America has always been a land of opportunity for entrepreneurs, leading the planet in industrial and technological revolutions. Yet, for the past decade, America has gone to war with its own innovation sector. Even as the country’s politicians stated they would take on the unhealthy dominance of Big Tech companies, they inexplicably froze out the entrepreneurs best positioned to counteract that dominance: the developers building decentralized alternatives with blockchain and open[1] AI technology.

Instead of nurturing innovation to empower individuals and redistribute power away from Big Tech companies, regulators and policymakers have failed to embrace the distinct edge – its technological heritage, dynamism, and ingenuity – that makes America unique. For almost a decade, both Republican and Democrat administrations allowed the SEC and other regulators to manage the crypto sector by enforcement actions instead of rulemaking, while also smearing many legitimate American entrepreneurs as money launderers or drug traffickers.

On the AI front, the Biden administration told American investors the sector would soon be under government control, and hastily pushed out executive orders limiting computational power. This served, once again, to stifle innovation and enrich large companies. Democratic Party leaders also quietly deployed agencies to debank hundreds of founders in blockchain, artificial intelligence and and other tech fields—a sequence of events known as Operation Chokepoint 2.0.

Ironically, the upshot of this flurry of hostile actions has been to further entrench the five biggest tech corporations as gatekeepers of the Web, and swell to a combined market value of more than $10 trillion. Now, as the latest shockwave in AI and crashing stock markets demonstrate: America’s punitive and self-defeating stance on frontier technology is backfiring in real time.

The recent arrival of DeepSeek—an open-source AI model fully developed in China – has shaken the comforting narrative that U.S. companies clearly held the upper hand in AI. Now, DeepSeek’s shocking accomplishments have upended the assumption that America can win the AI game by throwing all of the country’s resources behind a handful of compute-rich, data-wielding tech giants. It turns out it was naive to assume Big Tech will always have better AI models than its open-source counterparts, and that only a small number of monolithic, proprietary models will win.

Instead, DeepSeek shows it’s possible to launch a cutting edge model for a fraction of what its American competitors have spent on AI training, and without deployment delays or API rate limits. As a result, the U.S. equity markets—understanding DeepSeek’s efficiency as an over-investment in compute and inefficient approach by dominant players—are feeling the strain. DeepSeek’s emergence is a direct reflection of how America’s hesitance to embrace decentralized and open-source development is ceding ground to international rivals.

Ironically, America’s strength in AI and crypto lies in the very thing that policymakers have sought to dismantle in America’s dark decade: its decentralized ethos. As AI and blockchain technology continue to evolve, it’s become clear that open source and decentralization are more than an ideology– they are an economic necessity for our country.

A decade of fear has pushed some of the brightest academic and technical minds overseas, where jurisdictions like Singapore and El Salvador have rolled out regulatory red carpets. Even the EU beat the U.S. to regulatory clarity for crypto, and continues to lead today, albeit with questionable policy.

Fortunately, there are still credible founders—including those of web3 AI startups Prime Intellect, Gensyn, and Pluralis – in the U.S. driving visionary work to share compute power and distribute AI model training. Many of them are combining blockchains and AI into a fast-growing and formidable area of innovation. These builders are fighting to preserve a free and democratic internet by offering open-sourced AI models that anyone can contribute to, co-own, and use – effectively offering AI as a public good. America’s entrepreneurs need our encouragement and workable policy more than ever before.

Despite the self-inflicted wounds, the United States can still emerge as a world leader when it comes to crypto and AI development. One hopeful sign is a recent Executive Order that aims to bolster the nation’s leadership in technological innovation and preserve the public’s right to use blockchain technology. Meanwhile, a new SEC Task Force for crypto aims to establish regulatory guidelines for the first time that will empower founders to build decentralized tech without the fear of persecution.

At our core, the foundation for innovation is still right here in the U.S.: world-class universities, venture capital eager to deploy capital into game-changing projects, and a legal system that, when not weaponized against entrepreneurs, distills the role of intellectual property in an AI-enabled world and fosters business growth. The problem isn’t the lack of potential.

The hubris of the past decade must be set aside. America cannot merely cling to the notion that technological supremacy is our heritage; it must actually innovate. If our country continues to dictate terms while the rest of the world moves forward freely, it will find itself outpaced not just in AI but in every emerging field. AI, blockchain, and other frontier technologies are still in their infancy; with a more supportive regulatory approach, America could reclaim its position as the undisputed leader.

Jake Brukhman is Founder and CEO of CoinFund, one of the world’s longest-tenured cryptonative investment firms. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.