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Wu says the notion that crypto doesn’t want regulation is not true
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China’s crackdown helped innovation come to the US
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Centralised stablecoin should be strictly regulated to reassure investors and users
Ava Labs president John Wu says most companies and participants in the cryptocurrency industry prefer to operate under clear, sensible rules. He argued that the common belief that crypto actors oppose regulation is a misconception and that the sector generally wants well-designed oversight that protects consumers while enabling innovation.
Wu made these remarks during an appearance on CNBC’s “Closing Bell”, shortly after the U.S. President’s Working Group on Financial Markets published its report on crypto and stablecoins.
“The biggest misnomer out there is that crypto firms and people do not want that. Actually, most crypto firms want that… they want sensible and appropriate regulation,” Wu said.
The US doesn’t need a China-like crackdown
Wu warned that the United States should avoid overly harsh or poorly considered measures like those implemented in China earlier in the year. He said heavy-handed policies risk pushing developers, entrepreneurs and technical talent out of the country, which would harm the broader ecosystem and reduce the U.S. role in crypto innovation.
As a founder and former CEO of SureView Capital, Wu highlighted the real-world consequences of China’s approach. After Beijing tightened rules on mining and transactions, the global Bitcoin mining hashrate fell dramatically, and much of that activity later relocated to the United States, notably to areas such as West Texas where mining operations expanded.
“We want innovation to stay in this country. When China first came up with the mining regulations and later transaction regulations, what you saw was the Bitcoin mining hashrate dropped 40%…and guess where it all picked up later on — in the U.S., a lot of it in western Texas,” he said.
Wu argued that emulating China’s crackdown should not be the goal for U.S. regulators as they consider rules for crypto firms and stablecoins. Instead, policymakers should seek balanced regulation that protects users without driving away innovation or pushing activity offshore.
Centralised stablecoins need proper regulation
Wu also addressed the regulation of stablecoins, which has become a prominent policy issue after the Treasury-led working group recommended applying bank-like oversight to some stablecoin issuers. One major proposal from the group suggests that certain stablecoin issuers be subject to laws similar to those governing depository institutions, with supervision from the Federal Reserve and other banking regulators.
According to Wu, this approach makes sense for centralised stablecoins such as USD Coin (USDC) and Tether (USDT). Proper regulation can reassure users and investors that reserves backing these coins are appropriately managed and fully backed, increasing confidence in their safety and reliability.
At the same time, Wu emphasized that decentralised stablecoins present different regulatory considerations. In decentralised systems, collateral and accounting are typically on-chain, providing a level of transparency that differs from traditional, centralised operations.
“The collateral is on-chain, a lot of the disclosure and visibility that a banker or regulator would have in a normal centralised environment is all on-chain,” he noted. This on-chain transparency allows anyone to inspect the collateral and transactions, which is a meaningful difference that regulators should consider.
Wu urged regulators to explore and better understand the distinctions between centralised and decentralised stablecoins before prescribing rules, so that oversight is effective without stifling innovation.
Ava Labs is the company behind Avalanche (AVAX), a layer-2 protocol built for the Ethereum ecosystem. At the time of Wu’s comments, Avalanche ranked among the largest cryptocurrencies by market capitalization, reflecting its growing role in decentralized finance and blockchain infrastructure.