“In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”
― Friedrich Nietzsche
People like to joke that cryptocurrency is just right-libertarians speedrunning financial legislation history but the reality is more that a lot of the tools that governments use to make finance "safe" don't have well established parallels that work on a decentralised platform. A lot of that "speedrunning" is the people who are actually building things trying to figure out how to still have reasonable safety and stability without relying on a single government or power to enforce policy.
Things like privacy preserving transactions/communication and decentralised consensus are useful and valuable features but it's taken years for game theorists and cryptographers to work out schemes that are even close to being sustainable at scale without compromising on priorities. Doubly so to build those tools for stability that are essential for a well functioning society such as the capacity for KYC, tax, and regulatory compliance without compromising on the above priorities.
So in a sense that argument that "this is good because it shakes out the bad actors before they can do too much more damage" is accurate but not in the sense that it allows the "good guys" to continue in their glorious libertarian fantasy. Rather it's a good thing because it minimizes the potential damage that can be done until researchers and engineers can develop the technology to a degree that the average person could actually use it.
It's a race against a regulatory clock and when it strikes midnight, unless there is a working example of a "good" and "safe" cryptocurrency, regulators will absolutely go for the throat. Unless the tech is sufficiently mature, they will divide the space into one that is illegal & only used by criminals and another which throws any semblance of decentralisation or privacy preservation out the window. This take is unfortunately fairly US- and Euro-centric but the reality is that those two sets of governments and regulatory bodies will be the ones to decide what form digital currency/digital assets take going forward.
That said, I think this is as insightful a summation of the situation I see in crypto as I've read recently.
It's a race against a regulatory clock and when it strikes midnight...
I may steal this gem. :-)
The whole point of defi is to build systems where nobody can do what FTX did. Uniswap for example doesn't even have admin functions. Nobody can move your funds on Uniswap besides you.