The Real Reason Token Issuers Are Fleeing the US

The rise of initial coin offering - as controversial as they may be - is a signpost that the age of Industrial Era capital formation is giving way to a new paradigm of decentralized and democratized investment and customer-driven business models that expand far beyond the borders of any one country.

While U.S. regulators have publicly offered platitudes about being friendly to innovation and facilitating domestic entrepreneurship in the crypto space, the proof is always in the pudding.

As highlighted by CoinDesk, the natural and predictable consequence is that innovators are leaving the U.S. in search of friendlier jurisdictions.

While still grappling with the best way to tackle this new business model, many are rethinking outmoded approaches to capital formation - particularly the idea that token issuances are necessarily investment contracts.

Should they wake up to see billions of dollars of real economic value being created in places Liechtenstein and Gibraltar while the U.S. chases its own tail deciding whether or not ether is a security, they're going to find a way to get in on the act - and with haste.

The Brits have long been eager to wrestle the title of world's premier financial center away from the U.S. and recrown the City of London, and there is a growing sense within governmental ranks that blockchain and financial technology may be the ticket to doing just that.

While the U.S. lacks impetus for change, Britain is looking for relevance in a post-Brexit world.

The Fintech Regulatory Sandbox recently launched by the Financial Conduct Authority, Britain's top financial regulator, gives challengers and innovators a way to launch without prohibitive compliance costs.

Despite birthing the Industrial Revolution, they grew too comfortable in their colonial Agrarian Era societal structure and ultimately forfeited dominance of the Industrial Era to the U.S. because they were unable to adapt quickly enough.

Not all innovative crypto projects will abandon the U.S., but it has become disappointingly clear in recent months that there is too much inertia built up around its regulatory infrastructure for it to play top dog in the coming era of decentralized business models and global capital formation.