The clock is ticking for US regulators as options for customers looking to get involved with cryptocurrencies are dwindling amid regulatory uncertainty. Following the news earlier this year that crypto exchanges Binance and Coinbase were being sued by the Securities and Exchange Commission (SEC), the US regulator, the industry has been dealt another blow, as superapp Revolut removes its crypto offering from the country.
In early August, Revolut announced it was going to stop offering its crypto services in the US market as a result of an unstable regulatory environment.
A Revolut spokesperson told Decrypt: “As a result of the evolving regulatory environment and the uncertainties around the crypto market in the US, we’ve taken the difficult decision, together with our US banking partner, to suspend access to cryptocurrencies through Revolut in the US. This decision has not been taken lightly, and we understand the disappointment this may cause.”
As a result of the announcement, Revolut customers have until 2 September 2023 to trade on the platform. After this date, users will no longer be able to buy crypto. A month later in October, the cryptocurrency holdings service will be disabled.
Speaking on Revolut’s decision, Kadan Stadelmann, CTO at Komodo, the open-source blockchain tech provider, says: “Revolut has already said it will suspend all crypto services in the US by October 3. However, the company has also said this impacts less than one per cent of its crypto customers globally. So while regulatory uncertainty is certainly a factor, it’s probably also a cost-cutting measure if you take into account that the company no longer has to worry about spending on legal services, policy experts, and other personnel.”
A sign of the times
When a regulator cracks down on one of the biggest names in the industry, everyone tends to pay attention. Although there are other options for customers to use, the third and the most used crypto exchanges in the US, Binance and Coinbase respectively (with Binance trading $500million daily and Coinbase trading $3billion daily), clashing with the SEC undoubtedly diminishes confidence in the market.
These sentiments are echoed by Haydee Barroso, co-founder and CEO of Atani, a European multi-exchange broker regulated as a virtual assets service provider. Barroso says: “Until the two ongoing cases of the SEC vs both Coinbase and Binance are not settled, confidence will not return to the US market. These are major cases meant to be exemplary and, for the worse of the better, they will set a precedent and define the industry in the US for the coming years.”
Barroso further explains: “At Atani, our decision to getting authorised under the European regulation and staying away from serving US customers until there is more regulatory certainty it was a no brainer.”
Atani is not alone in wanting to avoid the US market. Prior to the SEC’s lawsuit, Coinbase had shown signs of wanting to move its HQ out of the country and to Bermuda. Crypto exchange, Gemini (the fifth most used in the US) also expressed concern about the regulatory landscape as a reason for its expansion to India. Bittrex, another popular crypto exchange quit the US market for the same reason.
Not a crypto issue but an issue within the US
For Amram Adar CEO and co-founder of Oobit, the crypto payment platform, the lack of crypto regulation won’t harm the development of digital assets. The only one with anything to lose is the US market. Driving away innovators will only see them establish an HQ in another, more crypto-friendly country.
“With places like Hong Kong and Dubai already working to become global crypto hubs, in due time, companies that face severe scrutiny in the US are likely to move to a more crypto-friendly region. In the long term, this is more likely to affect the US than the crypto industry, considering all the growth and innovation we’re seeing in the technology and the whole Web3 sector.”
All or nothing?
Although Revolut has announced its exit from the US crypto market, we wanted to find out if this was going to be a one-off until regulations improved, or if this was the first domino to fall in superapps and other financial organisations completely removing themselves from the US market.
Lendel Lucas, CEO at iVi Crypto, the crypto hedge fund management platform says: “The potential ripple effect of crypto regulations on companies like Revolut is a multi-faceted consideration. While regulatory uncertainties could influence decisions, it’s important to remember that companies make choices based on a range of factors. Crypto regulations are part of the equation, but they interact with broader business dynamics.
“Certainly, enhanced regulations can significantly foster the growth of superapps in the US. Superapps, known for offering diverse services within a single platform, benefit greatly from regulatory clarity. When guidelines are well-defined, they boost investor and consumer confidence, allowing companies to confidently expand their service portfolios.”
A budding market
A similar sentiment was shared by Jesper Johansen, CEO and founder at Northstake, the compliant crypto-staking product creator. He suggests Revolut’s move is not a sign of the company’s intentions to leave the US market. “However, it does send a clear signal to regulators that regulatory clarity is needed in order for US businesses and international firms like Revolut alike to stay competitive.”
He also explains that in order to see an uptake in apps like Revolut, regulations must be changed. “A recent Coinbase report showed, more than 52 per cent of Fortune 100 companies have invested in blockchain projects since the start of 2020. This is a good indication of where the uptake is despite the current regulatory climate. When regulations improve, then we will likely see an uptick in investments, as well as, activities from companies like Revolut.”
Francis Bignell
