US Share In Successful Crypto Startups Slumps To 20% Under Democrats
Highlights
- The US share of successful crypto startups has fallen to 20%, down from 80% in 2022.
- Regulatory hurdles and increased scrutiny from the SEC are cited as key factors behind this decline.
- The current Democratic administration is perceived as less supportive of crypto innovation and growth.
The United States’ once-dominant position in the global crypto startup landscape has significantly diminished, according to a recent report by Alliance, a network for crypto founders. Qiao Wang, co-founder of Alliance, attributes this downturn to the current Democratic administration’s policies, which he believes are detrimental to the crypto sector.
Overview of Crypto Startups in the U.S.
The data shows a sharp decline in the US’s share of successful crypto startups, plummeting from around 80% in the second half of 2022 to just 20% today. This dramatic shift has raised concerns among industry experts about the future of the crypto sector in the US. The decrease is largely attributed to mounting regulatory challenges.
Wang contends that the regulatory environment under the Democrats is increasingly hostile to new crypto ventures. “If the Democrats continue their current approach, we could see zero viable crypto startups left in the US within four years,” Wang warned.
A major contributing factor to this decline is the heightened scrutiny from the US Securities and Exchange Commission (SEC). Recently, the SEC has ramped up its investigations into several key crypto entities, including OpenSea, Coinbase, and Uniswap.
On August 28, OpenSea received a Wells Notice from the SEC, indicating that the agency believes the digital collectibles traded on its platform might be classified as securities. This unexpected stance has alarmed the industry. OpenSea CEO Devin Finzer expressed surprise at the SEC’s broad action against creators and artists, asserting that their products should not be deemed securities and promising to challenge the SEC’s position.
The SEC’s scrutiny extends beyond OpenSea. Uniswap, another major decentralized protocol, has also been investigated, and both Coinbase and Binance are facing similar regulatory challenges.
Finzer cautioned that such regulatory measures could hinder innovation across the board, amplifying concerns about the US crypto startup ecosystem. “It would be disastrous if regulatory pressures led to creators abandoning digital art,” he said.
Could a Trump Victory Reshape the Crypto Landscape?
In a broader political context, the SEC’s aggressive stance on crypto regulation might be seen as a subtle challenge to former President Donald Trump, who has recently launched a new series of NFT collectibles. If the SEC’s claims about NFTs as securities are upheld, Trump’s NFT venture could face significant legal hurdles.
This scenario adds another dimension to the ongoing regulatory debate. Should the SEC lose its case against OpenSea, it could impact the broader regulatory landscape. The political environment is also playing a role in shaping the future of digital assets and the US crypto startup sector. Experts suggest that if Trump, who is pro-crypto, were to win the presidency, regulatory crackdowns might ease, offering relief to current enforcement actions.
While Vice President Kamala Harris’s proposed crypto reforms have yet to show results, Trump’s pro-crypto position continues to gain momentum. He has pledged to establish a Bitcoin strategic reserve and is involved in several crypto-related projects, including a decentralized finance (DeFi) initiative hinted at by his son, Donald Trump Jr.
Trump is currently leading in Polymarket predictions with a 50% chance of winning, compared to Harris’s 48%. Additionally, pro-Bitcoin Robert F. Kennedy Jr. has withdrawn from the presidential race and joined Trump’s campaign, strengthening Trump’s support among crypto voters and posing a challenge to Harris’s position.
