Yassine Elmandjra, an analyst at ARK Invest, cautions that the United States faces the potential of relinquishing its prominent role in the cryptocurrency competition to nations such as the United Arab Emirates, Korea, Australia, and Switzerland.
In a communication to ARK Invest clients on May 22, Elmandjra pointed to the recent decline in trading activities by firms like Jane Street and Jump Trading as indications of a larger response to uncertain regulations within the United States.
The digital asset ecosystem in the United States, which was once dominated by reputable and trustworthy institutions, is now experiencing a noticeable absence that is likely to dampen interest from other institutional investors. Elmandjra suggests that regulatory ambiguity in the United States is discouraging both existing companies and potential newcomers from participating in the crypto industry.
Regulatory Uncertainty Around Crypto Puts Innovation In The United States At Risk
Headed by CEO Cathie Wood, ARK Invest is a worldwide asset management firm that currently manages a portfolio with assets exceeding $14 billion.
Furthermore, Elmandjra recognized the significant decrease in cryptocurrency liquidity within the United States, highlighting that Bitcoin trading volume in the country had declined by 75% over the past two months. Referring to data from Coin Metrics, he mentioned that the daily trading volume had dropped from $20 billion in March to a mere $4 billion in the most recent week.
In the midst of a growing antagonistic stance from the United States towards digital assets and related companies, certain crypto firms based in the U.S. are starting to explore alternative options.
One such example is Coinbase, which has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) due to the regulatory ambiguity surrounding cryptocurrencies. Coinbase has expressed its contemplation of the United Arab Emirates (UAE) as a potential “strategic hub” for its operations.
Coinbase is not the sole prominent company considering the UAE as a prospective base. According to Cointelegraph, Saqr Ereiqat, co-founder of Crypto Oasis, a venture-building firm, highlighted the UAE’s favorable regulatory approach towards digital assets, deeming it an “ideal” destination for both established and emerging crypto enterprises.