On ‘From the Block,’ Experts Warn Crypto Must Fix Scams and User Errors Before Scaling

 

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The cryptocurrency industry appears to have a narrative problem.

The story it tells is about speed, innovation and a financial system rebuilt from scratch. The story it hasn’t figured out is what happens when an ordinary person makes an ordinary mistake, and there’s no one to call.

That disconnect was at the center of the latest “From the Block” podcast, where PYMNTS CEO Karen Webster and Citi Global Head of Digital Assets for Treasury and Trade Solutions Ryan Rugg sat down with Andrew Balthazor, associate and co-lead of the crypto asset disputes team at Holland and Knight LLP.

While all three covered the regulatory landscape, it was Balthazor, a lawyer who spends his days in the wreckage of crypto disputes, scams and lost funds, who delivered the sharpest assessment of what stands between digital assets and the mainstream.

The Criminals Problem

Balthazor didn’t start with policy. He started with people.

He told Webster and Rugg he routinely hears “heartbreaking stories” from victims of crypto scams, and in many cases, there is little they can do to recover their money.

The industry still hasn’t found a solution to prevent criminals from exploiting the technology, and until it does, expanding access without enhanced guardrails mostly expands harm, he said.

That framing matters because it reorders the usual crypto debate. The question isn’t whether blockchain rails are faster or cheaper. It’s whether the protections that make traditional finance trustworthy, such as the remedies, accountability and recourse, exist yet in crypto. Balthazor said they largely don’t.

The Lost Stablecoin Scenario

Balthazor offered an example that wasn’t about fraud at all. He walked through a scenario in which a user simply types the wrong destination address and sends a payment stablecoin to an inaccessible wallet. No scam. No fraudster. Just a typo. And the money is gone with limited recourse.

The GENIUS Act, the new stablecoin law in the United States, requires issuers to have policies to freeze tokens. But Balthazor pointed out that freezing is not the same as fixing. There is no clear remedy under the act for a user who sends money to the wrong address. Right now, the only option is to sue the issuer to force them to reissue the tokens, a process that is completely unworkable for everyday commerce.

If the “fix” for an ordinary payment error is litigation, the system is not ready to be a consumer payment rail, he said.

GENIUS Is a Start, but It’s Narrow

Webster pushed Balthazor on whether the GENIUS Act meaningfully changes the trajectory. His answer was measured.

Yes, more clients are leaning forward, but the act covers only payment stablecoins, which Balthazor described as “very narrowly defined.” He estimated that 98% of crypto falls outside that definition, leaving institutions and regulators still wrestling with how other digital assets fit into existing frameworks.

He said his advice to clients right now is not to ignore the category, but not to make irreversible bets either. Firms should become conversant, designate people internally to learn the space well, watch what peers are doing and explore pilots. They should also be ready to pivot as rules and customer demand crystallize.

The Yield Question

One of the hottest debates in Washington right now is whether stablecoin issuers should be allowed to pay yield to holders.

Balthazor acknowledged the intensity of the argument but said he sees room for a middle ground. Rather than an all-or-nothing answer, he suggested the path forward could involve specific criteria that issuers would need to meet, disclosure requirements that give consumers clarity on what they’re holding, and perhaps even provisions that push traditional financial institutions to sharpen their own competitive offers in response.

The yield question is less of a binary fight and more of a design problem that thoughtful regulation could help solve, he said.

Companies Are Still on the Sidelines

For all the momentum in Washington, Balthazor said most of the companies he talks to are not yet moving.

The reason isn’t skepticism about the technology. It’s skepticism about the durability of the rules. Many companies worry that a future administration could be less crypto-friendly and roll back the regulations that are being written today. That makes it hard to justify large investments in digital asset infrastructure when the regulatory foundation could shift in two or four years.

It’s a rational calculation, one that underscores the broader challenge that crypto doesn’t just need rules, he said. It needs rules that both major parties in Washington are willing to defend, so that the companies building on them aren’t left stranded by a potential regulation pivot from the next election cycle.

What He’d Tell Congress

When Webster asked what he would say to lawmakers, Balthazor urged them not to pick favorites or write rules for only one group’s business model. Instead, they should listen to all stakeholders, like issuers, intermediaries, banks, consumers and commercial users, and draft legislation that is even-handed.

He also flagged a subtlety that often gets lost in the policy debate. Enforcement actions and formal rulemaking create clarity, but in different ways. When enforcement actions are withdrawn or never reach a definitive resolution, the market loses the chance to get binding answers that apply broadly. That leaves a patchwork of decisions that is hard for anyone to rely on.

The Bottom Line

Balthazor’s message across the episode was that crypto’s mainstream future is unlikely to be decided by technology or hype. It is likely to be largely decided by the unglamorous questions of protections, remedies and responsibility. Until those answers exist, more adoption can simply mean more people with no recourse when something goes wrong.

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