The US is at risk of losing crypto leadership

The dominance of the United States in the cryptocurrency industry is under threat, as predicted by ARK Invest, an investment management firm. Yassine Elmandjra, an analyst at ARK Invest, warns that the US is at risk of losing its championship title to countries like the United Arab Emirates (UAE), South Korea, Australia, and Switzerland.

Elmandjra highlights the flight of major market makers, Jane Street and Jump Trading, from the US as an initial indication of the repercussions caused by poorly thought-out regulations in the country. He explains that the once robust and reliable crypto ecosystem in the US is now experiencing a void, which is likely to diminish the interest of large investors.

The report emphasizes that the unclear regulatory environment has a detrimental effect on existing companies and discourages new players from entering the market. According to ARK Invest, crypto-liquidity in the US has significantly decreased, with a 75% drop in bitcoin trading volume over the past two months, from $20 million per day in March to $4 million in May.

Coinbase, Bittrex, Kraken, Gemini, and Genesis have faced regulatory violations pointed out by the Securities and Exchange Commission (SEC) in 2023. Furthermore, the Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance and its CEO, Changpeng Zhao.

Elmandjra also highlights an interesting observation regarding the pricing of cryptocurrencies. He notes that the rate of the leading cryptocurrency, Bitcoin, on Binance.US was $600 higher than on other exchanges, suggesting incorrect pricing in the US market.

Coinbase’s recent decision to establish a hub in the UAE and launch an international digital asset futures exchange further adds to the concerns about the US losing its leading position. Additionally, Bakkt, an institutional platform, is considering expanding its operations to Europe. Earlier, Circle CEO Jeremy Allaire expressed the possibility of the US relinquishing its dominant position to the European Union (EU), Hong Kong, and the UAE.