The United States at Risk in the Crypto Race
The United States risks losing its position as a leader in the cryptocurrency race against countries including the United Arab Emirates, Korea, Australia, and Switzerland, warns ARK Invest analyst Yassine Elmandjra.
In a May 22 note to ARK Invest clients, Elmandjra looked to the recent crypto-related pullback of trading firms Jane Street and Jump Trading as the early signs of a broader reaction to precarious regulation in the country.
“Once populated by well-established and credible institutions, the crypto ecosystem in the U.S. now faces a void that is likely to put interest among other institutional investors on hold,” stated Elmandjra.
“In the U.S., regulatory uncertainty seems to be discouraging both existing firms and new entrants in the crypto space,” he added.
Crypto Liquidity Declines in the U.S.
ARK Invest is a global asset management firm headed by CEO Cathie Wood that currently holds more than $14 billion in assets. Elmandjra also acknowledged that crypto liquidity on U.S. soil had “diminished considerably.” He noted that Bitcoin trading volume in the U.S. had fallen 75% in the last two months. According to data from Coin Metrics, it has decreased from $20 billion per day in March to just $4 billion in the past week.
U.S.-based Crypto Firms Seek Alternatives
Meanwhile, due to the growing hostility of the U.S. toward digital assets and the companies dealing with them, some U.S.-based crypto firms are already exploring opportunities in other countries.
Coinbase, which is currently suing the U.S. Securities and Exchange Commission for its lack of clarity on crypto regulation, expressed its consideration of the UAE as a “strategic hub” for its business.
Coinbase isn’t the only major firm looking to the UAE as a potential home. According to Cointelegraph, Saqr Ereiqat, the co-founder of venture-building firm Crypto Oasis, believes that the UAE’s more optimistic regulatory approach toward digital assets makes it an “ideal” location for new and existing crypto businesses.