Crypto Companies Seek New Home: Examining the Global Regulatory Landscape

Cryptocurrency exchanges are on the move as regulatory frameworks shift eastward, bringing about the need for regulatory arbitrage. Gemini, a cryptocurrency exchange, has announced plans to boost its headcount and operations in Singapore, while Binance, Bybit, and OKX have all left Canada. Similarly, Andreessen Horowitz has named its first non-US outpost in London. This shift in the regulatory landscape is creating opportunities for countries that have established crypto-friendly regulations to attract crypto companies. In the past year, Dubai established the Virtual Asset Regulatory Authority, while the European Union passed the Markets in Crypto-Assets regulation. Hong Kong’s Securities and Futures Commission have also started accepting license applications for crypto exchanges.

However, the lack of a global regulatory framework for cryptocurrencies has made it imperative for crypto companies to practice regulatory arbitrage. The International Monetary Fund has called for a global framework to bring order to the markets, establish consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue. In the absence of such a coordinated worldwide effort, national regulators will remain cloaked in differing regulatory frameworks. Ultimately, crypto professionals will be compelled to migrate to the friendliest jurisdictions.

This reality is prompting crypto companies to consider relocating or expanding to more crypto-friendly jurisdictions. Most recently, after the U.S. Securities and Exchange Commission sued Coinbase, the largest U.S. crypto exchange, for allegedly trading unregistered securities, a politician in Hong Kong then invited the company to apply for licensing in the city-state. Coinbase has also publicized its meetings with authorities in the United Arab Emirates to discuss establishing a hub there. Startup founders and digital nomads are surveying the regulatory landscape and developing criteria for deciding where to put down roots.

Regulations are important, but other factors are equally important, including a favorable investment environment, ease of doing business, and low taxes. CoinDesk has ranked the best places to live and work for crypto professionals based on eight different criteria. Zug topped the list where Ethereum was born; Singapore is the center for Asian crypto wealth; London is the world’s capital for foreign exchange, and Seoul is Asia’s retail crypto capital. Dubai plans to become a global financial power by launching a crypto regulatory arm. Other crypto-friendly places on the list include Abu Dhabi, Wyoming, Silicon Valley, Austin, Berlin, Los Angeles, and New York City.