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Palihapitiya Blames Regulators for Killing Crypto in America

Key Takeaways
  • Chamath Palihapitiya, a billionaire tech investor and Bitcoin enthusiast, claims that the U.S. government's regulatory stance is killing the cryptocurrency sector in America
  • The U.S. views crypto as a threat to its "establishment," and regulators are discouraging banks from providing services to crypto companies, resulting in good actors paying the price for bad actors' wrongdoings
  • Coinbase, a digital asset trading platform that followed the rules, is no closer to receiving regulatory clarity than the now-bankrupt FTX, as the SEC issued Coinbase a Wells notice in March, which could lead to legal action
25-Apr-2023 By: Ashish Sarswat
Palihapitiya Blames

Billionaire Investor Chamath Palihapitiya says "Crypto is dead in America" due to regulatory chokehold

According to billionaire tech investor and Bitcoin bull, Chamath Palihapitiya, the cryptocurrency sector in the United States has been choked out to the point of death by regulators. In a recent episode of the All-In podcast, Palihapitiya stated that "Crypto is dead in America" and attributed the blame to Gary Gensler, the chair of the U.S. Securities Exchange Commission. 

Palihapitiya believes that the U.S. views crypto as a threat to its "establishment," but he did also point out that the crypto sector pushed boundaries more than any other startup economy, which may have attracted regulatory attention.

Palihapitiya also acknowledged that good actors in the industry are now "paying the price" for the bad work done by firms like FTX, which has impacted the industry's reputation. 

US regulators suffocating crypto innovation and threatening legal action against Coinbase, say industry insiders

Meanwhile, co-host David Sacks suggested that the U.S. may be attempting to suffocate cryptocurrency because it could threaten the dominance of the US dollar. However, Sacks also expressed concern that pushing crypto companies offshore would be "terrible for American innovation."

Others have described the issue as "Operation Choke Point 2.0," which allegedly involves regulators discouraging banks from holding crypto or providing services to crypto companies. Palihapitiya expressed bafflement that Coinbase, a digital asset trading platform that had "played by the rules, stood in line, and tried to do the right things," was no closer to receiving regulatory clarity than the now-bankrupt FTX

In March, the SEC issued Coinbase a Wells notice, which typically implies that the regulator plans on pursuing legal action against the firm for potential violations of U.S. securities laws. Coinbase CEO Brian Armstrong has stated that if a lawsuit is filed, the exchange will be ready to litigate. 

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