As regulatory pressure on the US cryptocurrency industry continues to mount, crypto businesses are increasingly turning their sights towards international expansion. Gemini Trust Co., led by billionaire twins Tyler and Cameron Winklevoss, has announced plans to focus on growth in Asia and establish a non-US crypto derivatives platform. This comes on the heels of Coinbase Global Inc., the largest US crypto exchange, obtaining a virtual-asset hicense in Bermuda and considering moving its headquarters outside the US amid regulatory clampdowns. The Securities and Exchange Commission (SEC) has issued several enforcement actions this year, while US politicians are struggling to create crypto , creating a challenging environment for crypto businesses.
In contrast, the European Union is working to develop rules for the industry, while locations such as Hong Kong and Dubai are actively cultivating crypto hubs. Vince Turcotte, Director of Digital-Assets at market surveillance firm Eventus, notes that given the progress of regulators in the Asia Pacific and the Middle East towards clarifying their regimes, virtual-asset service providers are likely to continue gravitating towards jurisdictions that provide greater clarity and specific guidance.
To support their international expansion, Gemini plans to set up an engineering hub in India and expand their team in Singapore. They have also announced that their derivatives exchange will be available in 30 territories, but not the US, offering Bitcoin and Ether perpetual contracts denominated in Gemini dollars or GUSD, a stablecoin. Coinbase, on the other hand, is accelerating its plans for the United Arab Emirates, engaging in discussions with Abu Dhabi officials over a potential license for a regulated exchange.
Tightening regulatory oversight has affected several crypto businesses, including Gemini, Coinbase, Genesis Global Capital, Kraken, and Bittrex Inc. The latter has announced that it will shut down its US operations, citing the regulatory environment. The Commodity Futures Trading Commission is also suing Binance Holdings Ltd. and its CEO Changpeng Zhao for breaking US derivatives rules, which Binance has said it is disappointed by but will continue to work with the regulator.
The US crypto industry has faced challenges in the wake of FTX's bankruptcy and other wipeouts following the crypto rout of last year, which has fueled skepticism about digital assets in the US. The SEC's Chair Gary Gensler argues that most digital tokens are unregistered securities and that the sector has been built up around non-compliance. With regulatory pressure expected to continue, crypto businesses are looking to international markets with more clarity and specific guidance for expansion.
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