The cryptocurrency landscape continues to evolve at breakneck speed, shaped by technological innovation, shifting regulatory stances, and growing institutional interest. In a recent Bloomberg feature titled Ideals vs. Pragmatism: The Future of Crypto, Sam Bankman-Fried (SBF), founder of FTX, shared deep insights into the forces shaping the next phase of digital assets.
This discussion comes at a pivotal moment — following a volatile Q2 and a surge of mainstream attention in Q1. As investors grapple with market fluctuations and global regulators step in, SBF’s perspective offers clarity on crypto price volatility, regulatory trends, ESG and sustainability, Bitcoin’s future role, and institutional adoption.
High Volatility: A Sign of Market Evolution
One of the most persistent criticisms of cryptocurrencies like Bitcoin is their price volatility. Major financial institutions have cited this as a barrier to adoption. For example, PayPal’s CFO stated earlier this year that due to volatility, the company won’t be adding crypto to its balance sheet. Similarly, Goldman Sachs recently concluded that Bitcoin’s volatility disqualifies it as a reliable long-term store of value or investable asset class.
SBF offers a different interpretation: high volatility is not a flaw — it's a feature of emerging markets. He explains that asset pricing depends on market consensus, and for new asset classes like crypto, that consensus is still forming.
“As long as there's no clear agreement on what crypto is worth or how it should be valued, price swings are inevitable.”
Yet this doesn’t mean progress isn't happening. In Q1, prices surged amid growing institutional interest. While many traditional finance players are still figuring out how to engage, SBF notes that nearly all major institutions he’s spoken with want some form of involvement — whether through trading, custody, or product development.
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For users seeking stability in transactions, stablecoins offer a practical solution. But for those treating crypto as a value storage vehicle — akin to gold — expecting low volatility contradicts the principles of efficient markets.
Where Crypto Adds Real Value: Payments and Smart Contracts
Beyond speculation, SBF highlights two areas where blockchain technology delivers tangible utility: cross-border payments and smart contract applications.
Revolutionizing Global Payments
Traditional international wire transfers are slow, expensive, and often inaccessible. As SBF points out:
“Electronic transfers seem easy until you cross borders. Then it takes days, costs hundreds in fees, and sometimes isn’t even possible without visiting a bank.”
Enter crypto-based payment systems. PayPal launched crypto checkout in Q1, enabling its 29 million merchants to accept digital assets. Visa followed by integrating Bitcoin into its network, while Mastercard is exploring CBDCs but also partnering with Gemini on crypto cards.
Meanwhile, exchanges are building their own payment rails:
- Binance Pay (beta) supports over 30 cryptocurrencies.
- FTX Pay allows merchants to embed one-click crypto payments directly into websites.
These tools aim to make crypto not just tradable, but usable — transforming it from speculative asset to functional currency.
The Rise of Smart Contracts and DeFi
Despite market downturns, decentralized finance (DeFi) has shown surprising resilience. After May’s price crash:
- AAVE’s token dropped 60%, yet its Total Value Locked (TVL) hit an all-time high.
- Yearn Finance’s YFI fell 50%, but yields increased fourfold quarter-over-quarter.
- DEX trading volume reached record highs in May.
This suggests that infrastructure usage remains strong, even when prices fall. Developers and users continue building and transacting — indicating long-term belief in the ecosystem.
SBF sees smart contracts as foundational to this shift — enabling automated execution, instant settlement, and trustless arbitration. DeFi may start as a "supplement" to traditional finance, but its potential goes far beyond.
Global Regulatory Clarity: A Necessary Step
Regulation has become a dominant theme in 2025, especially following China’s aggressive stance. Authorities in Inner Mongolia, Sichuan, and other regions banned mining operations and added miners to social credit blacklists. Banks were also directed to cut off services related to crypto.
However, SBF emphasizes that the crackdown isn't about crypto itself, but rather two specific risks:
- Leveraged crypto derivatives trading
- Energy-intensive mining activities
These actions align with broader monetary tightening policies aimed at curbing speculative investment fueled by loose liquidity.
