The crypto industry in the United States has been negatively affected by regulatory uncertainty and scrutiny. This has been a major barrier to its growth. Despite the industry’s efforts to establish itself, certain digital assets are still unsure about their regulatory status. Currently, assets like Bitcoin [BTC] and Ethereum [ETH] have been dragged between the Securities and Exchange Commission [SEC] as well as the Commodity Futures Trading Commission [CFTC]. Amidst this power struggle, investors have been seeking alternative investment options.
In a recent report, JPMorgan analysts pointed out how institutional interest was moving to gold. The regulatory crackdown has discouraged institutional investors from engaging with the crypto industry. As a result, investors are opting to buy gold instead of Bitcoin as a hedge. This is against a potential “catastrophic scenario” in the event of the descent of Silicon Valley Bank.
The report suggested that regulatory uncertainty has caused people to lose confidence in the digital asset industry and seek safer investment options.
JPMorgan’s research report highlighted that Bitcoin’s rally in 2023, has been largely fueled by retail buying rather than institutional investors. The report suggested that due to the regulatory crackdown and uncertainty in the industry, institutional investors have been dubious to invest in the sector. Despite this, Bitcoin has still managed to gain 76% year-to-date. Gold, on the other hand, hit a new all-time high.
American crypto firms will migrate overseas: JPMorgan
Several U.S.-based crypto firms are currently under immense scrutiny. Ripple, Coinbase and now Binance have been facing the heat of regulators in the region. Amidst this, several have decided to veer out of the region. Elaborating on the same, the JPMorgan report said,
“The U.S.-based arm of Binance has called off its deal with Voyager, while Coinbase launched Coinbase International, a crypto derivatives exchange outside the U.S., as a proactive measure in response to rising U.S. regulatory pressures.”