While American venture capitalists are pulling back from the crypto industry amidst regulatory uncertainty, Web3 and crypto funding in France remain strong, according to an opinion piece by Ken Timsit, the managing director of blockchain company Cronos Labs.
France was home to 32 “unicorn” tech companies, or private companies with valuations of at least $1 billion, as of March, and blockchain projects in France have raised at least $1.3 billion in funding since 2017, Timsit wrote.
The Web3 industry has seen support from government agencies, with France’s Ministry of Culture dedicating $150 million to the promotion of “French cultural sovereignty” in digital environments.
“All of these investments speak volumes of the tenacity of France’s capital markets – even amidst a crypto winter, it has remained resilient and abundant,” Timsit said.
France has seen an influx of Web3 innovators who are migrating from jurisdictions that are less friendly to crypto, Timsit said. The European nation is now home to the sixth-highest number of blockchain developers in the world.
In the U.S., more than a dozen crypto companies have faced enforcement actions from the U.S. Securities and Exchange Commission (SEC) this year over alleged registration violations, including Binance, Coinbase, Linus Financial, Impact Theory, Celsius, Coinme, Bittrex, Beaxy, Kraken, Nexo Capital, Genesis and Gemini, according to the SEC website.
Lawmakers, including U.S. Sen. Cynthia Lummis (R-WY), have criticized the SEC's "regulation by enforcement" approach to the crypto industry, warning that failure to implement comprehensive regulations for the industry will result in innovation moving offshore.
"The SEC has failed to provide a path for digital asset exchanges to register, and even worse has failed to provide adequate legal guidance on what differentiates a security from a commodity,” Lummis said in a post on X after the SEC filed lawsuits against Binance and Coinbase in June. "The SEC's continued reliance on regulation by enforcement continues to harm consumers. Real consumer protection requires creating a robust legal framework that exchanges can comply with, not pushing the industry offshore or into the shadows.”
A June report from Moody's Investors Service warned that failure to advance comprehensive cryptocurrency regulations "could make the United States (Aaa stable) comparatively less attractive for both firms and investors, particularly in a context where many other jurisdictions are moving forward with comprehensive rules."