The Future of Crypto in America

The following is a guest post from Steven Pu, Co-founder of Taraxa.

There’s no question about it, President Trump’s inauguration is a watershed moment for American crypto innovators. In just little over a week, we’ve seen a rapid series of crypto-friendly initiatives helmed by unambiguously pro-crypto leadership.

These initiatives are in stark contrast to the irrational persecutory stance taken by regulators of the previous administration. Whilst speculation stirs around geoeconomic outcomes, a transformed landscape will more importantly liberate previously stifled US-based developers. America is back on track to reclaim leadership in crypto.

Persecutory Regulators Drained US of Crypto Talent

Crypto is a fast-growing industry in which America can and must reclaim leadership. Since 2015, the crypto market has grown 107.7% annually, from $5 billion to $3.68 trillion – in spite of unfriendly regulatory environments in every major economy worldwide. Much of this global growth was driven by rapid technical innovation, predominantly emanating from the United States, positioning the American market to capture the economic upside.

But persecutory regulators have heaved talent out of America with great force. The US had 38% of the world’s crypto engineering talent in 2015, but dropped to just half that at 19% by 2024. In a market that’s doubling every year, and home to the vast majority of the infrastructural technical innovations, this has been a massive brain drain. Given crypto’s decentralized and digital nature, talent is highly mobile, and US regulators in the past have given them ample reasons to leave.

Regulatory Failure on a Massive Scale

Prior to 2025, regulators sought to stifle American crypto innovation and economic opportunity using whatever means necessary. Regulators were busy persecuting compliant actors such as Coinbase, Kraken, and Uniswap, and even fabricated evidence to persecute startups like DEBT Box. In many cases, regulators even used de-banking as leverage in its irrational crusade to destroy American crypto companies.

But American consumers gained little from such regulatory zealotry, as regulators failed to protect consumers from historic crypto frauds. In 2022, FTX lost over $8 billion of user deposits, while Terra Luna vaporized over $40 billion in market valuation, causing a cascade of failures in companies such as BlockFi and Genesis. In every instance, regulators failed to mark any wrongdoing or did so far too late.

There were no winners under this hostile regulatory regime. Consumers lost, innovators lost, and America lost precious time to capture and foster this new and rapidly growing sector.

Hope is on the Horizon

American builders are resilient. Despite an actively hostile regulatory environment, America is leading the crypto industry on many fronts. Most key infrastructure powering the crypto industry, including technologies in cryptography and distributed computing, were invented in America.

We can see hope from just the first week of the new administration – an SEC subcommittee is set to reform crypto rulemaking under Hester Pierce; a Senate subcommittee on digital assets will be formed under Cynthia Lumis. We’re seeing positive changes in both regulatory and legislative tracks. It’s a great beginning towards the sustainability of a healthy American crypto industry.

Nevertheless, there’s still much to do. Much of the financial legislative and regulatory infrastructure remains fundamentally incompatible with the decentralized nature of crypto. For example, the Infrastructure Investment and Jobs Act of 2021 expanded the definition of a “broker” to potentially include crypto wallets and even network miners and validators, making compliance difficult for anyone in crypto.

We remain hopeful. The new administration has swiftly signaled its intent to improve the regulatory environment, making it more transparent, rational, and pro-growth. Talks of a Bitcoin profit frenzy or questions of geoeconomic power shifts may energize discussion, but what’s really important is the potential reversal of blockchain brain drain.

Restored freedom to innovate in America is on the line, and there’s every chance it will materialize in the crypto realm, sending America back on its way to reclaim its position at the helm of transformation.