Go around the room at any highbrow crypto gathering and ask what the suited participants are most excited about. The answer you’ll most likely hear is “regulatory clarity.” They’re not wrong – it would indeed be a boon to the industry as it would give builders and investors a certain amount of protection and usher in even more institutional funds.

But it’s not the “make or break” for crypto that it’s sometimes painted to be. And those who insist that “all of crypto must be regulated” display a lack of understanding of what crypto is and how it got to where it is today.

Not all crypto markets will end up regulated. But nor do they need to be for the industry to succeed. I’ll go even further – nor should they be.

Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice.

As a crypto analyst with an institutional bias, I am inherently pro-regulation. Despite my slightly libertarian leanings, I support the role of government in protecting citizens. And I recognize that many investors are more comfortable with some degree of protection when it comes to financial transactions.

Last week, Bloomberg published the results of a recent MLIV survey, in which 60% of 564 respondents agree that more regulation would make them more likely to invest in crypto assets. Also last week, CoinDesk reported on a poll conducted by the Crypto Council for Innovation, an alliance of major crypto companies, that showed 52% of the 1,200 participants (of whom only 13% own cryptocurrency) want the industry to be more regulated. On Thursday, Fidelity Digital Assets published its annual survey of global institutional investors, which cited regulatory issues as one of the top barriers to investment.

So, the numbers suggest that investors are awaiting more regulation with open arms. This is supported by the hopeful narrative that more regulation will bring in more institutional funds, which will boost prices.

But let’s look a bit closer before we take a big step back.

The numbers published in this week’s three surveys are not conclusive: 40% of Bloomberg’s respondents said the degree of regulation would have little impact in their crypto investment decision. For the Crypto Council for Innovation poll, almost half either don’t want the industry to be more regulated or they are indifferent to it. The Fidelity Digital Assets survey shows that concern about the classification of certain assets came in seventh in the list of investment barriers, while a “lack of regulatory clarity” came toward the bottom. Only 4% of Asian institutions and less than 20% of European respondents cited this as something they worried about.

So regulatory issues are a concern for many, but not for all. And here we come to the bigger issue: the idea that all crypto markets can be or even need to be regulated.

This stems from the institutional mindset. Most institutions can only transact on regulated exchanges, and all institutions want to avoid future legal issues. What’s more, most crypto market firms want institutional clients, for the transaction volumes and willingness to pay for services. So crypto regulation is verging on an obsession among service providers and a meaningful chunk of investors.

But it’s not an obsession for the whole industry, and to assume this is the natural state of affairs is to overlook a key feature of both crypto and regulation: They are about choice.

Crypto emerged as an alternative to the centralized fiat system, and the explosion of innovation, technological progress and incentive experimentation over the past few years has generated a dizzying array of assets, use cases, governance styles, trading platforms, tribes, even aesthetics.

The role of choice in regulation is not so obvious. We’re taught that we have to obey the rules, but this isn’t true. We can ignore them (please note that I am NOT recommending this!), but there is a price. Sometimes the cost is high (e.g., men with guns will lock you up for a very long time), sometimes not so much (your bank will make sure you pay the assigned penalty). We evaluate the trade-off – and for most, there are moral and social costs as well – and we act accordingly. But the choice is ultimately ours.

In exchange for obeying the rules, we get protection. This is usually a very good thing. But when it comes to financial transactions, for some that protection can feel like centralized control, especially when opportunities are denied based on seemingly arbitrary filters, and individual financial agency is curtailed because of some distant and imaginary threat. For many participants, however, that protection implies fair pricing, recourse if anything goes wrong and the civic comfort that illicit transfers are more easily flagged.

This brings us to the contradiction inherent in the institutionalization of crypto. On the one hand, that process is forging a stronger industry. But it’s also causing a myopic focus and a blurred narrative. Crypto markets originally developed at the grassroots level, with no regulatory oversight or protection whatsoever. As the investor base broadened and as certain blow-ups highlighted the often-painful lack of rules, the demand for more reliable platforms led to the birth of the market infrastructure we have today. This in turn fueled the growth of investor interest, including among more restricted participants with deep pockets, and the boost in volumes supported both prices and further innovation.

Institutional investor involvement in crypto markets is good. It is a sign of success. But the outsized weight of its influence has led to the conflation of “crypto potential” with “institutional needs.” This makes it easy for us to forget that crypto emerged retail-first, with hundreds of thousands of individuals leading the way. That, in turn, tends to hone focus on fitting a square peg into a round hole because regulators insist that current rules can cover our industry. This is a generalization, sure, but one that is delaying support for certain areas of progress as infrastructure participants wait for a regulatory clarity that is unlikely to ever get ahead of or even keep up with crypto innovation and demand.

Crypto applications will continue to emerge on the fringes, and there is not much anyone can do to stop this. Remember: Token issuance and trading is not controlled by any central authority.

And not all of crypto needs “regulatory clarity” or institutional participation. Much of it simply needs testing with real users and real incentives with some degree of supervision to ensure fair markets and mitigate illicit use. More regulatory sandboxes, for example, could further industry experience while deepening official understanding of the risks and opportunities. And there are no doubt other frameworks that could give officials some assurance that crime is not abetted and that participants understand the choices they are making. Fewer rules means more opportunity but less protection. Waiting for a detailed framework or even specific limitations could imply greater safety but more delay.

In sum, regulators could give crypto industry builders and market participants more choice in the rules they follow while showing support for good faith human ingenuity and respect for those it helps. And, in so doing, they could perhaps strengthen the appreciation for what regulation has to offer.