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A significant shift in the regional supply chain of Bitcoin is underway as the United States intensifies its crackdown on the cryptocurrency industry, driving both crypto companies and investors to seek refuge in Asia. This geographical transition is evident as US federal regulators ramp up their efforts to clamp down on digital assets.
Recent data from the on-chain analytics platform Glassnode reveals a growing divergence in the year-over-year regional supply change between the US and Asia. As of May 9, the analysis shows that coins previously held in the US are increasingly being transferred to wallets located in Asia.
This contrast is quite striking, with a 7.5% decrease in the American year-on-year supply change compared to a 6.9% increase for Asia. The split became apparent in the initial months of 2022, coinciding with the collapse of the Terra/Luna ecosystem, and has continued to accelerate without any indication of abating.
Is Bitcoin Abandoning US Waters? Is It Time to Search for a New Crypto-Friendly Haven?
The migration of Bitcoin supply from the US to Asia can be attributed to the increasing scrutiny of crypto exchanges and wallet providers by American authorities. This shift also reflects the contrasting policy approaches toward cryptocurrencies between the two regions. While the US has grown increasingly hostile toward the industry, Asia appears to be opening its doors.
Signs of the geographical shift are evident in the decisions of major US-based crypto exchanges. Coinbase, the largest American crypto exchange, is considering a move offshore in response to the threat of enforcement action by the Securities and Exchange Commission (SEC). Gemini has also announced plans to open an offshore exchange following regulatory scrutiny. Bittrex, another prominent exchange, closed its US operations in March and filed for Chapter 11 bankruptcy protection in April after being targeted by the SEC.
On May 9, two of the world’s largest market makers, Jane Street Group and Jump Crypto, announced they were putting their US crypto trading plans on hold due to regulatory uncertainty. Jump Crypto is even considering a move offshore.
Crypto Mining Exodus Looms
US-based cryptocurrency mining companies may soon seek more welcoming locations due to mounting pressure from regulators.
As China imposed a ban on Bitcoin mining, the US reaped the benefits, albeit temporarily. The Biden administration’s proposal of a 30% energy tax on Bitcoin miners threatens to make operations even more expensive than they currently are.
Should the US government maintain its aggressive stance on cryptocurrencies, the potential consequences include a significant loss of talent, technological innovation, assets, and advancements in digital finance.
As the American war on crypto escalates, the increasing shift of Bitcoin supplies to Asia highlights the growing divide between the two regions’ approaches to the cryptocurrency industry. This trend is likely to continue, as Asia appears to be capitalizing on the opportunities presented by the US crackdown on digital assets.
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