SEC is killing innovation in the United States — 1inch co-founder

The United States could risk an exodus of significant Web3 and cryptocurrency provider as the Securities and Exchange Commission (SEC) does something about it versus Coinbase and Binance.Sergej Kunz, a co-founder of decentralized financing (DeFi) protocol 1inch Network, believes the SECs enforcement action against the 2 central exchanges could have a negative result on the development of Web3 in the United States.Related: SEC suits versus Binance and Coinbase combine the crypto industrySpeaking to Cointelegraph throughout Money 20/20 in Amsterdam– a popular international fintech occasion focused on payments and monetary provider– Kunz highlighted his belief that regulatory uncertainty in the U.S. could harm the industry:”I would say the very same as Brian Armstrong. Its killing innovation in the United States. All the companies there are considering relocating to another nation.”Kunz included that he had witnessed Coinbases CEO holding talks with United Arab Emirates delegates previously this year, checking out the possibility of setting up store in the Middle East. Within a few weeks, news broke that Coinbase is undoubtedly wanting to develop a main office in the UAE.Events in the U.S. today remain in stark contrast to the experience at Money 20/20, where a huge selection of household names in traditional financing, or TradFi, were sprinkled with a handful of companies and company from the cryptocurrency and DeFi environment, consisting of Ripple and USD Coin (USDC) company Circle.Cointelegraphs Gareth Jenkinson along with 1inch Network co-founder Sergej Kunz at Money 20/20 in Amsterdam. Source: Cointelegraph1inch Network, which has developed itself as a notable DeFi aggregation procedure, likewise had a cubicle near the main entrance to the event. The companys existence amongst numerous TradFi gamers seems a sign of the latters growing interest in Web3.Europes move to produce solid regulative requirements for the cryptocurrency environment through the marketplaces in Crypto-Assets (MiCA) policies contrasts the absence of clearness across the Atlantic in the U.S., where Web3 firms and advocates continue to advocate a regulative framework.Related: 3 takeaways from the European Unions MiCA regulationKunz said that while MiCA pertains more specifically to centralized exchanges, efforts to create structures for organizations to use products and services across the continent have been favorable for the larger Web3 ecosystem.He likewise exposed that countries like Switzerland and the UAE have embraced an open-minded “how can we help” technique, putting them far ahead of the U.S. when it comes to DeFi guidelines:”They state, How can we assist you? We can change the structure if you have something that includes worth.”Kunz said a major stumbling block for regulators is comprehending how smart agreements and settlements deal with blockchain systems. Players like 1inch have been communicating with regulators in the Middle East to adjust regulatory frameworks about DeFi-related services and products.”When I do a keynote, I try to explain what is DeFi and Web3. How the settlement on clever agreements is more efficient than centralized settlement.”Kunz added that occasions like the collapse of FTX indicate the threat for users of relying on a central party to hold their cash or assets.Magazine: Crypto policy: Does SEC Chair Gary Gensler have the last say?

Other Questions People Ask

How is the SEC killing innovation in the United States according to the 1inch co-founder?

Sergej Kunz, co-founder of 1inch Network, argues that the SEC's enforcement actions against major exchanges like Coinbase and Binance are stifling innovation in the U.S. He believes that regulatory uncertainty is prompting companies to consider relocating to countries with more favorable regulations. This shift could lead to a significant exodus of Web3 and cryptocurrency providers from the U.S., ultimately harming the industry's growth.

What impact does the SEC's regulatory approach have on Web3 development in the U.S.?

Kunz emphasizes that the SEC's current regulatory framework creates an environment of uncertainty that negatively affects Web3 development. He points out that while companies in the U.S. are contemplating moving abroad, regions like the UAE and Switzerland are actively fostering innovation by adopting supportive regulatory measures. This contrast highlights the potential risks for U.S.-based firms if they remain under stringent regulations.

What alternatives are companies considering due to the SEC's actions?

In light of the SEC's actions, many companies, including Coinbase, are exploring opportunities in countries like the UAE, which offer a more welcoming regulatory environment. Kunz notes that discussions between U.S. firms and Middle Eastern regulators indicate a desire for collaboration and support. This trend suggests that companies may prioritize jurisdictions that encourage innovation over those that impose restrictive regulations.

How does the regulatory landscape in Europe compare to that of the U.S. regarding Web3?

Kunz highlights that Europe is making strides with its Markets in Crypto-Assets (MiCA) regulations, which provide clearer guidelines for cryptocurrency operations. In contrast, the U.S. lacks a cohesive regulatory framework, leaving Web3 firms in a state of uncertainty. This difference in approach could position Europe as a more attractive destination for innovation in the cryptocurrency space.

What lessons can be learned from the SEC's impact on innovation in the cryptocurrency sector?

The situation underscores the importance of regulatory clarity for fostering innovation in the cryptocurrency sector. Kunz suggests that regulators need to better understand technologies like smart contracts and decentralized finance to create frameworks that support growth. By learning from the experiences of other regions, U.S. regulators could help prevent further stifling of innovation within the industry.