America’s reluctance to regulate crypto is costing the country on startups and potentially the future of technology.
That’s the view of two major names in the crypto space, Ripple CEO Brad Garlinghouse — whose company created cryptocurrency XRP — and Michael Arrington, the founder of TechCrunch who runs a dedicated crypto fund, who shared their thoughts at TechCrunch Disrupt San Francisco today.
While there’s been no breakout blockchain company so far — excluding those that service the industry through crypto exchanges or mining — nearly every major tech company has a stance on blockchain, and is actively looking into how it can work with it. While big companies as diverse as Facebook, IBM and Google are looking hard at what’s possible, most startups — which also bring innovation — are being developed elsewhere in the world.
“We have a few good U.S. investments,” Arrington said of his $100 million Arrington XRP fund. “But 80-90 percent of our investments are in Asia, Europe and Israel right now because they are actually countries where there’s enough regulatory certainty that entrepreneurs feel safe starting token or blockchain companies there.”
“Here [in the U.S.] they don’t. There’s so much regulatory uncertainty, add to that the tax burden and the visa burden of coming here and then our current federal government’s stance on immigration in general, they’re just saying ‘Fuck it’ and they’re staying in Singapore or Israel or Europe instead of coming here and starting companies,” he added.
In more stronger terms, Arrington said the lack of clarity is “single-handedly fucking the next stage of technology development.”
“The SEC needs to get their act together,” he added. “If they had done that with the internet in 1994-1995, TechCrunch/none of us would be here, we’d all be living in Shanghai or somewhere else, wherever had managed to get their act together.”
Garlinghouse echoed those statements, whilst adding that there is certainly a need for intervention from a regulator.
“There are unequivocally bad actors in the ICO ecosystem,” he said. “There have been frauds and massive scams — hundreds of millions of dollars, if not billions, have been heisted — if anything I’m surprised the SEC hasn’t been more aggressive.
“The clarity [around regulation] would be very helpful, there’s a risk that a lot of this developments ends up not being in the U.S.,” Garlinghouse explained. “The impact on the United States economy for having the internet that we think of today being very U.S.-centric in many ways has been very, very positive for the United States.”
While there’s been plenty of speculation around what tokens that the SEC might deem to be securities, Garlinghouse said that he isn’t concerned about a clampdown on XRP.
“We joked at an all-hands meeting recently — and some people didn’t find it funny — that if Ripple shutdown tomorrow, the XRP ledger would continue to operate. So if XRP is a security, it is a security of what?” he said.
“The facts are pretty clear: XRP is not a security… I don’t spend a lot of time worrying about that.”
Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.