Globally, governments are now defining their positions. Some embrace innovation; others impose restrictions. For exchanges like FTX — with less than 10% revenue from any single region — this diversification provides resilience. But for regionally concentrated platforms, regulatory shifts can be disruptive.
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The takeaway? Regulatory clarity, while sometimes painful in the short term, is essential for long-term legitimacy and growth.
Building a Sustainable Crypto Industry
Environmental concerns have cast a shadow over proof-of-work (PoW) blockchains like Bitcoin. Critics argue that energy consumption is disproportionate to transaction volume.
SBF acknowledges this challenge:
“Security arguments don’t fully justify energy use when compared to traditional payment networks.”
But solutions are emerging:
- Ethereum’s transition to proof-of-stake (PoS) drastically reduces energy use.
- Newer blockchains are built on PoS from day one.
- Even within PoW, progress is being made: the Bitcoin Mining Council reports over 56% renewable energy usage in Q2 2025.
- Cambridge Centre for Alternative Finance estimates 39% of Bitcoin mining is carbon neutral.
FTX has taken proactive steps by adopting a “carbon-neutral formula”: donating $0.0026 to Cool Effect per $1 in trading fees. BitMEX has already implemented this model.
Moreover, firms like One River Asset Management are pushing boundaries by filing for a carbon-neutral Bitcoin ETF, using carbon credits to offset emissions from underlying holdings.
This movement reflects a broader shift: crypto must become environmentally responsible to gain institutional trust and public support.
Bitcoin’s Future: From Currency to Reserve Asset
So where does Bitcoin fit in this evolving ecosystem?
SBF envisions a dual-path future:
- Stablecoins will dominate daily transactions (e.g., paying in USD on-chain).
- Bitcoin will evolve into a digital reserve asset, similar to gold.
Transactions may increasingly move off-chain via Layer 2 solutions like the Lightning Network or wrapped BTC (wBTC) on Ethereum. PayPal and Visa integrations further support this trend — using Bitcoin not as a direct payment method, but as an underlying value layer.
In essence: use stablecoins to spend, hold Bitcoin to store value.
Final Thoughts: Underestimated Innovation
SBF concludes with a powerful analogy: Netflix began as a DVD rental add-on but accidentally discovered the future of entertainment — streaming.
Similarly, DeFi may seem like a supplement to traditional finance today. But if adopted at scale, it could redefine how we think about lending, trading, insurance, and more.
“Fintech companies need to understand blockchain now — not react when we’ve already changed the game.”
The message is clear: innovation waits for no one.
Frequently Asked Questions (FAQ)
Q: Why is cryptocurrency so volatile?
A: Crypto markets are still maturing. Price swings reflect ongoing debates about value, utility, and adoption. As consensus forms and institutional participation grows, volatility is expected to decrease over time.
Q: Can crypto be environmentally sustainable?
A: Yes. With the rise of proof-of-stake blockchains, renewable-powered mining, and carbon offset initiatives like FTX’s neutrality program, the industry is actively reducing its environmental footprint.
Q: Will Bitcoin replace traditional money?
A: Not directly. Experts like SBF believe Bitcoin will serve more as a store of value, while stablecoins and central bank digital currencies (CBDCs) handle everyday transactions.
Q: Are governments banning crypto?
A: Not universally. While some countries restrict certain activities (like leveraged trading or mining), many are developing frameworks to regulate and integrate digital assets responsibly.
Q: Is DeFi still growing despite market downturns?
A: Absolutely. Even during price declines, DeFi protocols have maintained high Total Value Locked (TVL) and user engagement — signaling strong foundational growth beyond speculation.
Q: How are institutions adopting crypto?
A: Major players like PayPal, Visa, and asset managers are integrating crypto into payments, launching crypto cards, or filing for innovative products like carbon-neutral ETFs.
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