Companies like Coinbase and Binance might not want to, but they could be pushed to put their efforts elsewhere.
Some experts in the business world say that the SEC’s recent moves against U.S.-based Coinbase and Cayman Islands-based Binance could be good for U.S.-based companies in the long run because they could help bring regulatory clarity. But in the short- to medium-term, these actions might force these companies to put their focus somewhere else.
Jason Allegrante said, Chief Legal and Compliance Officer at infrastructure firm Fireblocks. “Regulatory pressure does create an incentive for exchanges to move overseas; for the digital asset industry specifically, it’s a much easier shift because there are no factories to move.”
Coinbase recently said it got a license to offer its services in Bermuda, where it reportedly wants to set up a crypto-trading platform outside of the U.S. The exchange is also expanding its operations in Canada. Canada has tightened its rules for crypto companies, but it let Coinbase sign an improved Pre-Registration Undertaking, which shows that it plans to follow the new rules when they come out.
Andrew Lawrence, co-founder and CEO of Censo Inc., an on-chain custody solution, said, “I suspect we will see more and more moves like this, Yes, the U.S. is the biggest market, but people who are building in the crypto industry are doing so not because of the size of the market now, but because of the size of the market in the future and people are seeing that this future is not looking good in the United States.”
“All eyes are now set on other jurisdictions. This is not the best time for crypto startups in the U.S. Larger players such as Coinbase are able and should engage the regulator to come to solutions. Still, entrepreneurs and small businesses in crypto are probably better off in other jurisdictions.” Ben Caselin, Vice President & Chief Strategy Officer at centralized crypto exchange MaskEX, agreed.
For his part, SEC chief Gary Gensler signaled he’s not too worried about the prospect of crypto firms leaving the U.S. On Tuesday, he told Bloomberg TV that “we don’t need more digital currency; we already have digital currency, it’s called the U.S. dollar.”
Allegrante of Fireblocks said that even if the U.S. is the most valuable market for some exchanges, they might have better reasons to put all their efforts there. “When a company publicly announces plans to establish exchange operations outside of the United States, you can assume that there are plans to shift that balance over time,” Allegrante said about Coinbase.
At the same time, ignoring the U.S. market will be challenging.
Edward Moya, senior analyst at foreign exchange Oanda, said. “The U.S. market was supposed to deliver the next major wave of crypto interest, so it will be hard to completely abandon it.”
Even though the SEC told Coinbase in March that law enforcement could go after the exchange, CEO Brian Armstrong said the exchange is still going strong. “100% committed to the U.S.”. In answer to the lawsuit, Coinbase said it would continue to focus on operating in the U.S.
Mark Palmer of Berenberg Capital Markets said the fight may have just started.
Palmer noted, “The exchanges, led by Coinbase, will likely take their fight to the courts while hoping that the political winds change in the U.S. such that more crypto-friendly leaders would be in charge.”