- The U.S. crypto regulatory landscape is shrouded in uncertainty.
- A Chainalysis executive has warned of the threat of an unofficial ban.
- The statements come amid talks of a crypto exodus.
The crypto industry in the United States has been in a precarious position as regulatory agencies go on the offensive. While it remains unclear how the industry fits existing market rules, the sector has received numerous enforcement actions, particularly from the U.S. Securities and Exchange Commission.
As the crackdown continues, Chainalysis Vice President & Head of Policy Caroline Malcolm warns that the crypto industry in the U.S. is at risk of an informal ban.
U.S. Crypto Market Under Severe Threat?
In response to questions posed by DailyCoin around the crypto regulatory landscape in the U.S., Malcolm asserted that the present regime of regulating crypto exchanges through enforcement actions could be paving the way for a crypto “‘ban by enforcement.'”
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According to Malcolm, crypto firms want to be compliant but need clear regulatory guidelines that factor in the industry’s peculiarities. Conversely, the Chainalysis policy head argued that regulation by enforcement continued to shift the goalpost instead of offering clarity that could guarantee future investments.
Malcolm noted that while Chainalysis data showed that more consumers were entering the crypto market, the current approach of regulation by enforcement was driving businesses abroad.
"This harms U.S. consumers by limiting the market options available to them, and also by potentially pushing a revolutionary technology outside the bounds of U.S. law. Therefore, a comprehensive regulatory framework is the only sustainable path forward – if the goal is to actually achieve consumer protection," she added.
The Chainalysis policy head’s statements echo the sentiments of several other executives in the crypto industry.
SEC Pushing Out U.S. Crypto Businesses?
Amid the SEC’s heightened crackdown on crypto businesses, executives have warned that the regulator is pushing innovation offshore.
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In March, Ripple Chief Executive Officer Brad Garlinghouse asserted the exodus of crypto innovation is already happening.
In April, Gemini’s Tyler Winklevoss argued that the U.S. is falling behind on crypto innovation as the European Union Parliament approved the Markets in Crypto-Assets (MiCA) bill. Similarly, Coinbase‘s Brian Armstrong recently asserted that the U.S. is fumbling its crypto lead.
Fears of a U.S. crypto exodus have heightened as platforms like Coinbase have recently focused expansion efforts abroad, launching an international derivative trading platform unavailable to U.S. customers in May. Similarly, Crypto.com shuttered some U.S. operations in June.
On the Flipside
- Congress may be making progress toward crypto regulations as the House Financial Services Committee is set to vote on a crypto bill drafted with the House Committee on Agriculture in July.
Why This Matters
The statements from the Chainalysis VP underscore the fears of industry participants amid talks of a crypto exodus.
Read this to learn more about the state of crypto regulations in the U.S.:
Exchanges Were Warned: SEC Chair Gensler Defends Crypto Crackdown
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