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Mike Novogratz has urged US authorities to take a more liberal approach toward regulating crypto. The Galaxy Digital CEO says the current onslaught on the web3 space, majorly due to Sam Bankman-Fried’s alleged fraudulent practices, is akin to “throwing away the baby with the bath water.”

During the fourth quarter 2022 call conducted by Galaxy Digital on March 28, Mike Novogratz, the founder and CEO of the company, buttressed the need for amenable crypto laws in the US.

Novogratz noted that the country’s crypto space was making significant progress in innovation-promoting regulations until the disgraced Sam Bankman-Fried’s FTX collapsed last Nov. 

And then the Democrats felt foolish that they were so close to Sam Bankman-Fried from the SEC to the CFTC to the Biden administration, have used this one example of, you know, horrific fraud and being snookered by a guy in Bermuda shorts to just say the whole [crypto] thing is bad.

Mike Novogratz, the founder and CEO of Galaxy Digital

Indeed, the major US financial regulators, including the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC), have made life difficult for web3 market participants in recent months through countless enforcement actions and crackdowns.

The 58-year-old multi-millionaire argued that the government’s current regulatory approach toward crypto is a shortsighted move that will do more harm than good in the long run.

“So, if it’s the government trying to pressure banks not to be in crypto, if it’s regulatory enforcement after regulatory enforcement, the SEC seems to be issuing Wells letters weekly, there’s going to be a huge backlog of judicial proceedings. That’s not good for innovation, it’s not good for America’s chance to lead this industry, it’s pushing people offshore, and so we’re fighting back”

Mike Novogratz, the founder and CEO of Galaxy Digital

You may also like this: Galaxy Digital research: Bitcoin NFTs to reach $4.5b by 2025 

AI must be checkmated 

Novogratz made it clear that it’s crucial for authorities to bring fraudulent crypto market participants like SBF to justice and put them out of business. According to the Galaxy CEO, they have set the industry back and made investors lose their hard-earned money. Regulators must therefore act cautiously to not crumble the entire web3 ecosystem.

Novogratz says the government’s current onslaught on the web3 space can be likened to throwing away the baby with the bathwater, an approach that could have dire consequences for the US. He added that crypto is a solid technological breakthrough that presents the masses with real money-making opportunities.

Just the same way Satoshi Nakamoto’s bitcoin (BTC) brought blockchain technology into the consciousness of the masses, OpenAI’s ChatGPT and others are unlocking the doors of artificial intelligence to the world and making life easier for users.

However, despite the unending possibilities that come with AI, Novogratz has highlighted the need for the space to be regulated, adding that crypto and blockchain technology has a huge role to play in the AI sector, especially in terms of identity verification. 

Novogratz sees a future where AI will enable bad actors to create counterfeit versions of virtually anything in the real world. He concluded that without blockchain-based verification, the world could be in a real mess.

According to Alex Thorn, Galaxy Digital’s head of research, web3 projects and crypto-focused businesses dominated venture capital transactions and funding in 2022, attracting over $30 billion.

Read more: Galaxy Digital gets 60% off Celsius assets after crypto lender’s bankruptcy

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