‘Crypto Is Dead in America’ As Regulators Target Sector: Palihapitiya

• Crypto is paying the price for challenging the establishment, Chamath Palihapitiya said.
• “Crypto is dead in America,” the so-called SPAC King recently said on the All-In podcast.
• “So the US government has definitely turned its guns on crypto.”

Cryptocurrencies are paying the price for pushing financial boundaries, “SPAC King” Chamath Palihapitiya said on a weekend episode of the All-In podcast.

His comments came as the Securities and Exchange Commission has stepped up efforts to crack down on the sector.

“Crypto is dead in America,” Palihapitiya said. “Now you had [SEC Chair Gary] Gensler even blames the banking crisis on crypto. So US authorities have definitely turned their guns on crypto.”

Recent examples of the SEC’s enforcement efforts include a February proposal to stop investment advisers from trading 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 may move out of the US due to a lack of regulatory clarity.

In addition, crypto exchange Bittrex also recently said it would leave due to unclear enforcement. Last Monday, the SEC alleged that the company operates an unregistered securities exchange.

“I just think so [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, pushed 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 is 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 new regulatory framework should be created instead to ensure companies don’t go overseas.

“Regulation by enforcement is not sufficient or sustainable,” said Representative Patrick McHenry. “You’re punishing digital asset firms for allegedly not following the law when they don’t know it will apply to them.”

Meanwhile, Palihapitiya also bemoaned the SEC’s enforcement rationale, arguing that it is overly targeted at a company that has a history of being regulatory-friendly.

“Coinbase played by the rules, stood in line, tried to do the right things. It seems that every step of the way – everything from board composition, to management composition, to how they try to interact with the regulators, but they were probably the furthest away from get a license,” he said. “The closest one was the most fraudulent, which is FTX. How is that even possible?”