On March 31, Bittrex, one of the largest and oldest US exchanges, announced the closure of its operations due to the country’s current “regulatory and economic environment.”
According to the official statement, users’ funds will remain secure and available for withdrawal at any time during the wind-down of US operations. This announcement will not affect customers outside the country using Bittrex Global.
US Regulations Created An Uneven Competitive Landscape
Bittrex co-founder Richie Lai stated that the US regulatory environment has created an uneven competitive landscape, ultimately affecting the company’s operations, despite over nine years of operation in the country.
“Nine years later, the crypto ecosystem is very different. Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape.”
He added that due to these obstacles, operating in the country is “no longer feasible.” Hence, the board of directors decided to close operations on April 30, allowing users to withdraw their funds before that date.
“As I mentioned above, all customer funds are safe, here and ready for your retrieval (for users with KYC requirements met). We will permit trading until April 14, 2023, and you should withdraw all your funds by April 30, 2023.”
What is Happening at the Regulatory Level in the US?
In recent months, US regulators have gradually reduced the flexibility granted to exchanges for years, despite compliance with evolving regulatory norms, which have become problematic for many companies.
This has led some exchanges to be in a position where they must choose between shutting down or moving their headquarters out of the United States to avoid fines and unnecessary problems.
For instance, on March 22, the US Securities and Exchange Commission (SEC) issued a Wells notice against Coinbase, indicating potential action against the exchange for “possible violations of securities laws” concerning its staking services and digital wallet.
In response to this threat, Daniel Seifert, Vice President and Regional Director of Coinbase Europe, commented that “the US has left a void that other countries are eager to fill.” In other words, if regulators continue to target the exchange, they will relocate to another country, just as Bittrex plans to do.
As recently reported by CryptoPotato, Binance was the latest exchange targeted by regulators, following a lawsuit filed by the CFTC against its CEO, Changpeng Zhao, and Binance.com, the global cryptocurrency platform. Despite not having its headquarters in the US, the company was sued nonetheless, perhaps to demonstrate the country’s reach.
This must be taken into consideration because the current head of the SEC, Gary Gensler, has already said that according to his reasoning, all of the transactions that happen on the Ethereum blockchain fall into the jurisdiction of the United States. He added that most cryptocurrencies are securities – which, if adopted as common criteria amongst different regulatory instances, could be potentially harmful to the country’s crypto industry.