- The Ripple-SEC rivalry will have some far-reaching implications for the crypto industry. In fact, as former SEC Commissioner Joseph Grundfest suggested in a recent letter to Jay Clayton, the Ripple case will cause “billions of dollars in losses to innocent third parties.”
The Ripple-SEC rivalry will have some far-reaching implications for the crypto industry. In fact, as former SEC Commissioner Joseph Grundfest suggested in a recent letter to Jay Clayton, the Ripple case will cause “billions of dollars in losses to innocent third parties.”
The lawsuit claims that XRP is a security that must be registered with the agency and is actually not a currency outside the regulator’s domain. Ripple CEO Brad Garlinghouse called the SEC’s move an attack on crypto.
While this case raises concerns about the potential characterization of cryptocurrencies as securities, the biggest concern is perhaps the impact of these regulatory actions on crypto innovation in the United States.
The SEC will not be the only one to be blamed here for the potentially stifling crypto innovation, as the proposed new rule of the US Treasury is also not fully appropriate for the domain. The resulting results may not be good for the industry and could lead to mass migration of crypto companies from the US.
But how likely is this scenario? So what is the probability that companies will pack up and leave?
Crypto companies outside the USA
There are good reasons to believe that the United States is at the head of crypto innovation in the world. After all, not only is it home to some of the world’s largest crypto exchanges, but assets like Ripple are also located here.
However, the situation may not really be as described. Consider this – As of last January, data confirmed that Switzerland has 5 times the number of crypto initiatives per 100,000 people, despite being close to 40 times the US population.
Ethereum, the second largest crypto currency in terms of market value, is located in Zug, Switzerland.
Switzerland is not the only country hosting high-profile crypto companies Recently, Efforce, founded by iconic Steve Wozniak, established itself in Malta and its currency WOZX is listed on a Singaporean exchange.
If this trend continues, how much will the US lose?
It seems that he will lose a lot. Speaking about the impact of these companies potentially leaving the US, Ben Weiss, COO of CoinFlip, said:
“You will lose your jobs, you will lose your competitive advantage and a group of big companies.”
According to him, the next Apple or Amazon will most likely be a blockchain company and the executive will perhaps say:
“Right now, we will probably be in Asia, not America, because of the regulations here.”
What could potentially stop this from happening?
Appropriate regulations imposed earlier rather than late seem like the desired course of action. Reportedly, Congressman Warren Davidson was working in his favor with a law that aimed to exempt some tokens and digital assets from federal securities laws, with the re-enactment of the Token Taxonomy Act last year.
However, according to crypto lawyer Shapiro, the implication of this bill would prohibit governments from regulating any aspect of digital token sales other than complete fraud, calling it “insulting the rights of states.”
What can reinforce positive regulations for the US this year has been the emergence of institutions as a 2020 feature of crypto markets.
This year saw the biggest allocation of Bitcoin from an institution from MicroStrategy to date. It has now announced that it is over $ 1 billion in total Bitcoin purchases for 2020. Many other institutions have done the same, allocating some of their Treasury reserves to Bitcoin.
Now, as the Chicago Mercantile Exchange (CME) becomes the largest Bitcoin Futures exchange, the newly discovered interest of institutions is not only a sign of mainstream adoption, but also serves to further legitimize Bitcoin’s status as an asset class.