An analyst at ARK Invest, a prominent investment management firm, recently shared thoughts on the crypto regulatory landscape in the United States. In a newsletter, Yassine Elmandjra, an analyst at ARK Invest, cautioned that the current regulatory uncertainty in the country could jeopardize innovation.
Elmandjra further noted that this uncertainty is discouraging both existing and potential crypto firms, putting the US at risk of losing its position at the forefront of innovation to other countries.
US Crypto Regulatory Environment Puts Investment in Jeopardy
In the newsletter, Elmandjra outlined the potential impact of an unfavorable regulatory environment on investment in the US. He cited cryptocurrency liquidity pullback after Jane Street and Jump Trading retreated as early signs of the broader ecosystem’s reaction to ambiguous regulatory uncertainties.
Additionally, the analyst pointed out a void in the US crypto ecosystem, once populated by reputable institutions. This void may drive institutional investors away from the industry. Elmandjra stated:
The US regulatory uncertainty seems to be discouraging existing firms and new entrants in the crypto space.
The analyst also revealed that cryptocurrency liquidity in the US significantly declined, with Bitcoin trading volumes dropping by 75% in the last two months. He cited data from Coin Metrics, which shows BTC trading volume in the United States reducing from $20 billion per day in March to only $4 billion in the last week.
US Crypto Firms Consider Expanding Outside the Country
ARK Invest’s newsletter comes as US-based crypto firms look into expansion outside the country due to an allegedly hostile business environment for digital assets. Many companies have complained about a lack of regulatory clarity as US regulators continually crack down on them.
Recently, Coinbase sued the US Securities and Exchanges Commission, seeking clarity on regulation after the exchange received a Wells Notice from the regulator threatening legal actions for alleged securities law violation.
At the Dubai Fintech Summit, Coinbase CEO Brian Armstrong expressed that the UAE is more business-friendly towards crypto firms than the US in a tweet. Coinbase also established its international exchange, indicating a possible departure from the US.
About ARK Invest
ARK Invest is a US-based investment management firm that manages exchange-traded funds (ETFs). The firm held $50 billion in assets under management in February 2021 before a market downturn in May 2022, which lowered the amount to $15.9 billion. Regardless, ARK Invest remains an active pro-crypto investor and has acquired millions of Coinbase exchange shares despite crashing prices.
Featured image from Pixabay, and chart from Tradingview.com
