In this post:
- US cryptocurrency exchanges are subject to AML and KYC rules, which have sparked concerns. Onshore exchanges are subject to more responsibilities than offshore exchanges.
- In the most recent quarter, demand for offshore native platforms increased to almost 50%, while demand for onshore exchanges lagged behind at 41%.
- As more people accept digital currencies, some nations are starting to lead the way in the adoption of these payments.
The US federal government is stepping up its efforts to regulate the cryptocurrency industry by enforcing stronger Know-Your-Customer (KYC) and Anti-Money Laundering (AML) laws.
The majority of these policies have raised market liquidity and innovation toward more crypto-friendly regions even if they were intended to stop illegal activity.
The United States has been at the forefront of technological advancement and cryptocurrency adoption; states like California, San Francisco, New York City, and Miami have become hubs for cryptocurrency activity, hosting conferences and events that bring together experts, financiers, and innovators from around the world.
But because every state has its own set of regulations, it can be difficult to navigate the regulatory landscape in the US.Companies who are starting out in the bitcoin space frequently run across this obstacle.
A regulatory burden could lead to a shift in liquidity away from US venues
As US government agencies enforce AML and KYC regulations, which result in increased compliance expenses for enterprises situated in the nation and cause some of them to look for friendlier regulatory environments elsewhere, regulatory expectations for bitcoin exchanges are growing.
Onshore exchanges are undoubtedly under the most regulatory pressure, even though the majority of respondents think that the new rules have affected offshore exchanges.As a result, demand for offshore exchanges has surged, and many have welcomed offshore access.
Trading volumes on offshore native platforms exceeded the aggregate trading volumes of newly formed and regulated onshore exchanges during the most recent quarter.
Acuiti reported that although onshore exchange demand was marginally higher at 41%, offshore exchange demand increased to 49%.
The demand pool for new onshore exchanges was only 3%, compared to 8% for DeFi.
Cryptofriendly governments are becoming more and more well-known
Countries like El Salvador, Malta, and Switzerland are widely recognized as centers for the development of cryptocurrencies.
Compared to tight rules like those in the US, they offer more flexible policies that facilitate the growth of digital banking and blockchain technology.
These nations are drawing in capital together with government-backed blockchain initiatives thanks to tax breaks and more streamlined licensing processes.
For example, Singapore has established itself as a major global financial centre and has a welcoming posture towards cryptocurrencies.Institutional and individual investors can now trade cryptocurrencies in a secure environment thanks to the clear legal framework established by the Monetary Authority of Singapore (MAS). As a result, blockchain research and cryptocurrency firms now favor Singapore.
