As the United States government struggles to regulate the cryptocurrency industry, many crypto firms are considering moving their operations overseas. The lack of regulatory clarity in the US has pushed some of the brightest young entrepreneurs to move to more crypto-friendly jurisdictions, such as the Cayman Islands, Singapore, Portugal, and Dubai.
US Senator Cynthia Lummis (R-Wyo.), known as the “Crypto Queen,” is pushing for legislation that will bring regulatory clarity to the cryptocurrency space. She believes that the US is lagging Europe, Australia, the UK, and Switzerland in terms of regulatory framework, which is why crypto firms are moving their operations overseas.
The CEO of Ripple, Brad Garlinghouse, has said that the crypto industry has already started moving outside of the US. Coinbase, the largest US-based crypto exchange, is considering launching an overseas trading desk due to the regulatory uncertainty in the US. Circle, issuer of the USDC stablecoin, is also opening a new office in Paris as France is seen as a leader in crypto.
Although the threat of leaving the US is mostly talk at this point, many crypto companies are seriously considering moving overseas. David Nage, portfolio manager at Arca, says that the last few weeks of regulatory and banking concerns have added “jet fuel” to crypto looking overseas. However, moving to another country is not a casual process and involves a gauntlet of paperwork and approvals, which is why most startups and small businesses are taking a harder approach towards compliance, even if it slows them down in the beginning.
The legal ambiguity in the US is another reason why developers are considering moving overseas. Many founders are afraid of launching tokens in the US due to confusion about crypto tokens’ status as securities. Anxiety over tokens is one reason why developers can have an incentive to move overseas, according to Kristin Smith, CEO of the Blockchain Association. The US share of Web3 developers is shrinking, threatening the US’s preeminence in finance and technology.
The spate of government-mandated shutdowns of banking services for crypto companies in the US has added to the uncertainty. The Securities and Exchange Commission has launched enforcement actions against major players such as Coinbase, accusing the platforms of flouting securities laws.
If US crypto firms do move overseas, it will have an economic impact, and the US will lose its preeminence in finance and technology. Marshall Hayner, the CEO of Metallicus, a digital asset banking network, has decided to remain in the US because 20% of the crypto market is based in the US. He believes that if the US issues guidelines that shape the global framework, there is no need to abandon the US now just for a bit of corner cutting.
The lack of regulatory clarity in the US is pushing crypto firms to move their operations overseas. However, moving to another country is not a casual process and involves a gauntlet of paperwork and approvals. Most startups and small businesses are taking a harder approach towards compliance, even if it slows them down in the beginning. The US needs to pass legislation that will bring regulatory clarity to the cryptocurrency space, or else the US will lose its preeminence in finance and technology.