The United States is mistaken in its regulation of the digital assets industry, as it could be a powerful driver of growth for the economy. Fred Ehrsam, cofounder of the Bitcoin exchange Coinbase and CEO of the Paradigm venture capital firm, said in an interview with Bloomberg.
Ehrsam noted that the United States dollar is the world’s reserve currency, and American regulators de facto have influence on participants in the global financial system. However the country could lose this leadership due to a flawed approach to regulating the market for digital assets.
“Cryptocurrencies are a complex issue, and it is quite possible that the United States is getting them wrong. Regulators are focused on reducing risks and protecting investors. At the same time, I consider cryptocurrencies an opportunity on a scale comparable to the Internet,” added Ehrsam.
According to him, the industry has the potential to create “the same, if not greater, numbers of jobs as the Internet.” He also noted the economic growth that enterprises in the digital assets space can deliver.
Ehrsam did not rule out that China could overtake the United States in this regard, and in several areas at once. One of them is government programmes using the digital yuan and blockchain technology.
The cofounder of Coinbase also drew attention to the fact that most mining facilities are located in China. The hard regulatory stance of the PRC he called “a huge opportunity for miners in the United States and around the world to make cryptocurrencies more decentralised”.
Despite optimism about market development, Ehrsam recommended that investors allocate in digital assets only as much as they are prepared to lose. He advised aiming for a 10–20 year investment horizon.
“It may make sense to allocate slightly more, but when distributing funds, stay the course with a conservative approach. It is still too early — as the fundamentals improve, confidence will grow,” added Ehrsam.
Earlier, billionaire Mark Cuban also said that the United States could lose “the next big engine of growth the country needs”, if it does not stop regulating the crypto industry and the DeFi segment.
Earlier, the United States formed a working group to liaise with regulators and experts to better understand the market for digital assets.