Regulators in the United States have choked out the cryptocurrency sector to the point of death, according to Bitcoin (BTC) bull and billionaire tech investor Chamath Palihapitiya.
“Crypto is dead in America,” he boldly claimed in an April 22 episode of the All-In podcast.
Palihapitiya’s comment came in response to the news that cryptocurrency exchange Coinbase is now considering a move offshore. He pointed the finger at Gary Gensler, the chair of the U.S. Securities Exchange Commission:
“Crypto is dead in America. I mean now you have Gensler even blaming the banking crisis on crypto — so the United States authorities have firmly pointed their guns at crypto.”
While Palihapitiya said that the U.S. likely views crypto as a threat to its “establishment,” the tech investor did however attribute some fault to the sector:
“In fairness to the regulators, [the crypto sector] did push the boundaries more than any other sector of the startup economy.”
He rounded out his analysis by concluding that the good actors are now “paying the price” for the bad work done by FTX and other firms that have impacted the reputation of the industry.
“The bill has come due for them,” he added.
David Sacks, one of the show’s co-hosts, said the U.S. may be trying to choke out crypto because it may eat into the dominance of the U.S. dollar:
“I think it’s probably not a coincidence that you’re seeing all these concerns about de-dollarization at the same time they’re cracking down on crypto.”
But the overall impact will be a net negative one, implied Sacks, who is of the view that pushing crypto companies offshore will be “terrible for American innovation.”
Related: Coinbase CEO on its Wells notice: SEC is like soccer referees in a game of pickleball
Other commentators have described the issue at hand as “Operation Choke Point 2.0” — an alleged orchestrated effort by regulators to discourage banks from holding crypto or providing services to crypto companies.
Palihapitiya was baffled by the notion that Coinbase — a digital asset trading platform that he says had “played by the rules, stood in line” and “tried to do the right things” — was no closer to receiving regulatory clarity than the now-bankrupt FTX.
“How is that even possible,” Palihapitiya asked. Sacks answered that former FTX CEO Sam Bankman-Fried “had skills in gaming the system.”
In March, the SEC issued Coinbase a Wells notice — which typically implies the regulator plans on pursuing legal action against the firm for potential violations of U.S. securities laws.
If a lawsuit is filed, Coinbase CEO Brian Armstrong says that the exchange will be ready to litigate.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom