The SEC’s actions against Coinbase and Binance could lead to a major departure of Web3 and cryptocurrency service providers from the United States.
Sergej Kunz, one of the co-creators of the DeFi protocol 1inch Network, thinks that the SEC’s enforcement against two centralized exchanges might impede the expansion of Web3 in the U.S.
SEC lawsuits against Binance and Coinbase have unified the crypto industry.
At Money 20/20 in Amsterdam — a renowned international fintech event centered around payments and financial service providers — Kunz expressed his apprehension that regulatory ambiguity in the U.S. might damage the sector when speaking to Cointelegraph.
Kunz reported that he had seen Coinbase’s CEO engaging in conversations with representatives from the United Arab Emirates earlier this year, discussing the potential of creating a presence in the Middle East. Soon afterwards, it was announced that Coinbase is indeed planning to establish a base in the UAE.
This week in the U.S., the contrast between events and the atmosphere at Money 20/20 is stark. There, a variety of well-known traditional finance companies, or TradFi, were mixed with a few cryptocurrency and DeFi companies and service providers, such as Ripple and Circle, the issuer of USD Coin (USDC).
The presence of 1inch Network, a notable DeFi aggregation protocol, at a booth near the main entrance of the event, surrounded by many TradFi players, seems to suggest the latter’s increasing interest in Web3.
Europe’s decision to establish firm regulatory rules for the cryptocurrency industry through the Markets in Crypto-Assets (MiCA) regulations stands in stark contrast to the lack of clarity in the United States, where proponents of Web3 companies persist in requesting a regulatory structure.
Three key points from the European Union’s MiCA regulation
Kunz stated that while MiCA is particularly applicable to centralized exchanges, the attempts to create frameworks for companies to provide products and services across Africa have been beneficial for the broader Web3 environment.
He also disclosed that nations such as Switzerland and the UAE have embraced a progressive “how can we aid” attitude, making them much further ahead of the U.S. with regards to DeFi regulations.
Kunz pointed out that a significant hurdle for regulators is grasping how smart contracts and settlements operate on blockchain networks. Companies such as 1inch have been conversing with regulators in the Middle East to modify regulatory frameworks in relation to DeFi-related products and services.
Kunz noted that occurrences such as the failure of FTX demonstrate the hazard for users who have faith in a centralized entity to keep their funds or assets.
Does SEC Chair Gary Gensler have the ultimate authority on crypto regulation?
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