The United States risks losing its leading position in the cryptocurrency industry, ceding leadership to the United Arab Emirates, South Korea, Australia, and Switzerland, warns ARK Invest analyst Yassine Elmandjra.
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In the report, the expert noted that the recent flight of market makers Jane Street and Jump Trading from the United States is the first sign of a negative reaction to the ill-conceived regulation in the country.
“What was once a crypto ecosystem in the United States filled with well-established and trusted institutions now faces a void that is likely to dampen the interest of other major investors,” Elmandjra explained.
According to the analyst, the ambiguous regulatory backdrop is harming incumbents and deterring new entrants.
In 2023 the SEC pointed to violations in the operations of Bittrex, Coinbase, Kraken, Gemini and Genesis. CFTC filed a lawsuit against Binance and its CEO Changpeng Zhao.
Crypto liquidity in the United States has “significantly diminished”, according to the ARK Invest expert. Citing data from Coin Metrics, he noted that Bitcoin’s daily trading volume in the country fell by 75% over the past two months — from $20 million in March to $4 million in May.
Elmandjra also noted that the price of the leading cryptocurrency on Binance.US was about $600 higher than on other exchanges. In his view, this points to mispricing in the United States.
Earlier, Coinbase management authorized the creation of a hub in the UAE. In the same month the company announced the launch of an international futures exchange for digital assets — Coinbase International Exchange.
The institutional platform Bakkt is also examining the possibility of expanding its business in Europe.
Earlier, Circle CEO Jeremy Allaire did not rule out the loss of US leadership in the sector to the EU, Hong Kong and the UAE.