Tech investor Chamath Palihapitiya, who previously claimed bitcoin has replaced gold and would eventually get to $200,000, now says “crypto is dead in America.” Palihapitiya’s dramatic change of heart is largely due to the regulatory crackdown on the crypto industry led by the U.S. Securities and Exchange Commission (SEC) and its Chairman, Gary Gensler.

In a recent episode of the All-In podcast, Palihapitiya stated, “The United States authorities have firmly pointed their guns at crypto.” While regulations are necessary to protect investors and maintain market integrity, the SEC’s approach has been nothing short of suffocating, forcing many legitimate companies to consider moving offshore or shut down operations entirely.

SEC’s aggressive pursuit of the crypto industry is evident in its recent actions against several major players, including Coinbase, Gemini, Ripple, Tron, Algorand, and Bittrex. These companies have found themselves in the crosshairs of the SEC for allegedly selling unregistered securities or operating unregistered exchanges.

This heavy-handed approach is driving innovation and jobs out of the United States, as many companies now seek refuge in countries with more regulatory clarity. The exodus of crypto firms from the U.S. not only stifles innovation but also hampers America’s competitiveness in the global market.

The SEC’s overreach was called out by House Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C., who argued that “regulation by enforcement is not sufficient nor sustainable.” McHenry also pointed out that the SEC is “driving innovation overseas and endangering American competitiveness.”

Chairman Gensler defended the SEC’s actions, stating that “we have a clear regulatory framework built up over 90 years” and that crypto exchanges “are noncompliant generally, and they need to come into compliance.” However, the question remains: is the SEC’s regulatory framework relevant and adequate for the fast-evolving world of cryptocurrencies?

The truth is that the SEC’s impossible compliance regime is crippling America’s crypto industry. By targeting legitimate companies like Coinbase, Gemini, Ripple, Tron, Algorand, and Bittrex, the SEC is inadvertently encouraging the rise of offshore derivative exchanges and driving away jobs and innovation from the U.S. market.

If the United States is to maintain its competitive edge in the global economy, the SEC needs to rethink its approach to regulating the crypto industry. A more balanced and forward-thinking regulatory framework is essential to foster innovation, protect investors, and ensure that the United States remains a leader in the rapidly growing cryptocurrency space.