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What a difference a single year makes.
This time last year, the vibes were off. Crypto was in a funk — bear market aside — and it was one that stemmed from the larger regulatory picture.
There’s no doubt that the market is more positive right now than it was a year ago, especially now that the bear market’s given way to a bullish environment.
While projects fled overseas last year, we’re beginning to see some projects move over to the US. A prime example being Circle, which plans to pursue an initial public offering on a US exchange.
Of course, it would be naive to think this means that the regulatory speculation is over, especially after the Securities and Exchange Commission served Uniswap, Consensys and Robinhood with Wells notices.
Blockworks co-founder Jason Yanowitz noted on Empire this week that roughly 37% of the speakers for last year’s Permissionless conference dropped out because they didn’t want to risk being on US soil.
Yanowitz noted that this year’s Permissionless — which takes place in the fall — hasn’t had that issue, which echoes what’s been seen at other conferences such as Consensus.
But a question remains: How much damage has been done and where does crypto go from here?
Bill Hughes, chief legal officer at Consensys, said that it’s caused the crypto space to mature “more slowly than it would have otherwise.”
Read more from our opinion section: Hey regulators, here’s how to get crypto right
“It has stifled innovation from the little guy, who is more concerned with being targeted by the government due to having only modest means, giving larger incumbent crypto firms a competitive advantage, especially ones that are overseas. The anti-crypto types are the same ones who decry competition problems with Big Tech and undue foreign interests over sectors that are important to the US, yet they try to repeat history with their policy choices,” he continued.
Joshua Riezeman, GCR’s general deputy counsel, agreed that the current stance “hamstrung” the industry in the US.
“The lack of clear, consistent and supportive regulations has created an atmosphere of uncertainty that stifles innovation and drives many crypto businesses that would otherwise much prefer a US base to more favorable jurisdictions abroad. Without a more constructive regulatory framework the US risks falling behind in this critical new industry,” Riezeman added.
On Empire, Avara CEO Stani Kulechov echoed the above, noting that the US lost “innovation” in the past couple of years.
Read more: SEC’s Hester Peirce gives advice to crypto industry as frustration with agency grows
But Matter Labs CEO Alex Gluchowski noted on the podcast that the crypto community in the US has managed to become a “powerful election force” despite the hurdles.
This is apparent in the recent bipartisan support for the FIT21 crypto bill, the pre-Biden veto rollback of the SEC’s SAB 121 rulemaking bulletin. But there’s also clearly partisan support, as former President Donald Trump adds crypto donations and allegedly claims he wants to be the “crypto president” (no proposed policies around crypto have been made public though).
Hughes seemingly agrees with Gluchowski, telling me that he’s still bullish on the US as a crypto hub.
“The US is still the best country to lead in this space, in terms of capital, talent and political philosophy. There’s good reason to believe the US will lead notwithstanding the efforts of loud, energetic detractors,” he added.
Kulechov said that DeFi is “just better financial infrastructure” given that the technologies are “valuable” for the users, and ensure that corporations have to play fair when it comes to interacting with the tech. Key note for Kulechov here is that it doesn’t take power from the government itself.
Now, whether the US understands Kulechov’s point is a separate issue but with the way that crypto continues to innovate — from SocialFi to infrastructure builds — it’s clear that the technology itself addresses questions and concerns that folks have. Such as wanting a social media platform that doesn’t control the data, and instead handing that power to the user.
Hughes summed it up perfectly: “We need a regulatory environment here where the tech can live and die on its own merits around the use cases that the market demands.”
“But beneath it all, the industry just needs to keep building. Attract the best talent and pursue all the ideas worth trying. There will be a high failure rate in a new field such as this, but the ideas that change the world will rise to the surface,” he added.