Regulatory Crackdown Pushes Crypto Firms to Consider Relocation from US

Mike Novogratz, CEO of Galaxy Digital, a leading crypto investment firm, has revealed that he is considering moving his business outside the United States due to the country’s ongoing regulatory crackdown on the cryptocurrency industry. Novogratz warns that many other crypto companies are also considering a similar strategy and moving away from the US.

During the Piler Sandler Global Exchange & FinTech Conference, Novogratz stated their intention to move personnel and companies out of the US. Several US-based crypto companies have taken steps to establish their operations in other countries.

Novogratz believes that the US will continue to be a significant player in the long term, but emphasizes the need for the country to engage with the crypto industry rather than ignore it. He stated that for cryptocurrencies to realize their true potential, the US must be actively involved. Given the significant role of the state in the global economy, finding common ground through engagement with politicians and regulators is critical.

Currently, the regulatory landscape for crypto businesses in the United States appears challenging. The US Securities and Exchange Commission (SEC) has stepped up its scrutiny of crypto companies, filing successive lawsuits against major exchanges such as Binance and Coinbase. The SEC alleges that these exchanges have violated investor protection laws, claiming that more than 30 registered cryptocurrencies are unregistered securities.

Amidst the uncertain regulatory environment, several crypto firms have announced their plans to move overseas. Coinbase, the largest US-based crypto exchange, recently established a business presence in Bermuda and expanded services for customers in Singapore. Gemini, another US-based exchange, is seeking a license in the United Arab Emirates and intends to expand its workforce in Singapore to target the Asian market.

Ripple, which is currently embroiled in a legal battle with the SEC, has also stated its intention to relocate its business outside the US. The increasing exodus of crypto businesses from the US and increasing regulatory uncertainty highlight the need for US regulators to establish clear and comprehensive guidelines for the industry. Failure to do so could result in further proliferation of offshore havens for crypto companies, hindering the ability of states to fully participate in and benefit from the cryptocurrency revolution.