The United States is gradually becoming too hot for crypto firms to operate due to unclear and stringent regulatory approaches. For instance, a recent development that sparked an outcry was the proposal to impose a 30% excise tax on crypto-mining facilities.
US President Joe Biden’s budget proposal presented a phased-in tax on the electricity used by crypto mining firms. This tax and the Securities and Exchange Commission’s enforcement actions may push many top crypto firms and startups to consider offshore operations. As such, Tim Draper foresees a massive departure from the US that might crash its economy.
US Unclear Regulatory Environment Is Leading To Massive Crypto Exodus
In a Twitter post, the founder of DFJvc, Draper mentioned that Silicon Valley startups are relocating operations to Asia, Europe, and the Middle East.
He further stated that Gemini and Coinbase are moving out of the US due to the regulatory pressure on their operations. Coinbase CEO Brian Armstrong hinted at the same outcome in an April conference organized by the Innovative Finance industry body.
While speaking, Armstrong stated that the Bahamas-based FTX exchange that crashed in 2022 shows the need for clear crypto regulations. As such, the industry needs clear regulations in the US and UK, or more firms will establish operations in “offshore havens.”
New York Is Losing Blockchain Development Leadership
Draper also pointed out that countries like Singapore, Dubai, and London gradually overtake New York in blockchain development. A report by Global Media Insight on March 29, 2023, pitched the UAE as the most digital-friendly country in the world.
The report revealed that Dubai has many policies that support blockchain technology. As such, it is emerging as one of the best crypto trading markets worldwide.
In April, Binance also shared many reasons Dubai is crypto-friendly, mentioning tax-free zone, government support, high-tech infrastructure, etc.
Apart from the UAE, London, and Singapore also has a more crypto-friendly environment than the US. According to Draper, these countries have positioned themselves to accommodate crypto firms, thereby attracting more investments gradually.
In conclusion, Draper believes that such an outflow of investment and development might leave the US economy in bad shape, increase homelessness and lead to a massive loss of jobs.
-Featured image from CNBC and chart from Tradingview