While the crypto industry waits for regulatory clarity from decision makers in Washington, D.C., a new research report highlights how web3 continues to mature in different states across the U.S. The State of Web3 report, released by the United States Blockchain Coalition, challenges the crypto casino narrative, detailing how blockchain and related technology has received $107 billion in investments in the U.S. since 2008 and created 200,000 jobs. 

The blockchain coalition is a federation of state associations and organizations that work together to promote best practices for economic development as well as supporting strong regulatory environments at the federal and state level. 

Lee Bratcher, president of the Texas Blockchain Council, co-founded the U.S. blockchain coalition. He said the group was striving to show the far-reaching effects of the industry. “We wanted to tell the story of the economic impact that this industry is having, even though it’s decentralized and spread out across the country,” Bratcher said in an interview. 

Solid data for D.C. 

Despite the challenges the digital assets industry has faced in recent years, enterprise web3 applications are driving real economic activity. Web3 activity peaked in 2017 with 932 related startups getting off the ground, followed by 898 a year later, according to the report. (The report doesn’t specify how many of those startups are still in business after harsh downturns in 2018 and 2022).  

The states with the most web3 activity are also the four largest – California, New York, Florida and Texas, which account for 61 percent of all web3 start-ups. California and New York lead the country in web3 venture capital (VC) investments, with $18 billion and $9.7 billion respectively. The report details how the bigger states are better equipped at attracting international capital, which makes up 29 percent of web3 investors. Asia and Europe are the top two sources of foreign investments. 

Smaller states are also making an impact on the industry in notable ways. There’s high domestic investment activity in Texas and Georgia, and high per-capita investment in Nevada, Wyoming, Utah, Delaware and New Jersey. Tennessee is leading in healthcare, Nevada in gaming and Maryland in government, according to the report.

Over a quarter of the companies that make up the Fortune 1000 are focusing on web3 in some capacity. Many web2 companies such as Google, Amazon, Mastercard, JP Morgan and Comcast are hiring for web3-related positions. Bratcher said in a recent interview that he was encouraged by the research relating to government investments. 

“I was surprised to see the amount of government funding for web3 startups,” he said. “The investment is probably less so on the crypto side and more so on the broader blockchain and digital asset side,” he said. 

The presence of web3 in academic institutions is also growing. The report reveals Texas received the highest amount of federal grants, totaling $6.63 million, followed by $5.37 million in California. Bratcher believes that the U.S. has a competitive advantage in higher education. 

On a smaller scale, the coalition is working with several community colleges on workforce training in both the hardware and software side – including semiconductors for bitcoin mining, ASIC machines and certificates in blockchain digital assets, Bratcher said. Still, it’s an uphill battle to convince academia that crypto isn’t just for scammers.

“There’s a slowness to react or a bit of a trepidation from university officials, due to the way the U.S. government has been treating the blockchain and digital asset industry over the last several years,” he said.   

Regulation is good for business 

Bratcher said we need regulatory clarity from the market structure bill that’s  before the Financial Services Committee. “We need the Senate to consider and pass that bill because there has been an unfortunate amount of entrepreneur and capital drain from the United States, as a result of our inability to come to grips with the regulatory environment that we need.” 

Most of the entrepreneurial and capital drain is going towards smaller jurisdictions, Bratcher said, such as areas already known for fintech like Singapore, Luxembourg, Switzerland and the United Arab Emirates. 

What the U.S. does have is a well-established VC community and a history of entrepreneurial activity that’s led to world-changing technology. 

“The innovative, pioneering spirit that’s led the U.S. to economic dominance is waning and we have to lean more on the access to capital and experience,” he said. “We don’t have that level of hunger that places like Singapore or other new tech hubs might have.”