3 - 6 minute read
The United States has long been a hub for technology and innovation, with many of the world’s leading tech companies and developers calling it home. However, when it comes to the world of cryptocurrency, the US is losing ground. According to a report from venture capital firm Andreessen Horowitz (a16z), the share of global crypto developers based in the United States declined by 26% from 2018 to 2022.
Electric Capital and SimilarWeb data was cited by a16z in its report ‘State of Crypto 2023’ that revealed “the proportion of crypto developers based in the U.S. vs. the rest of the world fell 26%.” In 2018, the US accounted for almost 40% of global crypto developers but dropped to below 30% in 2022, representing a decline of more than one-quarter.
The reason behind this decline is not immediately clear, but a16z has speculated that a lack of regulatory clarity may be a factor. The report suggests that “There has been much debate, but little regulatory clarity, which has hindered web3’s growth. As a result, America’s edge may be slipping.”
Although the report acknowledges the challenges facing the US crypto industry, it also highlights the potential for it to regain its lost ground. The report notes that the US government is considering multiple bills to provide regulatory clarity for crypto assets, including the Responsible Financial Innovation Act, Digital Commodities Consumer Protection Act, and Digital Commodity Exchange Act.
Today, we’re excited to share the 2023 State of Crypto Report and introduce the State of Crypto Index. https://t.co/nS2XjJoG1j— a16z crypto (@a16zcrypto) April 11, 2023
Furthermore, the report cited several influential crypto cases that may soon be decided, including the Securities and Exchange Commission’s enforcement action on Ripple, the Treasury Department’s Tornado Cash civil actions, and the bankruptcy proceedings of firms such as FTX, Voyager, and Celsius as reasons for optimism.
Interestingly, a16z’s sentiment on regulatory clarity echoes Coinbase’s CEO Brian Armstrong’s earlier comments that U.S. regulations are driving crypto users offshore. In addition, crypto lending platform Nexo announced its decision to leave the U.S. due to the lack of clear regulations in the market, a move that reflects concerns evolving among business owners.
Declining Share of Crypto Developers
The decline in the share of global crypto developers in the US is something that every trader should take note of. The US has been a significant player in the crypto market since the industry’s inception, and this decline could have significant implications for market sentiment.
One potential impact could be on the price of cryptocurrencies, as investors may become more hesitant to invest if the regulatory environment is uncertain. As a result, traders may see a slowdown in trading activity or even a decline in the value of crypto assets.
Moreover, traders may also need to consider the implications of a decrease in the competitive advantage of the US. As developers shift their attention to other parts of the world, the US may lose its position as a hub for crypto innovation. This could result in a decline in the number of new cryptocurrencies or the sophistication of new platforms. As a result, traders may need to adjust their investment strategies accordingly.
The Bottom Line
The decline in the share of global crypto developers based in the US provides traders with the insight that the US crypto market is losing its competitive edge. Regulatory clarity has been an ongoing concern for industry players, traders, and investors. The U.S. Congress has bills under consideration, which could provide the necessary regulatory clarity for crypto-assets. The crypto industry’s inconsistency may be causing some companies to relocate or withdraw altogether. Traders may need to keep a close eye on how the situation unfolds concerning the US regulatory environment to prevent significant disruptions in their investment strategies.