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New report shows 1 million tech jobs at stake in US due to regulatory uncertainty

Tl;dr: The US is at risk of losing out on 1 million developer jobs over the next 7 years as web3 development moves overseas, according to a new report by Electric Capital. The US's share of global web3 development has already dropped from 40% to 29% in the last 6 years fueled by uncertainty and a regulation by enforcement approach in the US. Meanwhile, developers are fighting to stay in the US with 32,000+ developers, builders, and individuals voting on-chain during our Crypto 435 campaign asking Congress to pass pro-crypto policies that would keep innovation in the US. Failure to act could result in the US missing out on one of the most significant technological and economic opportunities of our time.

By Coinbase

Policy

, March 29, 2023

, 4min read time

Coinbase Blog

At Coinbase, we’re working hard to help update the financial system by building trusted products that expand the utility and adoption of crypto because we believe crypto and blockchain technology have the ability to increase economic freedom and opportunity around the world. Coinbase chose to become a public company in the US because we believe the US would best be served by embracing this fundamental innovation, but we’re also focused on international markets, many of which are moving forward with strategies to become “crypto hubs.” We would like to see the US take a similar approach, but a regulation by enforcement approach in the US is instead leading to a disappointing trend for crypto development in the US. 

A recent report from venture capital firm Electric Capital shows that the US is at risk of losing out on 1 million web3 developer jobs, and millions of related non-technical jobs, over the next 7 years if it continues on its current path of regulation by enforcement, which is pushing tech innovation overseas. 

The report shows that the US’s global share of web3 developers has dropped from 40% to 29% over the last 6 years, with no sign of slowing down. On average the US is losing almost 2% of the web3 developer share every year. That means high quality, good paying jobs are leaving the US to innovate in locations with better conditions like clear regulation or a commitment to technological leadership. 

The US had an early lead in shaping the future of web3 and the global financial system, being the first and biggest hub for web3 software development. But the US is now losing market share as other countries are stepping in to fill the void the US is creating with regulatory uncertainty. The US is now losing market share to regions with more regulatory clarity and openness to crypto innovation like Europe and Asia, as well as emerging markets like LATAM, India, and Africa. For example, last year Hong Kong announced a plan to make itself a center for digital assets and web3 firms, and as part of this work, the government recently announced a state sponsored round table between potential crypto firms and bankers to help establish banking partners for crypto companies. Other countries are similarly embracing and attracting crypto innovation, a trend that threatens not only the US’s control over the development of the global financial system, but also the US’s preeminence in finance and technology.

In spite of the challenging regulatory environment in the US, we’re still seeing a passionate developer community that wants to keep building in the US. The report shows that despite a 70% decline in crypto prices, we’re still seeing a 5% YoY increase in web3 development globally. 

What’s more, over a one week period (March 20-27), more than 32,000 developers, builders, and individuals voted on-chain during our Crypto 435 campaign asking Congress to pass pro-crypto policies that would keep innovation in America. 

The preeminence of the US in web3 software development leads to jobs and growth in a market worth nearly $3 trillion at its height, and fuels broader financial inclusion in the evermore global cryptoeconomy.

It's not just about economic competitiveness, but also about standards, influence and national security. By designing new protocols, US engineers define the standards for financial systems and data systems. These are the SWIFT and HTTP equivalents of the modern era. Losing market share means that other countries can have larger influence over global financial and data standards.

Moreover, understanding the geographical distribution of web3 developers is crucial for the US in order to maintain its leadership in the rapidly evolving blockchain and cryptocurrency ecosystem. With the growth of crypto developers in other regions, such as Europe, Asia, Africa, and LATAM, the US must adapt its strategies and policies to foster innovation, attract and retain talent, and ensure that its interests are protected in the development of new financial and technological standards.

To this end, the US must invest in educational programs and initiatives that focus on blockchain and cryptocurrency development to create a highly skilled workforce and retain top talent within the US. We also need rulemaking to provide regulatory clarity for the crypto industry and encourage more innovation and growth within the US. Collaboration between the government, private sector, and academic institutions can further solidify the US's position as a global leader in crypto, blockchain and web3.

It's essential that the US engages with other countries and international organizations to develop global standards and best practices for blockchain and cryptocurrency technologies. This will help ensure that the US maintains its influence in shaping the future of these industries, driving innovation, job creation, and economic growth, while ensuring national security and promoting American values in the development of new financial and technological systems.

At Coinbase, we believe that web3, crypto, and blockchain technologies represent a huge opportunity for the US and the world. We continue to urge Congress to pass pro-crypto policies that would keep innovation in the US, and to take action to ensure that the US maintains its leadership position in the global blockchain and cryptocurrency ecosystems. Failure to act could result in the US missing out on one of the most significant technological and economic opportunities of our time.

Check out the latest video in our “It’s time to update the system” campaign, which highlights the contrasting approaches to crypto innovation between the US and international policymakers from the UK to Hong Kong:

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