Bitcoin and ether reserves on United States-based crypto exchanges have dipped below 50% amidst an ongoing regulatory crackdown in the country, according to a recent research report by CryptoQuant. The report states that U.S.-based crypto exchanges have lost their dominance in terms of the amount of bitcoin they hold for their customers, with offshore and international exchanges taking the lead. The bitcoin reserves held by U.S.-based exchanges have reached their lowest level since January 2017, indicating a significant decline.
Crypto reserves represent the coins and tokens held by exchanges on behalf of their users, playing a crucial role in facilitating trading activities and serving as a measure of liquidity. The decrease in crypto reserves suggests that users are withdrawing their holdings from exchanges, possibly due to security concerns or a preference for holding funds in private wallets. This decline in U.S.-based crypto reserves can be attributed to the ongoing regulatory crackdown by U.S. authorities on the cryptocurrency sector. In recent developments, the U.S. Securities and Exchange Commission (SEC) has filed lawsuits against Binance and Coinbase for alleged violations of securities regulations. In contrast, other regions like Hong Kong have adopted crypto-friendly policies, attracting more crypto firms and users to establish operations there.
According to CryptoQuant, the U.S. federal government and regulators have created a challenging operating environment for U.S.-based crypto businesses. The SEC’s ambiguous stance on compliance has resulted in some exchanges deciding to cease operations in the U.S., while others have announced plans to operate outside the country.
In response to the regulatory challenges faced by U.S.-based exchanges, Johnny Ng, a member of the Hong Kong Legislative Council, has extended an invitation to Coinbase and other crypto exchanges to establish regional operations in Hong Kong. Ng’s invitation aims to provide a favorable environment for global virtual asset trading operators and assist them in their official trading platform applications and future development plans.
Overall, the regulatory crackdown in the United States has led to a decline in bitcoin and ether reserves on U.S.-based crypto exchanges, paving the way for offshore and international exchanges to gain traction. The attractiveness of regions like Hong Kong, with their crypto-friendly policies, has further fueled the shift of crypto firms and users away from the United States.