democratic Party and Senator [Elizabeth] Warren pretty overtly starting her anti-crypto army. There’s no party platform on this. There are individual actors that have strong views. Most folks don’t have any view on this technology. They don’t even know what it is. They’re on the judiciary committee, worrying about getting judges nominated. They’re not thinking about crypto currency. They don’t care. So you don’t know until the moment of a vote how it’ll turn out.  

Legislators aren’t technologists. If they have trouble understanding what social media is, blockchain and crypto is much more complicated.

Yeah. A lot of folks in the Senate, it was their kids who were saying, “Hey Mom, this stuff is really interesting. I’m mining Bitcoin in the basement, FYI.” They came from that kind of personal connection, like, “Well, if my kid is doing this, I probably should pay attention to it as a parent, but also my kid is not an idiot. So . . . there must be something there, you know?” 

In a recent op-ed, you identified yourself as a Democrat and then kind of exhorted the party to not let itself be defined as anti-crypto. Why did you write this? 

The loudest voices in the Democratic Party are very overtly anti-crypto. The reality is that the more the Republicans become vociferously in favor of this technology, the more you look out of touch, or you look like you’re hostile to something that is actually like a movement that is growing; 20% of Americans across all demographics hold crypto—not a lot of crypto, but a little bit of crypto. One in five. Pretty wild, right? So it really comes down to, do you want to be a party that wrestles with this thing, because it’s not going away. And it actually is beneficial to your constituents who are engaging with it, whether you know it or not. 

Crypto myth-busting 

What do people most misunderstand about crypto? For a lot of people, they just think of it as like, what’s the price of Bitcoin? But what should they be paying attention to? 

The investment side is not what I focus on—the ticker on all of these finance shows is very distracting. I know some people are just looking to make money but I’m in this for very different reasons. We are talking about restructuring the architecture of the entire internet. Right now, someone has access to our data. We have no ability to influence any of that. Our information goes into this void. We don’t know where it goes—all those things we take for granted as being the cost of being online. It does not have to be that way. 

There is a different way of creating a much more user-centric internet that is focused more on the individual. And for me, again, the big play is data. I’ve been waiting for this conversation for almost 10 years: How are we storing data? Who gets to monetize someone else’s likeness or information? The Scarlett Johansson/OpenAI thing is wild. 

All of these questions have a predicate assumption that there is an intermediary that is navigating and creating rules of the road. That does not have to be the case. And to do that, you need crypto. You need a token that is tracking the movement of a unit from place to place, a unit of authenticity from place to place to place. 

There is always going to be a role for crypto, for blockchain technology. As time goes on, you’ll be using blockchains every single day without realizing it, and many of you probably already are. It’s something to take seriously and not to be afraid of. It’s not just something relegated to some randos on the internet, or sophisticated investors who are tracking the price of tokens every day. It’s more relevant to everyday people than most understand. 

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