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In: Cryptocurrency

An analyst at prominent investment management firm, ARK Invest, has weighed in on the crypto regulatory issues in the United States. In a recent newsletter, ARK Invest’s analyst, Yassine Elmandjra, warned that the regulatory uncertainty in the United States puts innovation at risk.

The analyst further noted that this issue discourages existing and intending crypto firms and could concede the US position at the forefront of innovation to other countries.

crypto Assets Regulatory Uncertainty Threatens Innovation In the US

In the newsletter, ARK Invest’s Elmandjra articulated the possible impacts and risks of an unfavorable regulatory atmosphere to investment in the US.

Related Reading: crypto Scam: Hong Kong Company Executive Defrauded Of $2 Million

The analyst <a href="https://www.bloomberg.com/news/articles/2023-05-19/crypto-trading-less-institutional-after-jane-street-jump-pull-back?sref=1f7Aj053&leadSource=uverify%20wall#xj4y7vzkg” rel=”nofollow noopener” target=”_blank”>cited the recent pullback in liquidity after Jane Street and Jump Trading retreated as the early signs of the broader ecosystem’s reaction to the unclear regulatory atmosphere.

In addition, Elmandjra said the US crypto ecosystem, once populated by well-established and credible institutions, is facing a void. And this void may discourage institutional investors from entering the industry. 

In the analyst’s words:

The US regulatory uncertainty seems to be discouraging existing firms and new entrants in the crypto space.

Elmandjra also noted that cryptocurrency liquidity in the US has significantly declined, adding that Bitcoin trading volume fell 75% in the last two months. 

Citing data from Coin Metrics, the analyst said BTC trading volume in the United States has reduced from $20 billion per day in March to only $4 billion in the last week.

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Bitcoin trends upward on the chart l BTCUSDT on Tradingview.com

US crypto Regulatory Environment Pushing Top Firms To Look Elsewhere

Ark Invest’s newsletter comes as US-based crypto firms consider expansion outside the country due to an overwhelmingly hostile business environment for digital assets. 

Several firms have complained about a lack of regulatory clarity while US regulators incessantly crack down on them. In a recent development, Coinbase sued the US Securities and Exchanges Commission, demanding clarity on regulation. 

This was after the exchange received a Wells Notice from the regulator threatening legal actions for alleged securities law violation.

At the recently concluded Dubai Fintech Summit, Coinbase CEO Brian Armstrong said the UAE is more business-friendly than the US when it comes to crypto firms.

In a May 7 blog, the firm noted that Armstrong and some other Coinbase executives want to discuss the UAE’s potential to become a strategic hub for the digital exchange. Notably, Coinbase has already <a href="https://www.reuters.com/technology/coinbase-launches-international-crypto-derivatives-exchange-2023-05-02/#:~:text=May%202%20(Reuters)%20%2D%20Coinbase,regulators%20in%20the%20United%20States.” rel=”nofollow noopener” target=”_blank”>launched its international exchange and appears ready to move outside the US.

Brief On Ark Invest

ARK Invest is a notable US-based investment management firm that manages exchange-traded funds (ETFs). The firm had $50 billion in assets under management in February 2021 before a downturn in May 22 pushed it down to $15.9 billion.

Despite the setbacks, ARK Invest remains an active pro-crypto investor and has bought millions of Coinbase exchange shares amid crashing prices.

Featured image from Pixabay and chart from Tradingview.com

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