Despite recent narratives suggesting differently, the United States won’t be losing its allure as a crypto hub, according to the CEO of blockchain analytics firm Merkle Science.
A swathe of hostile regulatory actions leveled at crypto firms in the United States in recent months has led many top crypto executives to turn their gaze elsewhere.
Despite this, Mriganka Pattnaik, the co-founder and CEO of Merkle Science, believes that crypto activity will remain in the country, at least in the medium term.
“My opinion is a little bit contrarian here, but I do think that five years down the line, the majority of activity will still be in the United States.”
While Pattnaik noted that regions like India, China and the United Arab Emirates have “strong consumer markets,” the U.S. commands a much higher level of innovation and has a “deeper talent pool.”
Pattnaik also pointed to the “general market dynamics” of the American economy — specifically the clarity around taxation — as the key reasons why crypto firms will likely choose to maintain the bulk of their operations in the United States.
Recent moves by U.S. regulators — namely the Securities and Exchange Commission against crypto firms — have created a narrative of “innovation” going offshore. In the wake of the FTX collapse, Coinbase CEO Brian Armstrong blamed unclear regulations for driving “95% of trading activity” away from U.S. soil.
https://t.co/0HxlRiI6Sy was an offshore exchange not regulated by the SEC.— Brian Armstrong ️ (@brian_armstrong) November 10, 2022
The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore.
Punishing US companies for this makes no sense.
On April 18, Armstrong revealed that Coinbase might consider relocating its headquarters to the United Kingdom.
While Pattnaik admitted that recent government policymaking and the enforcement actions against Coinbase and Binance are undeniably harsh, all of this has been an “overreaction to everything that happened with FTX.”
“Over time, things will become moderated, and there’ll be a lot more clarity in the U.S.,” he added.
Unsurprisingly, not everyone is inclined to agree with Pattnaik.
In an interview with Cointelegraph, Binance Dubai general manager Alex Chehade said that all large crypto firms — particularly those in the U.S. — desperately need clear and consistent regulation.
“You don’t want to set up where the goalposts move. For big businesses, you need predictability, you need to plan and you need to budget.”
Earlier in the year, Ripple CEO Brad Garlinghouse claimed that the crypto industry had “already started moving outside” of the U.S., given that its approach to regulation had fallen behind other crypto-friendly regions like Singapore, the UAE and Switzerland.
On March 20, it was revealed that more than 80 firms from around the world applied for a crypto services license in Hong Kong amid renewed efforts from the region to become a leading Web3 hub.
Months later, on June 1, Winklevoss-owned crypto exchange Gemini announced it would pursue a crypto services license in the United Arab Emirates. Cameron and Tyler Winklevoss cited “hostility and a lack of clarity” on crypto regulation in the U.S. as the reason for the move.