The U.S. crypto ecosystem is facing a “void” of well-established and credible institutions, according to an analyst from Ark Invest.
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 US now faces a void that is likely to put interest among other institutional investors on hold.”
“In the U.S., regulatory uncertainty seems to be discouraging both existing firms and new entrants in the crypto space,” he added.
Ark Invest is a global asset management firm headed by CEO Cathie Wood and currently holds more than $14 billion in assets.
Additionally, Elmandjra acknowledged that crypto liquidity on U.S. soil had “diminished considerably” noting that Bitcoin trading volume in the U.S. had fallen 75% in the last two months, down from $20 billion per day in March to just $4 billion in the past week, citing data from CoinMetrics.
Meanwhile, with the U.S. growing increasingly hostile towards digital assets and the companies that deal with them, some U.S.-based crypto firms are already beginning to look elsewhere.
Coinbase, which is currently suing the U.S. Securities and Exchange Commission (SEC) for its lack of clarity on crypto regulation, said that it’s now considering the UAE as a “strategic hub” for its business.
Coinbase isn’t the only major firm looking to the UAE as a potential home. As reported by Cointelegraph, Saqr Ereiqat, the co-founder of venture-building firm Crypto Oasis, said that the UAE’s more optimistic regulatory approach towards digital assets makes it an “ideal” location for new and existing crypto businesses.