'Crypto is dead in America' as US regulators target the sector for threatening the establishment, Chamath Palihapitiya says
- Crypto is paying the price for challenging the establishment, Chamath Palihapitiya said.
- "Crypto is dead in America," the so-called SPAC King said recently on the All-In podcast.
Cryptocurrencies are paying the price for pushing economic boundaries, "SPAC King" Chamath Palihapitiya said in a weekend episode of the All-In podcast.
His comments came as the Securities and Exchange Commission has stepped up efforts to crackdown on the sector.
"Crypto is dead in America," Palihapitiya said. "Now you had [SEC Chair Gary] Gensler even blaming the banking crisis on crypto. So, the United States authorities have firmly pointed their guns at crypto."
Recent examples of the SEC's enforcement efforts include a February proposal to stop investment advisors from trading in crypto, and the threat of legal action against a number of Coinbase products.
According to a press release from the crypto platform, the threat came after Coinbase had tried to get better regulatory guidelines from the SEC. CEO Brian Armstrong indicated last week that the company might relocate out of the US due to a lack of regulatory clarity.
In addition, crypto exchange Bittrex also said recently it would be leaving due to unclear enforcement. Last Monday, the SEC alleged the company is operating an unregistered securities exchange.
"I just think that [crypto companies] were probably the ones that were the most threatening to the establishment, and they were the ones that, in fairness to the regulators, did push the boundaries more than any other sector of the startup economy," Palihapitiya said. "So yeah, now they're paying the price for that. The bill has come due for them."
But Gensler faced similar concerns from Congressional Republicans last week, when he testified before the House Financial Services Committee over the SEC's crackdown.
Some lawmakers said a fresh regulatory framework should be created instead to ensure companies don't go overseas.
"Regulation by enforcement is not sufficient nor sustainable," said Rep. Patrick McHenry. "You're punishing digital asset firms for allegedly not adhering to the law when they don't know it will apply to them."
Meanwhile, Palihapitiya also lamented the SEC's enforcement rationale, claiming that it is excessively targeting a company that has a history of being regulation-friendly.
"Coinbase played by the rules, stood in line, tried to do the right things. It seems that every step along the way — everything from board composition, to executive composition, to how they try to interact with the regulators, yet they were probably the furthest away from getting a license," he said. "The one that came the closest was the one that was the most fraudulent, which is FTX. How is that even possible?"