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Tim Draper: UAE benefits from US crypto ‘overregulation’

May 5, 2024, 6:21 AM

Investor Tim Draper told AGBI the US must 'swing back to freedom' to avoid losing innovation to countries such as the UAE

Tim Draper invested in Bitcoin early
Says US ‘made a big mistake’
Believes UAE attracts innovation

Billionaire venture capitalist Tim Draper has criticised the US for its restrictive stance on cryptocurrency, claiming it is driving innovators towards more encouraging and friendlier markets such as the UAE.

The Gulf state is actively developing regulatory frameworks to lure new forms of business, amid intense regional economic competition.

Dubai and Abu Dhabi have set up comprehensive laws for digital assets, addressing many regulatory gaps found elsewhere, even as other governments around the world have tightened regulations and sounded alarm over the industry’s risks.

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Global exchanges such as OKX, eToro, Nomura’s Laser Digital, and the world’s largest exchange, Binance, have established significant operations in the region.

Draper contrasted this with US policies which, he believes, “overregulate in anticipation of issues” and stifle innovation.

He recalled the Clinton administration’s more hands-off approach to the early internet, suggesting the US should have applied the same outlook to the crypto sector.

“The US has made a big mistake,” Draper told AGBI at the AIM Summit in London.

“Imagine if the US had taxed and regulated the internet – Google, Facebook and Apple would have all started in a different country.”

Draper is known for his investments in companies such as Skype, Tesla, SpaceX, Hotmail, Baidu and Coinbase. He believes restrictive US policies are now pushing the next wave of tech innovators outside of the country to places like the UAE.

“If you have lots of restrictions, people spend all their time learning the rules,” he said.

“In Dubai and Abu Dhabi, they have focused so hard on freeing people to do innovative things with crypto, there are going to be a lot of innovative things that come out of there.”

The US needs to “swing back to freedom,” he said, to retain its position as a leader in global innovation.

Draper’s remarks came shortly before Binance’s billionaire founder Changpeng Zhao – widely known as CZ – was sentenced to four months in prison in the US on Tuesday, after pleading guilty to charges of enabling money laundering at his exchange.

As part of his plea deal, Zhao had agreed to step down as Binance’s CEO and pay hefty fines.

Amid these controversies, Binance was recently awarded a licence from Dubai’s Virtual Assets Regulatory Authority to expand its services.

“I like what CZ has done for the global economy,” Draper said.

“But if you overstepped in the US, then you have to face the consequences.”

Draper, an early Bitcoin investor, once correctly predicted that the price of the largest cryptocurrency would top $10,000 in 2017. He remains bullish on the token’s future, maintaining his forecast of a $250,000 valuation despite challenges.

Last year, venture capitalist Kevin O’Leary also warned that Abu Dhabi could soon eclipse the US as the global centre of crypto innovation.