Solana (SOL) co-founder Anatoly Yakovenko believes the U.S. government should not wait for “perfect” legislation to regulate the digital asset sector—instead, the crypto veteran advocates for a pragmatic regulatory framework that promotes innovation while protecting consumers.
In a recent opinion article published in Fortune, Yakovenko, the CEO of Solana Labs, said that the U.S. is grappling with a concerning trend as more founders leave the country to pursue their entrepreneurial ambitions.
Today, Solana Labs co-founder @aeyakovenko called for U.S. policymakers to clarify regulations around blockchain technology in order to maintain technological innovation in the U.S. and better support web3 entrepreneurs.
Read more in @FortuneMagazine 👇 https://t.co/RwJNt4tu97
— Solana (@solana) September 18, 2023
The Solana mastermind said that the U.S. has seen a significant decline in open-source blockchain developers. Citing data from Electric Capital, he said that the percentage of blockchain developers in the country has dropped from 42% in 2018 to 29% in 2022.
One primary reason behind this is the country’s lack of regulatory clarity. While it is crucial to combat scams and fraudulent activities in the digital asset space, it is equally important not to penalize an entire industry for the actions of a few bad actors, Yakovenko said.
“Many of us are here because we want to create real value — and we want American values at the foundation of the world’s most impactful companies. Imagine if Google had been founded in Russia, or Reddit had been founded in China. How different would the internet look today?”
U.S. Needs to Proceed With Available Crypto Bills
In July, the United States House Financial Services Committee advanced two bills to establish regulatory frameworks for digital assets and stablecoins bipartisanly. On July 26, most U.S. lawmakers voted in favor of the Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act.
The first bill would establish rules for crypto firms regarding when to register with either the Commodity Futures Trading Commission or the Securities and Exchange Commission. The bill also defines a process for firms to certify that their projects are adequately decentralized with the SEC.
The second bill aims to set guidelines removing hurdles and requirements for “blockchain developers and service providers” such as miners, multi-signature service providers, and decentralized finance (DeFi) platforms.
Yakovenko said that as the full House prepares to vote on these bills in the coming months, it is essential to acknowledge that no legislation is perfect. However, the pursuit of perfection should not hinder progress. He said that Congress needs to continue its efforts to protect America’s technological leadership, ensure market integrity, and promote an open and free internet.
“I applaud the efforts of members from both parties to move these bills forward, and I hope legislators across both chambers will take these proposals seriously, work to improve them, and turn them into law.”
U.S. Needs to Invest in Blockchain Research and Development
Beyond legislation, Yakovenko also emphasized the need for the U.S. government to invest in blockchain research and development actively. He noted that in the past, numerous groundbreaking technologies such as GPS, rockets, and the internet were initially nurtured by government initiatives.
European and Asian governments have already recognized the potential of blockchain and are allocating resources accordingly, the Solana co-founder said. The European Commission, for instance, operates a digital ledger sandbox to explore public-private partnerships, he said, adding that the U.S. should follow suit.
“Policymakers need to experiment with the technology themselves. Ethics rules prohibit most government officials who regulate digital assets from using them. This makes it tough to craft good policy: Imagine trying to regulate social media without having ever opened Facebook!”
Yakovenko said that the U.S. government could leverage the speed and cost-effectiveness of cryptocurrencies to distribute humanitarian relief funds or establish decentralized communication networks in areas with limited connectivity.
He said the potential for the U.S. government to support and encourage the growth of the internet’s new frontier is vast. “I welcome an open conversation with policymakers about Web3, its potential, and yes, its pitfalls. Let’s keep builders building in America.”
Regulatory Ambiguity Pushes Crypto Outside the U.S.
Regulatory ambiguity, particularly regarding the jurisdiction of the SEC and CFTC, has resulted in numerous challenges to the industry. For one, it has forced some high-profile crypto companies to explore other markets.
Coinbase is already aggressively expanding its global virtual currency footprint with operations in Germany, Ireland, Italy, and the Netherlands. Paxful, Nexo, and Binance are other major crypto platforms that could wind down operations in the U.S. amid growing regulatory scrutiny.
Last month, Antonio Juliano, founder of the decentralized exchange (DEX) dYdX, even suggested that crypto developers forget about serving customers in the United States for the next five to 10 years due to a hostile regulatory environment. The crypto veteran encouraged crypto builders to focus on experimenting in other markets and return to the U.S. when the time is right.
[Serious tweet / hot take 🌶️]
Crypto builders should just give up serving US customers for now and try to re enter in 5-10 years
It’s not really worth the hassle / compromises. Most of the market is overseas anyways. Innovate there, find PMF, then come back with more leverage
— Antonio | dYdX (@AntonioMJuliano) August 25, 2023
More recently, a16z General Partner Arianna Simpson also said that the lack of specific guidance in the U.S. is causing legitimate crypto companies to seek opportunities offshore. “The lack of specific guidance here in the U.S. is pushing legitimate companies offshore because they want to be compliant,” she said in an interview with TechCrunch.
