Digital FutureFest Interview with Kari Larsen
This essay is based on my interview with Kari Larsen, Partner and Co-Chair of the Digital Works Group at Wilkie Farr & Gallagher which I co-hosted with Eleanor Terrett (Host of Crypto in America) at Digital FutureFest—the inaugural conference hosted by the CT Digital Forum. This conversation was part of a series of interviews we conducted with leading figures in the blockchain, cryptocurrency and AI space, exploring the industry's transformation as it moves from experimental technology to mainstream infrastructure.
The digital asset regulatory landscape has undergone a dramatic transformation. Where enforcement actions once dominated headlines, collaborative guidance now shapes policy development. Legal professionals are witnessing clients who fled overseas return to U.S. markets, driven by newfound clarity in regulatory frameworks. The shift from aggressive enforcement to principled oversight represents a fundamental change in how businesses approach crypto development in America.
The Great Return
The clearest indicator of regulatory improvement has been clients returning from overseas exile. Kari Larsen, partner and co-head of the Digital Assets group at Wilkie Farr & Gallagher, witnessed this exodus firsthand. "I had a number of clients that left the country post-FTX and just the fear of the crackdown and just the unreasonableness of the SEC," she explains. Those same clients are now returning, energized by a regulatory environment that offers a viable path forward.
This represents a shift from "enforcement first" to "guidance first" that has created space for legitimate business development. We're now in what Larsen calls an "ask forgiveness, not permission zone"—except for fraud and criminal activity, which regulators remain vigilant about.
CFTC vs. SEC: Principles Over Prescriptions
The contrast between regulatory philosophies is stark. While the SEC operated with "jurisdictional hunger" and aggressive enforcement regardless of legal support, the CFTC maintained its principles-based approach focused on market integrity rather than pure consumer protection.
"The CFTC is a very supportive regulatory regime and platform," Larsen notes. "They focus on core principles. They have the flexibility. It doesn't matter how you meet those requirements. Just you have to document how you do and they have to agree with you."
The proposed Clarity Act would formalize this division, giving the CFTC jurisdiction over crypto-native firms. This represents significant expansion for an agency that currently lacks spot market oversight authority, but their flexibility in handling intangible asset classes like renewable energy certificates positions them well for crypto oversight.
Infrastructure Revolution: Perpetuals and Tokenization
Beyond jurisdictional clarity, genuine market structure developments are emerging. Perpetual derivatives—products originally created for Bitcoin miners needing continuous price hedging—are now launching on major regulated exchanges like Coinbase, CME, and Crypto.com.
Unlike traditional futures that expire periodically, perpetuals settle continuously against spot prices without expiration dates. "You're basically hedging your risk against the spot," Larsen explains. These products represent crypto's first truly native financial development that traditional markets are adopting at institutional scale.
More transformative is tokenized collateral in derivatives markets. The CFTC's Global Market Advisory Committee concluded that existing regulations are sufficient for clearing houses to implement blockchain infrastructure for non-cash collateral. Clearing houses are actively evaluating tokenized collateral programs that could launch within quarters, not years.
The legal framework is evolving too. The UCC's 2022 amendments created "controllable electronic records," providing legal certainty for crypto assets in over half of US states, though broader adoption remains necessary.
Leadership and 24/7 Markets
The crypto market's always-on nature is forcing traditional finance to reconsider fundamental assumptions. The CFTC's recent request for comment on 24/7 trading acknowledges that "that's where markets are moving." While "a grain trader does not want to trade at midnight," more intangible and finance-related products will naturally gravitate toward continuous trading.
Brian Quintenz's nomination as CFTC Chairman signals serious commitment to crypto market development. His experience with both derivatives markets and digital assets positions him well to navigate the agency's expanded role. "He is a very thoughtful person on policy," Larsen observes. "He has such a depth of understanding of our space."
The Broader Implications
The biggest obstacles to crypto market maturation aren't regulatory—they're operational. Supporting 24/7 markets, tokenized collateral, and blockchain-based settlement requires infrastructure that most traditional intermediaries lack.
The regulatory clarity emerging from the CFTC's approach represents more than just policy normalization—it's the foundation for realizing blockchain technology's core promise. Smart contract platforms like Ethereum offer programmable financial infrastructure that could dramatically reduce costs by eliminating expensive intermediaries. Instead of banks, clearinghouses, and settlement networks that add layers of fees and delays, smart contracts execute financial logic automatically, 24/7, with global accessibility.
The CFTC's principles-based approach, combined with their derivatives expertise, makes them uniquely suited to oversee this transition. For legal practitioners like Kari Larsen who navigated crypto's regulatory uncertainty, this moment validates that principled advocacy can create the clarity needed to build the next generation of financial infrastructure—one where programmable money and automated execution could fundamentally reshape how capital markets operate.
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