A growing number of US-based crypto companies are considering leaving the country due to increasingly harsh SEC crackdowns.
Following a harsh crackdown by the Securities and Exchange Commission (SEC) in the US, several crypto companies threatened to leave the country. On Sunday, reports stated that these US-based crypto players are testing their lobbying power limits with the bold threats issued. CNBC described the crypto-regulatory standoff as a ‘poker game’, in which the firms hope to force the SEC to accept their demands.
Executives at crypto companies like Coinbase (NASDAQ: COIN) and Ripple oppose increasing SEC pressure to conform to the US regulatory benchmark. These executives warned the Commission that they could shift their businesses abroad if it did not soften its hardball crypto approach. Also, several crypto firms have taken on the SEC to rally support and get the attention of instrumental US political stakeholders. The implied message is that the country could miss out on crucial technological innovation due to the government’s stance.
However, whether crypto businesses would leave the US remains to be seen. Crypto companies who leave the North American nation may miss out on a massive market of more than 50 million US citizens that own digital assets.
Coinbase, Ripple among Aggrieved Companies Impacted by Harsh US Crypto Regulation
Last week, Coinbase chief executive Brian Armstrong described the SEC as being on a “lone crusade” with its stringent crypto policies. The CEO added that SEC Chair Gary Gensler‘s anti-crypto view contradicted his earlier stance as a supporter of the industry. Armstrong’s reference was when Gensler served as a professor of economics at the MIT Sloan School of Management.
In a media session, Armstrong touched on Gensler and the SEC’s approach to crypto, saying:
“The SEC is a bit of an outlier here. I don’t think [Gensler is] necessarily trying to regulate the industry as much as maybe curtail it. But he’s created some lawsuits, and I think it’s quite unhelpful for the industry in the US writ large.”
Ripple CEO Brad Garlinghouse also recently chastised the SEC’s anti-crypto stance. The chief executive pointed out the staggering sum ($200 million) Ripple would have spent at the end of its lawsuit with the Commission. Furthermore, Garlinghouse bemoaned the current situation regarding crypto leadership due to the SEC’s unpopular views. As he put it:
“I find it as a company that started in the United States, and as somebody who is a US citizen, it’s sad. I have sadness about this. The US is getting passed not just by a little bit but by a lot.”
Garlinghouse also opined that the US “put politics ahead of policy”, which is ‘imprudent’ for stoking economic investments. The Ripple chief executive favors the Dubai and European digital asset markets over the US, calling the US “stuck”.
Observer Suggests ‘Threatening-to-Leave Tactic’ Would Protect Crypto Appeal Among Investors
Despite threats to leave, Southampton University finance associate professor Larisa Yarovaya believes the aggrieved crypto companies would remain in the US. Yarovaya explained that crypto companies fear that harsh regulation would spook investors and drive prices down. Therefore, these crypto firms hope to spur investor confidence and induce irrational behavior by appearing confident and defiant. Such irrational investor behavior may include holding on to crypto assets despite falling prices, which would be good for crypto companies.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.