‘Crypto Is Dead In America’ — Coinbase Takes Drastic Action After Bitcoin Investor Chamath Palihapitiya Issues Strong Warning Amid Price Chaos
04/25 update below. This post was originally published on April 24
BitcoinBTC and crypto have come under pressure due to the anti-crypto stance of US regulators and lawmakers (one of whom is building an “anti-crypto army”).
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The Bitcoin price, despite seeing a rally in 2023 that some believe may be just under way, is still down about 60% from its late 2021 highs, while CoinbaseCOIN, the major US-listed crypto exchange, has have been hit hard by violent price fluctuations in bitcoin and crypto – even if a new cryptocurrency suddenly rises.
Now venture capitalist Chamath Palihapitiya, an early bitcoin investor who claims to have first bought bitcoin in 2010, has declared that “crypto is dead in America” – warning regulators are coming for crypto companies like Coinbase.
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“Crypto is dead in America,” Palihapitiya said All-in-one podcast, along with fellow investors Jason Calacanis, David Sacks and David Friedberg, point to Securities and Exchange Commission (SEC) Chairman Gary Gensler blaming the recent banking crisis on bitcoin and crypto. “So the US government has definitely turned its guns on crypto.”
04/25 Update: Coinbase has sued the SEC in an attempt to force the watchdog to provide regulatory clarity for the crypto industry.
“Coin base filed a narrow case in federal court to force the SEC to answer yes or no in our July 2022 petition asks the SEC to use its formal rulemaking process to provide guidance for the crypto industry,” Paul Grewal, Coinbase’s general counsel, wrote in a blog post.
Last July, Coinbase urged the SEC to draft rules that would identify which cryptocurrencies are securities and how securities laws would apply to them.
Last week, Gensler linked the collapse of Silvergate and Signature Bank to their bitcoin and crypto activities during his testimony before a House Finance Committee.
US regulators and lawmakers stepped up their scrutiny of the crypto industry and market after the implosion of Bahamas-based crypto exchange FTX last November sent shockwaves through Washington DC, where FTX founder Sam Bankman-Fried had become a major political donor.
In January, four senior US officials in the Biden administration urged Congress to “step up” efforts to regulate the cryptocurrency market, calling it “a serious mistake to pass legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system.”
“Coinbase played by the rules, stood in line, tried to do the right things,” Palihapitiya said. “It seems that every step of the way, from board composition to management composition to how they try to interact with the regulators, they were still probably the furthest away from getting a license. The closest was the one that was the most fraudulent, which is FTX . How is that even possible?”
Coinbase listed shares on the New York Stock Exchange in the spring of 2021 at the height of a bitcoin and cryptocurrency rally. However, Coinbase stock has collapsed by more than 80% since it floated shares amid the price slump, sometimes called the bitcoin and crypto winter.
“[Crypto companies are] 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. So now they are paying the price for it. The bill has fallen due for them,” Palihapitiya said.
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Last week, Coinbase CEO Brian Armstrong said the San Francisco-based bitcoin and crypto exchange would consider moving away from the US if the regulatory environment for the industry does not become clearer.
“Everything is on the table, including relocation or whatever is necessary,” Armstrong said during a London conference, it was reported by Coindesk.
“I think the US has the potential to be an important market for crypto, but right now we don’t see the regulatory clarity we need,” he said. “I think if we don’t see regulatory clarity emerge in the US for a number of years, we may have to consider investing more elsewhere in the world.”
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