San Francisco was set to become “the blockchain capital of the world” but lost its status because of hostile US government policy and regulatory crackdowns, according to Chris Larsen, co-founder and executive chairman of crypto pioneer Ripple Labs Inc.
(Bloomberg) — San Francisco was set to become “the blockchain capital of the world” but lost its status because of hostile US government policy and regulatory crackdowns, according to Chris Larsen, co-founder and executive chairman of crypto pioneer Ripple Labs Inc.
London, Singapore and Dubai are now bigger hubs for the blockchain industry because the federal government forced operations to move overseas, he said in an interview with Bloomberg Television. Ripple, which remains based in San Francisco, is the crypto payments company behind the XRP digital token.
“They pretty much killed San Francisco from being what it was,” Larsen said. “We owned it and we don’t anymore because the Biden administration, for whatever reason, decided they want to push this industry offshore.”
Larsen’s remarks underscore the ongoing tension between crypto entrepreneurs and the US Securities and Exchange Commission, which has sought to more aggressively regulate the industry following a spree of high-profile scandals that included the collapse of digital asset exchange FTX.
The SEC recently sought to appeal a judge’s ruling that cryptocurrency wasn’t a security when sold to the public — a decision hailed as a victory for the crypto market. Last week, Ripple moved to block that request. In August, a US appeals court also overturned an SEC decision to block Grayscale Investments LLC from launching a Bitcoin exchange-traded fund, marking a stinging rebuke of SEC Chair Gary Gensler’s bid to clamp down on the industry.
Despite the recent wins, Larsen lamented that progress has been made through court battles and not via proactive regulation.
Gensler is “engaging in this regulation by enforcement,” rather than looking to lawmakers to pass clearer legislation, Larsen said. “He just likes that lack of clarity so that he can go after anybody and make up the rules as he goes along through bullying. And that’s not the American way.”
Larsen also criticized Senator Elizabeth Warren’s attitude toward crypto in the US, arguing that the industry should have pushed back harder on the Massachusetts Democrat’s influence. “Her policy is basically: ‘I’m building an anti-crypto army,’” he said. “It’s not: ‘I’m protecting consumers.’”
An SEC spokesperson declined to comment, while a representative for Warren didn’t immediately respond to a request for comment.
Larsen said that federal policy toward the crypto industry has exacerbated the woes of San Francisco, which has struggled to bounce back from the pandemic. He argues that the office vacancy rate might be half its current level if federal authorities were more supportive of blockchain technology and companies — even though the industry is known for embracing remote work.
San Francisco’s office vacancy rate grew to nearly 32% in the second quarter, according to preliminary figures from CBRE Group Inc. In 2019, before the pandemic, the rate was less than 4%.
While Larsen is still optimistic about blockchain and cryptocurrency in the US, he said Ripple is doing most of its hiring abroad and that he would encourage entrepreneurs to go to London, Singapore or Dubai to start their companies.
Those places have “clear rules that protect consumers and also celebrate innovation,” he said. “Why isn’t America leading that call? That’s what we’ve always been and we’ve got to get back to it. And by the way, that’s the engine that has made San Francisco what it is.”
–With assistance from Ed Ludlow.
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