The US has not been the most friendly towards crypto right from the start, but 2023 has become worse as the country unleashed much terror on the crypto industry. Crypto companies are being hunted down, and many of them have abandoned the country with more considering it.
The most recent is the lawsuit against Binance by the SEC, which has also sued Coinbase with allegations bordering on violation of federal and securities laws. While this may seem like a good thing to do in the name of protecting US citizens from the “risks” associated with crypto, there are several things wrong with the approach the SEC is taking.
The following are some reasons why the US is making a huge mistake with its approach which is obviously harming the crypto industry as a whole.
Loss of Innovation
Cryptocurrencies are built on blockchain technology and even though the US government detests the idea of cryptocurrencies, there is a general agreement that blockchain technology holds great potential for innovation.
However the war against crypto in the US currently does not separate between crypto and blockchain. The sentiment against crypto seems to have spread to blockchain technology as well and unless this is corrected, the US will be throwing away the bath water with the baby.
While it is doing that, other jurisdictions are not only embracing crypto, but are exploring ways of using blockchain technology for more. It will only be a matter of time before the US is left out of technological advancement around this all important technology.
Loss of Revenue
While the US does not like the idea of cryptocurrencies, the Internal Revenue Service sure likes to get revenue from the industry. This is not feasible because you can’t eat your cake and have it. You cannot stifle the growth of an industry and still hope to generate revenue from it.
If the government wants to generate revenue from crypto, it should create clear rules for the industry to follow and allow legitimate players to flourish. The crypto industry is a fast-growing one, and the investors as well as companies don’t mind paying, all they need is to be allowed to grow.
The indigenous crypto companies fleeing the country will end up in other countries, and will definitely pay taxes to those countries. The US might as well allow them to thrive so they can pay all the taxes at home
Loss of Foreign Investments
The US was a popular place for crypto companies until things took a different turn. Even at that, it is still one of the biggest crypto destinations in the world. Data shows that the US accounted for most of the bitcoin mined in 2021.
With proper regulation, the country would not only have retained its indigenous companies, but would have also attracted foreign companies to invest in the crypto industry in the country. Indeed, this would have made the US the leader in crypto innovation in the entire world.
As it is, the country is behind even in developing a central bank digital currency (CBDC), something the Fed would love to have if it wasn’t connected to blockchain technology. In contrast, economic rivals such as China and Russia are well advanced in the development of their CBDCs, leaving the US behind.
Conclusion
The US through the SEC and CFTC believe they are doing well to protect its citizens from the dangers of crypto, but the opposite is mostly the case. The essence of regulation should be to ensure compliance with the laws of the country, but the current approach is more of an all out attack on crypto.
Such an approach will only lead to a paralysis of the industry, which shouldn’t be the desired end result. The government can start by calling Gary Gensler to order, as many lawmakers have suggested.
By making fair rules for the industry, regulators will be able to sieve through and let legitimate companies thrive while eliminating bad actors.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
