Fleeing Developers and Enterprises: The Effects of the Regulatory Assault on Bitcoin

In the “State of Cryptocurrencies” report by cryptocurrency firm a16z, the firm's investment arm Andreessen Horowitz addressed the aftermath of the regulatory assault on the Bitcoin ecosystem in the United States. 

In the document, released last April, the company shares a number of statistics related to the growth of the Bitcoin ecosystem and its adoption.  

Among his research findings, he highlights a significant decline in the number of businesses and developers making a living in the United States, including a significant drop in traffic to industry websites.  

Research finds that while over 2018% of cryptocurrency developers were located in the United States in 40, this percentage fell below 30% in 2022 and so far in 2023.  

Something similar happened with US user traffic to websites like CoinMarketCap, CoinGecko or Etherscan, which went from over 23% in 2019 to under 15% in the last year. 

All of this takes place in a context where, globally, projects, products, capitalization and interest in the cryptocurrency market have increased by more than 70% on average since 2011. A percentage that has increased by more than 100% in the so-called fourth development cycle (which runs from 2021 to 2023). 

Effects of the regulatory assault 

According to the company's analysis, while these declines may be related to the prolonged cryptocurrency winter since 2022, there are other factors that are accelerating the process. One of them is the regulatory attack by US authorities against members of the Bitcoin ecosystem. 

It is a series of lawsuits against companies and personalities of the ecosystem that have been filed in court. These include some well-known companies in the community: Ripple, Coinbase, Kraken and Binance.US.

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are the agencies exerting the greatest pressure, increasing scrutiny and demands. All with the argument of defending investors and the stability of the traditional financial system, as stated by the president of the SEC in some interviews.

Added to this are the threats of heavy sanctions. This situation has set off alarm bells for many and prompted companies to flee the country, fearing they are being victimized by over-regulation.  

The report indicates that this trend has become more evident after the executive order issued by Joe Biden in March 2022.  

This fact has led to several bills with rules considered very restrictive for the development of codes, the trading of cryptocurrencies on platforms such as Bitcoin Pro and even bitcoin mining. 

In its conclusions, the report points out that, as a result of this regulatory assault, the United States is losing its leadership in web3 development. The report shows how "bans on new business models or technologies undermine American values ​​and displace innovation and jobs elsewhere."