Regulatory Uncertainty: US Crypto Firms Shift Over Half of Bitcoin Holdings Abroad
Many crypto firms in the United States have moved more than half of the bitcoin (BTC) they hold for their customers to exchanges located outside the country. Due to the unclear regulations, many firms tend to move their BTC holdings outside the country.
According to a research report shared with CryptoPotato by CryptoQuant, the amount of Bitcoin (BTC) held on cryptocurrency exchanges based in the United States has decreased to levels last seen in 2017. This is because BTC is being moved or lost to platforms outside of the United States.
Other Countries Are Welcoming the Industry
BTC reserves on American exchanges have decreased because there are no clear rules for the crypto industry. Regulators are enforcing regulations, which has led crypto firms to move their operations to other countries.
Countries and regions like the European Union (EU) and Hong Kong have put in place clear rules for the emerging economy, which has attracted a lot of money, skilled people, and companies working with digital assets. Hong Kong, specifically, has become more welcoming to cryptocurrency companies and has announced that they will apply the same rules and oversight to these companies as they do to traditional financial institutions.
Hong Kong even invited Coinbase to operate in the country amid a Securities Exchange Commission (SEC) lawsuit filed in US court.
Exchanges are leaving the US and stopping certain services due to accusations of wrongdoing. As a result, the US is losing its share in growing industries, and de-dollarization is becoming more important.
Exchanges’ Trading Volume Lower Than 2017
Ether (ETH) reserves, similar to Bitcoin (BTC) reserves, have been decreasing in the United States. Currently, around 56% of the ETH held on cryptocurrency exchanges is located outside the United States.
International crypto exchanges have four times more trading activity than those based in the United States. The trading volume of Bitcoin in the U.S. is now only 21%, lower than in 2017. U.S. exchanges cannot participate in perpetual futures trading, which has a volume 11 times larger than regular trading.
Asia has seen a gradual increase in spot and future trading as well. The continent’s spot trading volume is growing at a rate of 30%, while its futures trading volume is growing at a rate of 20%.
In 2023, the value of stablecoins based in the United States has dropped by 35% so far, which means they have lost $15 billion in total, CryptoQuant’s research found.
The U.S. is currently leading in Bitcoin mining, but its position is at risk due to unfavorable regulations. The government’s plan to impose higher taxes on miners is causing uncertainty and leading companies and assets to move to other countries.
