Technology investment firm ARK Invest warns that the U.S. is at risk of losing its leadership position in the cryptocurrency space due to uncertainty and heavy regulation. In his weekly review of ARK Invest notesthat the crypto ecosystem in the US is facing a “void” that could scare away both existing and new market entrants.
ARK Invest believes that cryptocurrencies managed by open networks enable the creation of a new paradigm for monetary systems and mechanisms for storing and transferring value. The company believes that the dynamics of the value and market share of cryptocurrencies will be distributed according to a “power law”, that is, a few cryptocurrencies will capture most of the value.
However, in order to realize their potential, cryptocurrencies need the support of regulators who can provide legal clarity and investor protection. In this regard, the US lags behind other countries such as the UAE, Korea, Australia and Switzerland, which offer a more progressive and friendly approach to digital assets.
A recent example of this is statement Coinbase that it views the UAE as a “strategic hub” for its business. Coinbase is the largest cryptocurrency exchange in the US, which is currently suing the Securities and Exchange Commission (SEC) due to a lack of clarity on the regulation of cryptocurrencies.
In addition, ARK Invest notes that the liquidity of cryptocurrencies in the US has “decreased significantly” over the past two months. According to CoinMetrics, USD-denominated bitcoin trading volume fell 75% from March to May, from $20 billion a day to $4 billion last week.
ARK Invest calls on the US authorities to reconsider their attitude towards cryptocurrencies and create more favorable conditions for the development of this industry. Otherwise, the US may lose its leadership to other countries that have already recognized the value and prospects of digital assets.
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