When Gary Gensler took over as chairman of the U.S. Securities and Exchange Commission (SEC) in 2021, he warned cryptocurrency projects that they were skeptical of “decentralized theater.” This is misleading as DAOs (Decentralized Autonomous Organizations) and protocols apparently have a core leadership team, but ostensibly lack a leader (and thus may not be prosecutable). I had in mind to make such a claim.
The ongoing crackdown on crypto assets by Gensler and the Biden administration now appears to be driving a different type of decentralization. It’s a major crypto asset company’s “America away”.
Geographic shifts are possible
Exchanges Coinbase and Gemini, bitcoin app company Strike and asset management platform Bakkt have all recently made plans to leave the United States.
Investor Kathy Wood, known for her huge long positions in Tesla and Coinbase, recently said that the US is “losing the Bitcoin movement” as the crypto industry moves away from it. bottom.
Related article: America is ‘losing’ the Bitcoin movement: Wood
Such a geographic shift is real and can have very negative consequences for over-regulated regions. Pharmaceutical maker Bayer, for example, recently announced it was moving its main business out of Europe for regulatory reasons.
But if you dig deeper, some of the crypto firms that say they’re leaving the United States may be a different kind of “decentralized theater” rather than really planning a move. And this, too, is unlikely to have any impact on regulators.
There are two ways to understand the cryptocurrency companies suggesting they are leaving America. For one, some companies really think so because of the regulatory uncertainty and expected crackdowns. Another is that they may be trying to influence regulators by threatening to move jobs and revenues to other countries.
So far, much of the news reporting the massive exodus of cryptocurrency firms from America seems to be the latter. It’s pretty close, if not a perfect sham.
Some of the news will be the result of thoughtless media overrepresentation. An executive at Bakkt, a subsidiary of the US Intercontinental Exchange (ICE) that provides digital asset services, said he intended to leave the United States only after suggesting an expansion plan in favor of the EU’s cryptocurrency regulation “MiCA”. did not express it. Gemini’s overseas expansion was also misrepresented as an “exit.” Similarly, Coinbase has hinted at global expansion, but so far it has not materialized, and the international version of the exchange offers very limited services.
Some movements seem more tangible, but their influence is less clear. At the Bitcoin 2023 conference in Miami, Strike CEO Jack Mallers lashed out at US regulators. He declared that he would be “based” in El Salvador.
But the company has since explained that this will be its “global headquarters” and that its US headquarters in Chicago will remain. It seems safe to assume that Chicago, where Mullers lives, will remain the true heart of the company.
Mullers also mentioned bitcoin investment platform Swan Bitcoin and wallet developer Fold while talking about companies “headquartered in El Salvador.” However, these companies are likely to be increasing their presence in El Salvador rather than relocating their headquarters.
Why You Can’t Leave America
It has been about two months since the anti-crypto asset policy by the Biden administration became clear. It’s not a long time, but if these companies were serious about relocating, it would be nice to see more substantive progress.
If the regulatory environment is so hostile, why aren’t crypto companies leaving the US in droves?
There are a myriad of possible answers, all of which have far-reaching implications for the crypto industry. First, staff living in the United States are unlikely to welcome a move to El Salvador or Malta. America is still a huge center of talent for the crypto industry.
Second, despite the crackdown by regulators, the US law and stock system offer many advantages for cryptocurrency companies. And America has an almost unparalleled financial sector, including an abundance of venture capital money that continues to flow in despite the SEC’s hostile stance.
However, the biggest reason why cryptocurrency companies do not actively transfer is that the benefits are small compared to the difficulty. At its most obvious, the past two years have shown that the SEC’s de facto global influence cannot be escaped by claiming it is not an American company.
What’s more, it’s unclear whether the president will react to the exodus of cryptocurrency companies from the United States by changing course in cracking down on cryptoassets.
What’s the point in taking action?
Employment in the U.S. accounts for the majority of employment in the crypto industry, but the percentage of employment in the crypto industry to total U.S. employment is very small (although salaries are often high).
To put it bluntly, fighting inflation is far more important to the Biden administration than cryptoassets, and the disappearance of hundreds of jobs is more of an intriguing proposition than a terrifying threat. it might look
Democrats, especially those in the executive branch, seem to be completely deaf to the idea that cryptocurrencies can be anything other than a scam. Republicans are making noise about jobs, but they seem too disorganized and powerless despite holding a majority in the House.
So if the goal is to convince authorities to stop cracking down on cryptocurrencies, leaving the US is only as effective as threatening to actually act. In other words, it has no effect at all.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original: Cathie Wood Thinks the US Crypto Exodus Is Here. Is It?