A cloud of uncertainty hovers over the future of the digital asset landscape in the United States following the Securities and Exchange Commission’s continued onslaught of legal action.
In the past week, the regulatory watchdog has filed lawsuits against leading exchange giants Coinbase and Binance – along with its founder Changpeng ‘CZ’ Zhao – for securities law violations.
It also listed 13 cryptocurrencies – including Solana, Polygon and Cardano – as securities in the lawsuits. Two days later, it sought a temporary restraining order to freeze assets of BinanceUS.
More exchanges could be forced to take similar steps as the SEC continues to tighten its grip on players in the crypto space.
The ‘Great Migration’
Despite its stated aim of safeguarding US investors through its recent actions, there are growing concerns that such measures could potentially hinder the country’s position in the blockchain industry. With some exchanges looking to relocate to more crypto-friendly jurisdictions, the exodus has already begun.
BittrexUS ceased operations in April after being sued for illegally operating a securities exchange. Gemini, Crypto.com, Nexo and Coinbase have hinted at possible exits, with some even publicly disclosing their acquisition of licences that authorise operations in alternative countries.
Meanwhile, Hong Kong is strategically positioning itself to be one of the biggest gainers of the US ‘fall-out’ with the crypto industry. Its legislative council member, Johnny Ng Kit-chong extended an invitation to Coinbase to obtain a licence and operate in the country. This came after the country announced a new rule allowing registered exchanges to serve retail traders.
The United Kingdom is also signalling its intentions of becoming the next hub for blockchain businesses. Last week, The All Party Parliamentary Group (APPG) for Crypto & Digital Assets released a report to explore business potential within the space and companies are already looking to take up these opportunities.
The world’s largest venture capital firm by AUM, Andreessen Horowitz (a16z) announced that it will open its first international office in London this year. Prime Minister Rishi Sunak expressed excitement at the news and reaffirmed the UK’s commitment to unlocking opportunities for the blockchain space.
“As we cement the UK’s place as a science and tech superpower, we must embrace new innovations like Web3, powered by blockchain technology, which will enable start-ups to flourish here and grow the economy… That’s why I am thrilled world-leading investor, Andreessen Horowitz, has decided to open their first international office in the UK — which is testament to our world-class universities and talent and our strong competitive business environment,” the PM said.
Can DeFi restore hope for crypto maxis in the United States?
With the SEC persistently targeting centralised exchanges in the country, the current climate presents an opportune moment for decentralised exchanges (DEXs) to step into the spotlight.
DEXs stand out as a remarkable innovation within the realm of decentralised finance (DeFi). It gained significant traction during the summer of 2020 primarily due to its capacity to enable transactions without relying on intermediaries or third parties. This surge in popularity brought forth a multitude of applications offering yield farming, lending and borrowing, decentralised insurance, liquidity provision and more.
DEXs are powered by self-executing smart contracts and allow users to swap one asset for another based on predetermined conditions and without an intermediary.
For a long time, DEXs remained in the shadow of centralised exchanges because of the latter’s support for cross-chain swaps. The introduction of decentralised bridges, however, spells a reversal in tides as users can now swap assets across different chains without a centralised market maker. The confluence of these advancements, coupled with enhanced privacy and user control, renders DEXs an even more compelling choice in today’s landscape.
In the face of the SEC’s regulatory onslaught, DEXs prove to be a tailor-made solution, offering a host of features and advantages perfectly suited to navigate these challenging circumstances.
While centralised exchanges struggle to remain compliant by delisting assets to appease the SEC, DEXs like Uniswap and PancakeSwap provide a viable alternative, allowing continued access and trading of these assets outside the reach of the SEC or any centralised authority.
It is therefore time for crypto enthusiasts in the US to lean towards DeFi as the fight for regulatory clarity continues – or risk being left behind in a fast-evolving industry.
As the industry navigates regulatory developments and companies moving to explore new frontiers, interesting days lie ahead in the cryptocurrency space.
Stay informed and be part of the exciting journey towards a decentralised future by visiting CoinNews for the latest updates in the world of crypto.
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