Europe and Asia – not the US – will lead in blockchain
The US government is cracking down on crypto. Recently, they shut down two crypto-friendly banks that acted as bridges between trading exchanges and the real world. These were Silvergate and Signature Bank of NY. These closures follow some events that may seem coordinated to some people. This includes the shuttering of Paxos BUSD stablecoin and the NY lawsuit against Kucoin and Ethereum.
One might think these are random actions against crypto, but some feel it is similar to Operation Chokepoint – but instead it is designed to try to kill crypto. Instead, the US plans to release a central bank digital currency (CBDC) that can track where everyone spends their money. It will of course be a nightmare for privacy advocates.
President Joe Biden also announced plans to eliminate end-of-year crypto-laundry trading tax credits that are bought back immediately after, and an additional 30% tax on the energy used to mine Proof of Work. Previously, the SEC under Chairman Gary Gensler had prevented Kraken from implementing their betting service. This follows previous lawsuits against other crypto entities, such as their focus on Ripple.
Apparently the US wants crypto and Web3 to grow elsewhere. They may say otherwise, but their actions speak louder than words – especially as they regulate with enforcement rather than guidance.
Against this backdrop is the European move to enact legislation through the Markets in Crypto Assets (MICA) legal framework. There is also a move by the Chinese government to legalize crypto in Hong Kong. Across Asia, Europe, the Middle East and elsewhere, they are looking for ways to attract more crypto and Web3 startups as they know it can bring financial wealth to their shores.
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The United States has historically been a friend of innovation. The innovation ecosystems of Silicon Valley, Route 128 in Boston, Austin in Texas and elsewhere have produced some of the leading household names in technology. NASDAQ has created considerable wealth over the past decades of its existence. Companies in the FAANG (Facebook, Apple, Amazon, Netflix and Google) stocks on the NASDAQ 100 have market capitalizations larger than any country. Apple alone already has a market cap of over $2T. When people around the world talk about technology, they look to the United States for leadership.
Take the Internet, for example, a development that began with US-funded research at DARPA, but was eventually developed by Tim Berners Lee at CERN in Switzerland outside the US. Parts of the web were developed in different places, but much of it took place in Silicon Valley. The first web browser, Netscape Navigator, started at the University of Illinois, and was the first major IPO of the Internet era in 1995.
If the US had stood in the way of Internet innovation, companies like Google, Facebook, Twitter, Youtube and others would not have innovated and grown up in the US, employing thousands. Instead, they would have been foreign companies like Baidu and Tencent, hiring those outside the US to innovate in technology.
All technology – from traffic lights, to cars, to airplanes, to telephones, to the Internet – has had its high-profile critics early in its life cycle when it was first misunderstood. The term “red flag” came from the person who waved a red flag in front of cars to warn people when these were first introduced on the roads. Editors used to ink and print looked down on their online news pages when they were new, but if you look now, most newspapers exist only as online editions.
Do not automatically believe the public statements of “experts” who may not understand the potential of new technologies. In 1997, a Nobel Prize-winning NYT columnist said, “The Internet’s impact on the economy has been no greater than that of the fax machine … ten years from now, the phrase ‘information economy’ will sound silly.”
The same negative attitude is being put forward towards crypto and blockchain from those in the more traditional areas of investment.
With this move to try to kill crypto, the US is potentially relinquishing what could be its lead to other countries. Europe and Asia are already leading in 5G and some aspects of chip manufacturing. If the US continues to protect the traditional multi-trillion dollar banking and finance industry, it stands to lose a lot of wealth and jobs that crypto and blockchain can create for other countries that want it more.
Zayn Jaffer is CEO of Zain Ventures with a focus on investments in Web3 and real estate.
This article was published through the Cointelegraph Innovation Circle, a researched organization of top executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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