Due to U.S. regulators and lawmakers’ anti-crypto stance, pressure has been placed on bitcoin and other cryptocurrencies.
While Coinbase, the major U.S.-listed cryptocurrency exchange, has been severely impacted by violent price swings in bitcoin and other cryptocurrencies, one new cryptocurrency is suddenly surging, the price of bitcoin is still down by about 60% from its late-2021 all-time highs despite a 2023 rally that some think may be just getting started.
The early bitcoin investor Chamath Palihapitiya, a venture entrepreneur, has now declared “crypto is dead in America” and warned regulators are coming for crypto firms like Coinbase.
Palihapitiya, together with investors Jason Calacanis, David Sacks, and David Friedberg, declared on the All-In Podcast that cryptocurrency is dead in America, citing SEC chairman Gary Gensler’s recent comments that bitcoin and cryptocurrencies were to blame for the recent banking crisis. As a result, the American government has openly threatened cryptocurrency.
In July 2022, Coinbase petitioned the SEC to use its official rulemaking process to provide direction for the cryptocurrency industry. Paul Grewal, Coinbase’s chief legal officer, announced in a blog post that the company has launched a limited action in federal court to compel the SEC to respond yes or no.
Coinbase requested that the SEC issue rules defining whether cryptocurrencies are securities and defining how securities laws should be applied to them in July of last year.
Last week, during his testimony before a House financial services committee, Gensler connected the failure of Silvergate and Signature Bank to their involvement with bitcoin and cryptocurrencies.
After the collapse of the crypto exchange FTX, based in the Bahamas, in November of last year, which sent shocks through Washington DC, where FTX founder Sam Bankman-Fried had grown to be a major political donor, regulators and lawmakers in the U.S. increased their investigation of the crypto market and industry.
Four high-ranking U.S. government representatives in the Biden administration encouraged Congress to “step up” efforts to regulate the cryptocurrency market in January, describing it as a grave error to pass legislation that reverses course and strengthens the connections between cryptocurrencies and the larger financial system.
Palihapitiya stated that Coinbase played by the rules, stood in line, and tried to do the right things. It seems that at every stage of the process—from board composition to executive composition to how they attempt to communicate with regulators—they were the furthest from receiving a license, yet. The most dishonest competitor, FTX, was the one that came the closest. What makes that even possible?
In the spring of 2021, during the peak of the bull run in bitcoin and cryptocurrency prices, Coinbase listed shares on the New York Stock Exchange. But since it floated shares during the price decline, which is frequently referred to as the “bitcoin and crypto winter,” Coinbase stock has fallen by more than 80%.
According to the regulators, Crypto businesses are certainly the ones that were the most threatening to the establishment and they were the ones that pushed the boundaries more than any other area of the startup economy. They are currently suffering the price for that. They now owe the money, according to Palihapitiya.
Brian Armstrong, the chief executive of Coinbase, stated last week that if the regulatory landscape for the sector is not clarified, the San Francisco-based bitcoin and cryptocurrency exchange may consider leaving the United States.
Armstrong stated during a seminar in London that anything is possible, including moving or doing whatever is required.
He believes that the U.S. has the potential to be a significant market for cryptocurrencies, but at the moment, they are not getting the regulatory clarity they require. He believes that in a few years, if they do not see that regulatory clarity emerge in the United States, they may need to think about increasing their investments elsewhere.
