In the United States where Senators like Elizabeth Warren are eager to push for strict measures against cryptocurrencies, a recent report could provide a setback to them. On 11 April, a report was published by a16z showing that the regulatory measures have hampered the growth of digital assets in the country. Additionally, a decline in digital assets has been witnessed.
According to the report, named State of Crypto, released on 11 April, there’s a significant decrease in America’s leadership in the digital assets world. The report mentioned different types of data from setbacks to opportunities in the digital assets sector. However, it represents a negative picture of the United States regulations on the crypto space. In recent months the United States has witnessed several developments in the crypto space, from the collapse of three crypto-friendly banks, the Silicon Valley bank, the Silvergate Bank, and the Signature Bank in March.
Now the report of a16z will provide an additional shock to the authorities. According to the report, “Banning new business models or technologies undermines American values and drives innovation and jobs elsewhere.” This clearly shows that an outright ban on services may not help the United States in the longer run.
A few days back, the Commodities and Futures Trading Commission (CFTC) sued the world’s largest cryptocurrency entity, Binance, for violating trading and derivatives rules. The report further added questions on regulatory bodies on their approaches towards Web3. According to the report, the United States was the hub of 40% of crypto developers in 2018 and the rate of decline was very fast in the last few years. In 2022 there’s only 30% of crypto developers remain active, which shows a clear decline in the numbers. Additionally, the traffic on crypto-related companies declined to 15% in 2022 from 23% in 2019.
Regulatory frameworks are necessary to protect clients from any fund loss but excessive regulations will discourage innovations in the United States. The report may be looked at as an eye-opener for the United States regulatory bodies to review their existing crackdown policies against the entities. It also mentioned some ongoing cases in the United States like Kraken which was fined $30 million by the Securities and Exchange Commission (SEC) in February. However, it is clearly shown in the report that the United States needs to reconsider its approach toward crypto management and come up with comprehensive crypto legislation.