The United States has long been a beacon of technological innovation, but in recent years, it has seen a worrying trend in the cryptocurrency sector.
A combination of strict regulations led by SEC Chairman Gary Gensler and growing international competition has led to a significant decline in the US share of global crypto development.
Regulatory Obstacles: The Decline of US Crypto Innovation
According to Coinbase’s latest report, since 2018, there has been a 26% decline in the share of US crypto developers, highlighting the ongoing challenges facing the industry under the current regulatory framework.
Our latest State of Crypto report shows that with onchain activity + increased corporate acquisitions, the US has lost 14% of developer share since 2018 and is now home to 26% of crypto developers. Global leadership in technological innovation is ours to lose, but the US Government must…
— paulgrewal.eth (@iampaulgrewal) June 12, 2024
Industry experts, including Bill Morgan and Paul Grewal, have been speaking out in forums like X, expressing concern about the implications of these stricter regulatory measures.
Grwal emphasized in particular that maintaining global leadership in technological innovation depends on the US government’s commitment to improving its regulatory framework.
In response to this, Morgan suggests that actions taken by the SEC, particularly under Gensler’s leadership, have not only stifled innovation but also discouraged the broader market. Morgan commented:
I warned you all in March 2021 what Gensler would do. You all thought that Ripple and XRP attack will not affect you. It does against all crypto.
Notably, the ripple effect of these regulations from the US SEC clearly shows the potential long-term consequences for the position of the US as a leader in the crypto space.
The Push For Reform
In response to growing concerns about America’s technological competitiveness, there has been a recent push within legal circles to adapt and revise regulatory approaches.
While initially opposing bills like HR 4763 that aimed to reform digital property laws, the Biden administration has expressed a desire to work with Congress to develop a more balanced and comprehensive regulatory framework.
This framework promotes responsible innovation while ensuring adequate protection for consumers and investors.
Recent legislative actions, including the Senate’s decision to repeal the SEC’s Staff Accounting Bulletin 121 (SAB-121), reflect a growing recognition of the need for regulatory reform.
SAB-121, which required financial institutions to treat crypto-assets as debt, has been criticized for placing unending financial burdens on the industry.
The potential passage of the Financial Innovation and Technology Act for the 21st Century (FIT21) further underscores the bipartisan effort to establish a more favorable regulatory environment for cryptocurrencies in the US.
The featured image was created with DALL-E, a Chart from TradingView
