The US government is putting pressure on crypto. Recently, they shut down two crypto-friendly banks that acted as bridges between trade and the real world. These were Silvergate and Signature Bank of NY. These closures follow certain events that may seem coordinated to some people. This includes the shutdown of the Paxos BUSD stablecoin and the New York lawsuit against Kucoin and Ethereum.
These may be thought of as chance actions against the crypto, but some believe it is similar to Operation Chokepoint – but instead it is designed to try to kill the crypto. In its place, the United States plans to release a central bank digital currency (CBDC) that can track where everyone is spending their money. Obviously, this will be a nightmare for privacy advocates.
President Joe Biden also announced plans to eliminate year-end crypto-wash trading tax deductions that are redeemed immediately afterward, and an additional 30% tax on energy used for mining in proof of work. Previously, the SEC under Chairman Gary Gensler banned Kraken from implementing its staking service. This follows previous lawsuits against other crypto entities, such as their focus on Ripple.
Apparently, the US wants crypto and Web3 to grow elsewhere. They may say otherwise, but their actions speak louder than words – especially since they diligently regulate instead of advice.
In this context, the European decision to adopt legislation via the Legal Framework for Crypto Asset Markets (MICA) fits into this context. There is also the Chinese government’s decision to legalize crypto in Hong Kong. Across Asia, Europe, the Middle East and elsewhere, they are looking for ways to attract more crypto and Web3 startups because they know it can bring economic wealth to their shores.
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The United States has always been a friend of innovation. Its innovation ecosystems in Silicon Valley, Route 128 in Boston, Austin, Texas and other places have produced some of the biggest names in technology. The NASDAQ has created significant wealth in the last decades of its existence. Companies in the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) of the NASDAQ 100 have higher market capitalizations than some countries. Apple alone already has a market cap of over $2 billion. When people around the world talk about technology, they look to the United States for leadership.
Take the Internet for example, a development that began with US-funded research at DARPA, but was eventually developed by Tim Berners Lee at CERN in Switzerland outside of the US. Parts of the web were developed in different places, but much of it happened in Silicon Valley. The first browser, Netscape Navigator, was launched at the University of Illinois and was the first major IPO of the Internet era in 1995.
If the United States had stood in the way of innovation on the Internet, companies like Google, Facebook, Twitter, Youtube and others would not have innovated and grown in the United States and would not have employed thousands of people . Instead, it would be foreign companies like Baidu and Tencent, employing people outside the United States to innovate in technology.
Every technology – from traffic lights to automobiles, airplanes, the telephone and the Internet – had its prominent detractors early in its lifecycle, when it was first misunderstood. The phrase “red flag” comes from the person waving a red flag in front of automobiles to warn people when these were first introduced to the roads. Newsroom editors who used to ink and print despised their online news sites when they were new, but if you look now, most newspapers exist only as online editions.
Don’t automatically believe public statements from “experts” who may not grasp the potential of new technologies. In 1997, a Nobel Prize-winning NYT columnist said, “The impact of the Internet on the economy has been no greater than that of the fax machine… ‘information’ will sound silly.
The same negative attitude is expressed about crypto and blockchain from those in more traditional investment spaces.
With this move to try and kill crypto, the US is potentially ceding what could be its lead to other countries. Europe and Asia are already leading in 5G and some aspects of chip manufacturing. If the US continues to protect the traditional multi-trillion dollar banking and financial sector, it stands to lose a lot of the wealth and jobs that crypto and blockchain can create to other countries that want more.
Zain Jaffer is the CEO of Zain Ventures, which specializes in web3 and real estate investments.
This article was published by Cointelegraph Innovation Circle, an vetted organization of senior executives and blockchain technology industry experts who are building the future through the power of connections, collaboration and thought leadership. The opinions expressed do not necessarily reflect those of Cointelegraph.
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