- The SEC’s heavy-handed regulations have made the US a risky space for crypto founders to build in, thus driving the best talents overseas
- The Biden-led administration has been hostile towards the crypto industry, and the American crypto community looks to replace the Democrat regime with the more crypto-friendly Republicans in the November elections.
The United States cryptocurrency regulatory landscape has been tighter for cryptocurrency projects between 2023 and now. Perhaps, the collapse of FTX – once valued at a whopping $40 billion – provoked the regulator’s increased scrutiny of digital asset service providers and the entire industry.
However, the stringent and overarching regulations on the industry appear to be rapidly repelling young crypto innovators looking to build in the US who fear they might fall victim to the unfriendly regulatory environment. This massive outflux of some of the best founders in recent years could lead to a decline in US crypto innovation.
The US Is Fast Becoming Hostile Towards Financial Services Innovation
Within the last four years, the SEC has fallen out with many cryptocurrency exchanges and other major firms in the industry, including Ripple, Coinbase, Binance, and the latest being Uniswap. Meanwhile, firms and exchanges on the receiving end of the regulator’s crackdown have accused it of not providing a clear regulatory framework for the industry to abide by.
In the Coinbase case, for instance, the SEC accused the exchange of engaging in an “unregistered offer and sale of securities” through its staking program. Months before the SEC lawsuit, Coinbase had already filed legal action in a federal court to get the regulator to provide regulatory clarity – a request the SEC would later reject in Dec. 2023, claiming existing laws and regulations were sufficient.
Besides providing regulatory clarity, there are complaints of the SEC trying to overstep the regulatory authority conferred on it by Congress while dealing with the crypto industry. In its latest move, the US watchdog issued a Wells notice to Uniswap, informing the decentralized exchange of charges it intends to bring against it.
The controversial notice to Uniswap has sparked a fresh round of outrage towards the regulator with Uniswap insisting “the SEC lacked the authority from Congress” to regulate the crypto market. While Uniswap’s CEO is “ready to fight” the SEC, new visionaries in the space might prefer to avoid clashing with the regulator – now widely considered a bully – and operate on friendlier overseas soil.
US November Elections Crucial In Determining The Future Of Crypto Innovation In The Country
With the Republicans being the more crypto-friendly crop in the US political climate, the crypto community is prepared to root for candidates that will advance the industry’s course in the forthcoming elections.
Republican candidate Donald Trump has become the favorite among crypto owners in the United States who detest the present financial system in the country – mostly influenced by the left. A poll by crypto investment company Paradigm revealed that 48 percent of respondents favored Trump against 39 percent who were for Democrat Joe Biden in November’s presidential election.
Crypto lawyer, James Murphy a.k.a. MetaLawMan, condemning the “SEC’s attack” on Uniswap said “the US is a dangerous place to innovate in the financial services arena.” He added that the November elections would provide a golden opportunity to put the current out of power and advance innovation in the crypto space.
“The elections in November are going to be extremely important to crypto if we want to slow down this train…if we want to stop the damage that is occurring. Because as you know, we are sending out some of our smartest minds who are literally leaving the United States, going somewhere where it is safer to innovate,” said Murphy on X.
Murphy related how his law firm has had first-hand interactions with some of the “smartest minds” in the industry – who would later opt to build outside the US after learning about the dangerous “regulatory situation” in the country. According to Murphy, “we really need to express our views in November in this election cycle” to tackle the sad reality of crypto talent depopulation and unending legal battles.