According to an analyst from Ark Invest, the cryptocurrency ecosystem in the United States is lacking established and trustworthy institutions, creating a significant gap.
Ark Invest analyst Yassine Elmandjra cautions that the United States is at risk of falling behind countries like the United Arab Emirates, Korea, Australia, and Switzerland in the cryptocurrency race.
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In a note to clients of Ark Invest on May 22, Elmandjra pointed out the recent pullback of trading firms Jane Street and Jump Trading in the crypto market. He sees this as an initial indication of a larger response to uncertain regulations in the United States.
The crypto ecosystem in the United States, which used to have reputable and trustworthy institutions, is now experiencing a lack of such entities. This absence is expected to discourage interest from other institutional investors for the time being.
In the United States, the uncertainty surrounding regulations appears to be deterring both existing companies and new players in the crypto industry,” he further explained. Ark Invest is a global asset management company led by CEO Cathie Wood and currently manages over $14 billion in assets.
Elmandjra also recognized a significant decrease in crypto liquidity within the United States. He mentioned that Bitcoin trading volume in the country has dropped by 75% over the past two months. In March, the daily trading volume was around $20 billion, but it has now declined to just $4 billion in the past week, according to data from CoinMetrics.
Total USD-denominated Bitcoin trading volume since December 2022. Source: Bitcoinity.
As the United States becomes more unfriendly towards digital assets and the businesses associated with them, some crypto firms based in the U.S. are already considering alternative options and exploring opportunities in different locations.
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Coinbase, which is in the midst of a lawsuit against the U.S. Securities and Exchange Commission (SEC) due to unclear crypto regulations, has expressed interest in the United Arab Emirates (UAE) as a potential “strategic hub” for its operations.
In addition to Coinbase, other prominent companies are also considering the UAE as a possible base. According to Saqr Ereiqat, the co-founder of Crypto Oasis, a venture-building firm, the UAE’s positive and favorable regulatory stance towards digital assets makes it an ideal destination for both established and emerging crypto businesses.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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