The cryptocurrency industry is undergoing significant shifts, prompting crypto companies to reassess their locations. In recent weeks, exchanges such as Binance, Bybit, and OKX have completely withdrawn from Canada, while Gemini has announced plans to expand operations in Singapore. Additionally, venture capital firm Andreessen Horowitz (a16z) has chosen London as its first non-U.S. outpost. These developments indicate a changing regulatory landscape that is shifting towards the East, as North America, specifically the U.S. and Canada, are viewed as less crypto-friendly.
Various regions are actively embracing cryptocurrencies and establishing regulatory frameworks to attract crypto businesses. Dubai introduced the Virtual Asset Regulatory Authority (VARA), and neighboring Abu Dhabi aims to pass its own crypto-friendly regulations this year. The European Union passed the Markets in Crypto-Assets regulation in April, while Hong Kong’s Securities and Futures Commission has started accepting license applications for crypto exchanges.
The absence of a comprehensive global regulatory framework for cryptocurrencies has created an opportunity for regulatory arbitrage, where companies seek out jurisdictions with favorable regulations. The International Monetary Fund (IMF) has emphasized the need for a global framework to instill consumer confidence, define permissible limits, and foster innovation while avoiding a fragmented regulatory landscape.
Given these circumstances, crypto professionals and companies must consider relocating or expanding operations to jurisdictions that are more crypto-friendly. Remote work has gained popularity, further facilitating the flexibility to choose the most suitable locations. Countries or regions with established regulations are attracting attention, even from major industry players.
For instance, following the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Coinbase, the largest U.S. crypto exchange, for alleged unregistered securities trading, a Hong Kong politician invited the company to apply for licensing in the city-state. Coinbase has also engaged in discussions with authorities in the United Arab Emirates to explore establishing a hub there.
Startup founders and digital nomads are carefully evaluating various factors when deciding where to establish their presence. Janina Pietrowska, an attorney at Rechtsanwälte Lennert Partners in Liechtenstein, which advises crypto clients on incorporation, particularly for security token offerings, suggests that while regulations are important, other considerations such as investment environment, ease of doing business, and tax advantages should also be taken into account.
Crypto Hubs 2023: Unveiling the Best Places for Crypto Professionals
CoinDesk has taken on the task of identifying the top destinations for crypto professionals in its Crypto Hubs 2023 report. By placing themselves in the shoes of a crypto startup founder, they have collected and weighted data based on eight different criteria, encompassing regulatory friendliness, digital infrastructure, and quality of life. The resulting ranked list of 15 crypto hubs may hold some surprises and aims to initiate discussion on the topic.
Ultimately, the crypto industry is evolving, and professionals are seeking environments that offer both regulatory support and conducive business conditions. The choices made today will shape the landscape of tomorrow’s crypto hubs.