While U.S. regulators are cracking down on crypto, other countries are embracing digital currencies.
- Crypto companies have had an increasingly difficult time functioning in the U.S. as regulators start to limit their operations.
- Companies have been met with opposition from leaders in the White House, the Department of Justice, the SEC, the Federal Reserve, and Congress, which argue that unregulated trading in crypto threatens the financial system.
- The FTX collapse in November did little to help crypto’s cause. As a result, the crypto market is blossoming in markets outside the U.S., such as the Bahamas, Singapore, and the UK.
Why it’s news
Though the widespread adoption of cryptocurrency has not taken hold in the U.S., investors like Cathie Wood of ARK Invest and venture-capital firm Andreessen Horowitz are already heavily involved in the market. Recently, Wood warned that the U.S. was falling behind in the crypto market and that its regulations would leave it a step behind other countries.
“It would be nice if the U.S. were leading this movement, but we’re losing it, and we’re losing it because of our regulatory system,” Wood says.
Andreessen Horowitz has already turned its focus on crypto investments to opportunities outside the U.S. Earlier this month, the firm announced the opening of a new branch of its a16z crypto fund in London.
Unlike the U.S., the UK has a better legal framework for crypto that allows crypto investors and companies to operate smoothly. Systems like this position the UK to become a crypto hotspot, and it is not the only country attempting to establish itself in the market.
If the U.S. wants to remain part of the crypto market, it will have to reevaluate its stance on regulation and take a closer look at how it can protect customers while also allowing businesses to thrive.
Backing up a bit
The UK has slowly but steadily increased its crypto influence. Already it is home to some of the best researchers and universities in the world and has a significant investment in FinTech. It is currently working on a regulatory framework for cryptocurrencies that will protect customers while also fostering company growth, according to Coinbase.
Early last year, former Economic Secretary to the Treasury John Glen made his crypto stance clear: “We want this country to be a global hub—the very best place in the world to start and scale crypto companies. If there is one message I want you to leave here today with, it is that the UK is open for business—open for crypto businesses.”
His successor Andrew Griffith appears to be upholding this sentiment. Late last year, he published proposals for cryptoasset regulation in the UK. He added that the government remained “steadfast in our commitment to grow the economy and enable technological change and innovation—and this includes cryptoasset technology.”
Gemini Trust Company founders Cameron and Tyler Winklevoss launched the cryptocurrency exchange the Gemini Foundation in Singapore. The twin brothers chose Singapore because the country has more crypto-friendly regulations than the U.S.
Singapore has many valuable characteristics for crypto companies, such as a favorable regulatory environment and attractive tax rates. The country is also home to a highly skilled workforce. Last year, the nation attracted $1.2 billion in crypto funding.
Though struggling after the FTX collapse, the Bahamas have also worked to establish a hub of crypto activity. The islands’ crypto reputation was hurt somewhat in the fallout of the FTX collapse, and the market is still working to recover.
Even if the U.S. is unable to establish favorable crypto regulations, the market will continue to grow globally.