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Why the US may lose the race to crypto



There are concerns that the approach the US has taken towards the development of crypto will have a negative hit against the nation with one of the highest number of crypto users in the world – over 50 million.

According to a report written Yassine Elmandjra, a blockchain and cryptoasset analyst at Ark Investment Management, the inconsistency of the US towards crypto regulation can push the nation backwards in favor of other more crypto-friendly nations such as United Arab Emirates, South Korea, Australia, and Switzerland.

Cryptocurrency regulation in the US is a complex and ever-evolving landscape, with the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN) being the three main federal agencies responsible for regulating cryptocurrencies.

Typical examples of how the country has not been clear on what it stands for in regards to crypto can be seen in the harsh lawsuits filed against firms such as Ripple, and Coinbase over the last two years.

For Yassine, the “regulatory uncertainty” that’s a major aspect of the market in the US “seems to be discouraging both existing firms and new entrants in the crypto space.”

Jane Street Group and Jump Trading ignores the US 

The Analyst added that crypto gorsm such as the Jane Street Group and Jump Trading are currently trimming their operations in the US due to “regulatory uncertainty and risks.”

A report by Bloomberg in the third week of May 2023 revealed that while the two firms are not leaving the industry completely, Jane Street is restricting its plans to expand and Jump Crypto of Jump Trading has plans to pull off the US market with plans to expand into the international market.

“Once populated by well-established and credible institutions, the crypto ecosystem in the US now faces a void that is likely to put interest among other institutional investors on hold,” Yassine said.

Price discrepancy of Bitcoin in Binance.US

Apart from the regulatory mishap, Yassine noted that the fluctuations in price of crypto assets such as Bitcoin and reduction in liquidity in the market are negative signs to the tough reality in the US.

Citing CoinMetrics, he said, “bitcoin trading volume has dropped 75% from $20 billion per day in March to approximately $4 billion last week.”

He also revealed that in May, the price of bitcoin in the Binance.US platform was at disparity with other platforms. “On Binance.US the bitcoin price was ~$600 higher than on other exchanges, a signal of weaker price discovery.”

In essence, the staff of Ark Investment Management is saying that if the US does not adjust its stand point to make crypto attractive, it will be led in the crypto-innovation path by other nations.

Read also;

Is the US ready to lead the digital currency revolution?

Grayscale Investments faces SEC scrutiny over Filecoin Trust registration

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