2 min video — America have been the tech global leaders but they seem to be slipping behind……
The attraction of doing business in the US is obvious, being the biggest economy globally, and there still exists a very ‘can-do’ attitude. However, if you are running a regulated business or, even worse, you do not think there is the necessity to be regulated, but the Americans think you do, then you potentially face the double challenge of both State and Federal laws.
For the last 20 or 30 years, California’s Silicon Valley has, without a doubt (largely due to the tremendous pool of talent and access to capital) led in innovation and technology. Global success stories such as Google, Facebook, Apple, CISCO, Oracle, Hewlett Packard, and Intel, to name a few, have transformed business and society across the world. Unfortunately, however, it seems there could be a possibility that the US is being left behind as its regulators fail to embrace the new Digital economy of digitising tangible assets, i.e. equities, debt, real estate, commodities, etc as well as intangibles such as loyalty schemes, IP and structured data, which offer alternative investment opportunities together with a way to improve the efficiencies of traditional financial markets.
We have already seen the digital exchange, Kraken (now launching a crypto bank) move from New York to the more digital-friendly state of Wyoming. More recently, Ripple is reported to be considering a move by leaving the US and relocating to Japan, Singapore, Switzerland, or London. Also in the news, the three founders of BitMex (another digital exchange) face criminal proceedings. Hence it would appear the potential personal cost of doing business is very high in the US, let alone dealing with the various State and Federal regulations. The chart below illustrates a selection of fines and penalties those firms involved with Digital Assets have faced, just from the SEC.
SEC penalties on various crypto ventures 2016–2020
This less than accommodative stance by US authorities means we are subsequently seeing more innovation in the Digital Assets sector coming from Asia and Europe where governments are actively encouraging companies to establish themselves in their countries, as the latter bring much needed and often highly paid, skilled jobs. The US has led the way in innovation for years with its huge consumer market and access to capital, but why would companies such as Ripple remain in the US and face such a hostile, regulatory environment and such tenacious lawyers. Regrettably, this is a real shame. Come on Uncle Sam, international borders are not as relevant in a globally interconnected market and together with the size of your debt mountain and a moribund economic outlook, you need the jobs and wealth that Crypto and Digital Assets offer — just as much as any country.