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Cryptocurrency News Articles
The Share of Successful Crypto Startups Based in the United States Has Sharply Declined to 20% Under the Current Democratic Administration
Aug 31, 2024 at 06:53 pm
The United States’ share of successful crypto startups has sharply declined to 20% under the current Democratic administration, according to data reported by Alliance, a prominent crypto founder network. This marks a significant drop from approximately 80% in 2022.
The decline is largely attributed to increasing regulatory challenges and scrutiny from federal agencies, particularly the U.S. Securities and Exchange Commission (SEC). Over the past year, the SEC has launched several investigations into various crypto entities, including some of the most well-known players in the industry, such as OpenSea, Coinbase, and Uniswap.
Recently, OpenSea, a leading NFT marketplace, received a Wells Notice from the SEC. The notice, typically a precursor to formal charges, suggested that the digital collectibles traded on the platform might be classified as securities.
OpenSea’s CEO, Devin Finzer, expressed surprise at the SEC’s stance, stating,
“We’re shocked the SEC would make such a sweeping move against creators and artists.”
The company has vowed to challenge the SEC’s position, arguing that its products should not be considered securities.
Another major decentralized finance (DeFi) protocol, Uniswap, has also come under the SEC’s scrutiny, facing a probe into its operations.
Similarly, Coinbase and Binance, two of the largest cryptocurrency exchanges, have encountered regulatory hurdles from the agency.
These actions by the SEC are perceived by industry insiders as a potential threat to innovation within the crypto sector.
“It would be a terrible outcome if creators stopped making digital art because of regulatory saber-rattling,” Finzer warned.
The political context surrounding the SEC’s actions is also a point of discussion. Some in the industry interpret the SEC’s aggressive stance as a possible challenge to former President Donald Trump, who has recently entered the NFT space with a new series of digital collectibles. If the SEC’s claims that certain NFTs are securities hold, Trump’s NFT venture could face legal difficulties.
In response to the current regulatory environment, Ripple’s Chief Legal Officer, Stuart Alderoty, referenced a historical precedent from 1976, noting that
“In 1976, the SEC ruled that art galleries, even when promoting and selling to buyers that had investment motives, didn’t need to register with the SEC.”
This historical context suggests that the SEC’s current approach might face challenges in court, particularly concerning the classification of NFTs.
Political dynamics are further influencing the crypto landscape in the U.S. Vice President Kamala Harris’s attempts at a crypto reset have yet to yield noticeable results, while former President Trump’s pro-crypto stance is gaining traction among certain voter segments. Trump has promised a Bitcoin strategic reserve and is reportedly involved in various crypto-related projects, such as a DeFi initiative hinted at by his son, Donald Trump Jr.
The sharp decline in the U.S. share of successful crypto startups is causing concern among industry participants. Qiao Wang, co-founder of Alliance, attributed this slump to the current regulatory environment under Democratic leadership.
“Four more years of gaslighting by the Democrats and there will be zero good crypto startups left in the US,” Wang stated.
Wang’s comments reflect a broader sentiment within the industry that the current regulatory approach could drive innovation and entrepreneurial activity away from the U.S., potentially benefiting other countries with more favorable regulatory environments.
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