ARK Invest analyst Yassine Elmandjra has warned that the U.S. risks losing its lead in the cryptocurrency race to countries including the United Arab Emirates, South Korea, Australia and Switzerland. In a note to ARK Invest clients on May 22, Elmandjra saw the recent cryptocurrency-related pullbacks at trading firms Jane Street and Jump Trading as an early sign of a broader reaction to the country’s destabilizing regulations.
“The U.S. cryptocurrency ecosystem, once dominated by established and reliable institutions, now faces a void that could put other institutional investors’ interest on hold.” “In the U.S., regulatory uncertainty appears to be holding back both incumbents and new entrants in the crypto space,” he added. ARK Invest is a global asset manager, led by CEO Cathie Wood, currently holding over $14 billion in assets.
Additionally, Elmandjra acknowledged the “significant decline” in cryptocurrency liquidity within the U.S., noting that bitcoin trading volumes in the U.S. have fallen by 75% over the past two months. It fell from $20 billion a day in March to $4 billion a day in the past week, he said, citing data from Coin Metrics. Meanwhile, some U.S.-based crypto firms have begun to look elsewhere as the U.S. has become increasingly hostile to digital assets and the companies that deal with them.
Coinbase, which is suing the SEC over its lack of clarity on cryptocurrency regulation, said it is now considering the UAE as a "strategic hub" for its business. Saqr Ereiqat, co-founder of venture capital firm Crypto Oasis, said the UAE’s more optimistic approach to regulation of digital assets makes it an “ideal” location for new and existing crypto businesses.
