America Surrenders Control of Crypto to Europe

Technology Companies Could Flee the U.S. in Droves.

By my count, the score is 517-2. We have a winner.

On the victorious side are the 517 members of the European Parliament who voted a few days ago to approve the world’s first comprehensive set of crypto laws.

On the losing side are U.S. Securities and Exchange Commission Chairman Gary Gensler and Massachusetts Sen. Elizabeth Warren, who combined cannot seem to add two and two together to get to the future of everything.

As you likely know, the SEC has been aggressively targeting crypto companies in recent months.

This has drawn significant condemnation. Even one of the SEC’s own commissioners has called out the agency she works for, saying it’s “paternalistic and lazy.” Why? Because instead of working with Congress, the crypto industry, and crypto users to design smart laws that make sense for a 21st century technology, the SEC under Gensler is punishing the industry based on 80-year-old financial regulations that don’t logically apply.

It’s an inefficient and, frankly, unfair way of regulating because the industry has not been given a set of rules of play by, and the SEC doesn’t meet with the industry to explain what is and is not legal.

So, he we are… the United States, the country that was once the undisputed shining beacon atop the technology hill… the country that gave the world the airplane, the internet, the microchip, the PC, the mobile phone, the refrigerator… the country responsible for 161 of Britannica’s list of the 321 greatest inventions of all time…

That country is now becoming a backwater when it comes to this technology.

Meanwhile, just across the Atlantic, an entire continent has come together to take the undisputed lead in crypto.

Indeed, some are already suggesting the EU’s new rules could become the gold standard of global crypto regulation. Even the crypto industry is praising the EU approach because it finally lays out a framework within which crypto can operate.

At the heart of the EU rules are, among other requirements, regulations that require crypto companies to be more transparent with consumers and to detail their plans for the capital raised. There are also various consumer protection rules, such a stablecoins needing to be backed fully by marketable assets. (Stablecoins are forms of crypto designed to track 1-for-1 an underlying asset such as the U.S. dollar.)

To a lot of people, none of this will seem very significant.

And, of course, those people would be wrong.

Crypto is the most significant technological leap since the internet itself.

Blockchain, the technology that powers crypto, promises to revolutionize pretty much every industry in one way or another. It can make consumer and business transactions faster, cheaper, more efficient, and more convenient. And it will open up avenues for new products and services.

For instance, access to sporting events, airline flights, concerts, movie theaters, etc. will be granted by way of a non-fungible token. (NFTs are a type of one-off, one-of-a-kind crypto token.)

Selling a house, a stock, a bond, any financial asset in fact, will be accomplished by way of an NFT as well. In fact, houses, stocks, and bonds have already been “tokenized” onto the blockchain and traded as digital assets.

Banking and money transfer services will all happen entirely on the blockchain. They will be incredibly cheap to facilitate (literally pennies or even fractions of a penny). And the transfers will happen in seconds, not days.

Money itself—the physical dollars in your wallet—will be 100% digital. Physical money will no longer exist.

Football and baseball games, the U.S. Open golf tournament, the Olympics… they will all be broadcast in a blockchain-powered metaverse that opens those events to tens or hundreds of millions of people “attending” from every corner of the world. (The metaverse is a new, immersive, 3D version of the internet built using blockchain.)

Education, too, will take place in fully rendered metaverse classrooms, rendering obsolete the vast campuses we have now.

That’s just a small sampling of the many revolutions and evolutions already taking shape even as you read these words.

And why is any of this important to today’s dispatch?

Because it shows how badly out of step the SEC and certain U.S. lawmakers are when it comes to America’s stance on crypto.

America is yielding tomorrow to Europe, where forward-thinking lawmakers are collectively saying “Yep, the future is all about crypto—and we can either get on board and get ahead of this thing and help the industry grow by way of a set of rules and regulations… or we can be Gary Gensler condemning ourselves to also-ran status.”

Even U.S.-based businesses are ignoring Uncle Sam’s minions.

I won’t go through the litany of names, but I will say that companies from JPMorgan to Home Depot to Nike and Walmart are all moving into the crypto space because executives and marketers in those companies see the future in high-definition.

They know where society, investors, and consumers are headed.

For Americans, though, that future is uncertain. Which means opportunities are already passing the country by.

Crypto-based companies are threatening to leave U.S. shores to re-establish in jurisdictions friendlier to crypto businesses (and there are many such jurisdictions).

Uncle Sam is also losing high-paid, highly educated technology talent that sees the writing on the wall and is fleeing America for other countries, where they can build their crypto projects without fear of running afoul of an irrational SEC.

A recent report shows America’s share of the world’s crypto talent is now down to 29%, when it was well above 40% as recently as five years ago.

Here at the bottom, there’s good news: This trend is going to reverse.

The crypto industry and American businesses are going to bring Congress around to their views. And Congress is going to bring the SEC around to its views.

It’s going to take a few years for sure. We’re going to lose a lot of talent and crypto businesses in that time.

But a change in mentality is certain.

Which means those who are buying crypto in their portfolio are going to be big beneficiaries of that change. The ride will be bumpier than a dirt road. But at the end, those who hold on now are going to reap massive rewards tomorrow.

So, take your cue from the EU, not the SEC.

Side with the winners, not the losing Luddites.

Stack and pack some crypto now.

Because the entirety of a continent is telling you where we’re going.