Venture capitalist Chamath Palihapitiya said “Crypto is dead in America.”
His stark assessment of the US crypto market came during an interview with the All-In Podcast – with Palihapitiya blaming hostile regulators.
Operation Choke Point 2.0
Since the start of the year, multiple crypto exchanges and projects have been served with enforcement actions at the hands of US regulators, including Coinbase, which received a Wells notice on March 22 detailing pending action over securities violations.
The frequency of enforcement actions, including against Binance, KuCoin, and Kraken, had raised suspicions that the crypto industry was under a coordinated attack.
Many in the community, including Anthony Pompliano, Nic Carter, and Caitlin Long, concluded that the attack took the form not only of regulatory enforcement actions, but also of de-banking.
Under an Operation Choke Point 2.0 scenario, observers pointed out that crypto companies are being marginalized by loss of banking access.
Similarly, crypto-friendly banks have been targeted, including Custodia Bank, which was denied a Fed master account and rejected for membership in the Federal Reserve System — Long concluded the decisions were made as part of an anti-crypto agenda.
Crypto is dead at the hands of US regulators
Commenting on the state of the US regulatory landscape, Palihapitiya said, “US authorities have turned their guns firmly on crypto.”
The former Facebook exec believes this is motivated by crypto’s threat to the establishment. But at the same time, he admitted that the crypto industry was “pushing the boundaries,” leading to the regulatory response we see today.
“To be fair to the regulators, they pushed the boundaries more than any other sector of the startup economy. And now they are paying the price for that.”
VC at Craft Ventures David Sacks said that while some crypto firms are guilty of “shady things,” most agree that Coinbase, as the gold standard that meets it, didn’t fall into that camp — confusing enforcement action against them.
Sacks pointed out that Coinbase had asked for clarity several times to comply with the rules. But the lack of response proves that the authorities are not seeking dialogue, only a ban.
“So I think Chamath is right about effectively banning crypto in the United States.”
Palihapitiya said it’s ironic that FTX came closest to “getting a license” despite its many shortcomings as a compliant exchange.
