Bitcoin and Crypto Unleash Their Global Reach: Operation Chokepoint 2.0 Fails as Over 50% of BTC Holdings Find Safe Haven Outside the US

• Over 50% of Bitcoin (BTC) and Ether (ETH) held on behalf of customers by crypto firms has relocated to offshore and international exchanges due to regulatory ambiguity in the US.
• The exodus of crypto assets and businesses from the US is leading to an increasing loss of the country’s crypto market share, with countries like the EU and Hong Kong seeing an influx.

The crypto landscape in the United States is experiencing a tectonic shift. With regulatory vagueness at its epicenter, more than half of Bitcoin (BTC) held by crypto firms for their clients has navigated its way to offshore and international exchanges. This intriguing development, backed by research data from CryptoQuant, suggests the ebbing of BTC reserves on American exchanges to levels last seen in 2017.

The force driving this crypto migration stems from the absence of a comprehensive rule book for the industry in the US. The present enforcement-based approach by regulators has spurred crypto companies to set sail to offshore locales. Countries like the EU and Hong Kong, armed with well-defined regulations for the emerging crypto economy, are receiving a surge of talent, capital, and crypto firms. Hong Kong’s adoption of the principle “same activity, same risks, same regulation” for crypto firms, akin to traditional financial institutions, is a case in point.

The US, in the face of these shifting dynamics, is gradually ceding its market share in the burgeoning crypto sector. Several crypto exchanges have opted to shutter their operations in the country, with others discontinuing specific services following accusations of regulatory violations.

Alongside the dwindling BTC reserves, Ether (ETH) reserves in the US have also been on a downward trajectory. Reportedly, about 56% of ETH on crypto exchanges are held beyond American shores. The trading volume on international crypto exchanges trumps that of US-based platforms by four times. In fact, the Bitcoin spot trading volume dominance in the US has ebbed to below 2017 levels, settling at a modest 21%.

Meanwhile, despite the US holding a leading position in the Bitcoin mining industry, this dominance may be jeopardized by regulatory constraints and prospects of higher taxation.

In essence, the US’s uncertain regulatory landscape appears to be fueling a considerable exodus of crypto assets and businesses, causing a reshaping of the global crypto market share.