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According to Yassine Elmandjra, an analyst from ARK Invest, the United States crypto ecosystem is facing a concerning “void” of established and credible institutions. ARK is an investment management firm based in the US that specializes in thematic investing in disruptive innovation.
This poses a significant risk for the country’s position as a leader in the global cryptocurrency race, as other countries like the United Arab Emirates, Korea, Australia, and Switzerland gain momentum.
Elmandjra points to recent events, such as the crypto-related pullback of trading firms Jane Street and Jump Trading, as early indicators of a broader reaction to the uncertain regulatory landscape in the United States.
The observations made by Elmandjra are underscored by the dwindling crypto liquidity on U.S. soil. He notes a substantial decline in Bitcoin trading volume, which has fallen by 75% in the past two months, dropping from $20 billion per day in March to just $4 billion in the last week, based on data from Coin Metrics.
As the regulatory environment in the United States becomes increasingly hostile towards digital assets and the companies associated with them, U.S.-based crypto firms are actively exploring alternative options.
For instance, Coinbase is currently involved in a legal battle with the U.S. Securities and Exchange Commission over regulatory clarity and has expressed interest in the United Arab Emirates as a potential strategic hub for its operations. Other major firms are also eyeing the UAE due to its more favorable regulatory approach towards digital assets, making it an attractive location for both existing and new crypto businesses.
These developments highlight the urgent need for the United States to address regulatory challenges and create a supportive environment for crypto innovation if it wishes to maintain its prominence in the evolving global crypto landscape.