Over 50% of BTC on Exchanges Have Moved Outside the US Due to Regulatory Uncertainty: Data

Due to unclear regulations in the US, more than half of the Bitcoin (BTC) held by crypto companies for their clients has moved to offshore and international exchanges.

According to a CryptoQuant research report shared with Potato encryptionBTC reserves on US cryptocurrency exchanges have fallen to 2017 levels, as they are being lost to non-US exchanges.

Offshore Exchanges Dethrone US Crypto Platforms

The significant drop in BTC reserves on US exchanges stems from the lack of a clear rulebook for the crypto industry. Regulators have resorted to an enforcement-based approach, driving crypto companies offshore.

Regions such as the European Union and Hong Kong, which have developed comprehensive regulations for emerging economies, are seeing inflows of capital, talent, and digital asset companies. Hong Kong, in particular, has opened up to crypto firms and stated that they will adopt the principle of “same business, same risk, same regulation” as entities similar to traditional financial firms.

Several exchanges have decided to exit the US, while others have suspended certain products and services due to accusations of infringement. The country is gradually losing market share from emerging and established sectors with increasing de-dollarization.

More than 50% of BTC and ETH are outside the US

Aside from the decline in BTC reserves in the US, ether (ETH) reserves have been in steady decline as well. About 56% of ETH is held on cryptocurrency exchanges outside the US.

In addition, the trading volume on international cryptocurrency exchanges is four times greater than the trading volume on US-based platforms. Bitcoin spot volume dominance in the US has fallen below 2017 levels and is currently at 21%. The report added that US stock exchanges have little or no exposure to the perpetual futures trading markets, which are 11 times the volume of spot trading, as companies are not allowed to provide the service.

In contrast, spot and futures trading volume growth in Asia reached 30% and 20%, respectively.

CryptoQuant’s research further found that the market capitalization of stablecoins in the United States has fallen by 35%, losing $15 billion so far in 2023.

Meanwhile, the United States remains the world’s dominant player in the bitcoin mining industry. However, the country may lose this position due to poor regulation, as the government targets miners with the potential for higher taxes. The United States is losing cryptocurrency market share as regulatory uncertainty pushes companies and assets abroad.