The once-dominant position of the United States in the global crypto startup arena has sharply declined, according to a recent report by Alliance, a crypto founder network. Moreover, the co-founder of Alliance, Qiao Wang, blamed the Democrat rule for the slump in the share of the U.S. in successful Web3 startups.
Overview Of Crypto Startups In The U.S.
The data reveals a dramatic drop from approximately 80% in the second half of 2022 to a mere 20% today. Moreover, this trend is causing concern among industry insiders about the future of the crypto sector in the US. The decline in successful US-based startups is attributed to increasing regulatory challenges.
Alliance’s Wang suggests that the current regulatory environment under Democrats has become increasingly unfavorable for new entrants. “Four more years of gaslighting by the Democrats and there will be zero good crypto startups left in the US,” Wang warned.
A significant factor contributing to the downturn is the ongoing scrutiny by the US Securities and Exchange Commission (SEC). Recently, the SEC has intensified its investigations into various crypto entities, including major players like OpenSea, Coinbase, and Uniswap.
On August 28, OpenSea received a Wells Notice from the SEC. CEO Devin Finzer disclosed that the SEC believes the digital collectibles traded on the platform might be classified as securities. This stance has caught the industry off guard.
“We’re shocked the SEC would make such a sweeping move against creators and artists. OpenSea, known for its role in the NFT space, has pledged to challenge the SEC’s position, asserting that its products should not be considered securities.
Moreover, the SEC’s actions are not isolated. Uniswap, another prominent decentralized protocol, faced a similar predicament when the regulator launched a probe into its operations. Coinbase and Binance also faced similar actions.
Moreover, Finzer warned that such regulatory actions could stifle innovation across the board, further fueling worries over the US crypto startup sector. “It would be a terrible outcome if creators stopped making digital art because of regulatory saber-rattling,” he cautioned.
Donald Trump’s Win To Change Tables?
In a broader political context, the SEC’s aggressive stance might also be interpreted as a subtle jab at former President Donald Trump. The Republican candidate has recently launched a new series of NFT collectibles. If the SEC’s claims hold, Trump’s NFT venture could face legal challenges.
Ripple CLO Stuart Alderoty weighed in on the debate, highlighting a historical precedent:
“Fun fact: 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 adds another layer to the ongoing regulatory discussion as the SEC might lose the case if they sue OpenSea. Meanwhile, political space is also influencing the digital assets landscape as well as the US crypto startup space. Experts believe that if pro-crypto Trump bags a win, such crackdown could be limited with relief to existing enforcement actions.
Vice President Kamala Harris’s purported crypto reset hasn’t shown results, while Trump’s pro-crypto stance continues to gain traction. Trump has promised a Bitcoin strategic reserve. Moreover, he is involved in various crypto-related projects, including a DeFi initiative hinted at by his son, Donald Trump Jr.
With Trump leading in Polymarket predictions at 50% odds against Harris’s 48%, the political climate remains a crucial factor in the future of crypto regulation and innovation. Furthermore, pro-Bitcoin Robert F. Kennedy Jr. recently dropped out of the presidential elections and joined Trump. Thus, this duo gained further support from crypto voters, weakening the game for Harris.
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