Ripple threatens to leave U.S. over crypto regulation

A senior executive from Ripple, one of the country’s most prominent cryptocurrency firms, warned on Tuesday the company is close to moving its headquarters overseas in response to excessive regulation.

Executive chairman Chris Larsen said San Fransisco-based Ripple has grown increasingly frustrated over what it perceives as a hostile attitude to the cryptocurrency industry by the federal government, and in particular the Securities and Exchange Commission.

Ripple has been locked in a long-running battle with the SEC and investors over whether the digital currency XRP is a security. While Ripple owns a large hoard of XRP, the company maintains that the network that oversees XRP transaction is decentralized like Bitcoin or Ethereum—two rival cryptocurrencies that the SEC has concluded are not centrally controlled, and therefore exempt from securities laws.

Larsen made the comment about Ripple relocating during a virtual interview with Fortune at the LA Blockchain Summit. He added that nearly every other country offers a more favorable regulatory climate for crypto than the U.S., but named the U.K. and Singapore as the most likely destinations if Ripple leaves the U.S.

Larsen also acknowledged that moving Ripple’s headquarters wouldn’t end U.S. jurisdiction over many of its operations, but said it be a relief to have another country as Ripple’s chief regulator.

The tussle between Ripple and U.S. regulators echo a similar one taking place over Libra, the digital currency proposed by Facebook, which has been repeatedly delayed as a result of political and regulatory skepticism.

The disputes come amid a broader debate over the role of central banks and digital currencies. Some critics, including Larsen, warn that the U.S. risks ceding financial innovation to China, which is on the cusp of launching a digital version of the yuan. They fear that the U.S. could not only fall behind on blockchain technology (the digital ledger that underlies currencies like Bitcoin), but see the U.S. dollar lose its status as the world’s reserve currency.

The debate also comes as companies like MasterCard are rolling out software that allows central banks to test digital currencies in controlled payment environments.

In his comments on the U.S. government’s attitude to digital currency, Larsen noted that its alleged hostility given the Trump Administration’s tough stance on China—a stance that Larsen claims is correct. As for the increasingly likely possibility of a Democratic administration led by Joe Biden, Larsen expressed cautious optimism it could bring a more favorable regulatory climate.

Larsen predicted that a Biden White House would change the cryptocurrency industry by placing carbon taxes on its energy-intensive mining operations—possibly helping to repatriate some mining activity from overseas. He noted that Chinese miners currently control 65% of cryptocurrency output, and that the miners are subject to the dictatorial control of the Chinese Communist Party.