Crypto industry’s recent court wins may not stop companies from moving out of the U.S. 

A long battle

While the crypto community has lately been celebrating favorable news on the regulatory front in the U.S., it may not be enough to stop some crypto companies from moving out of the country, as digital assets regulation is more clear and friendly in some other jurisdictions, said Gupta.

In August, a U.S. federal court ordered the Securities and Exchange Commission to vacate its rejection of Grayscale Investments’ application to convert its Bitcoin Trust product into an exchange-traded fund. Analysts said the ruling may pave the way for the approval of spot bitcoin U.S. exchange-traded funds in the future. 

In July, a federal judge ruled that Ripple Labs’ crypto token, XRP XRPUSD, +0.50%, is not a security when sold on digital-asset exchanges to the general public. The SEC has sought to appeal the court decision. 

As legal proceedings continue, there has been no final words on the cases, noted Gupta. She doubted any regulatory clarity on crypto would be provided until the U.S. presidential election next year.

“We have the election next year and it seems nothing will be changed until then. I think the election results are going to define the policies on this,” said Gupta. 

Global road map to curb crypto risks

The International Monetary Fund and the Financial Stability Board on Thursday said in a paper that they set out a roadmap for a policy response to the macroeconomic and financial stability risks associated with crypto-assets.

“Widespread adoption of crypto-assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability,” the paper wrote. 

While crypto has the potential to bring a variety of benefits, such as cheaper and faster cross-border payments, increased financial inclusion and greater portfolio diversification, many of them have not yet materialized, according to the paper. 

Still, the paper recommended against blanket bans for crypto assets, as they could be costly and technically difficult to enforce. Such bans “also tend to increase the incentives for circumvention due to the inherent borderless nature of crypto- assets, resulting in potentially heightened financial integrity risks, and can also create inefficiencies,” the paper said. 

Crypto in a snap

Bitcoin BTCUSD, +0.75% lost 3.1% in the past seven days and was trading at around $25,879 on Thursday, according to CoinDesk data. Ether ETHUSD, +0.35% dipped 2.7% during the same period to around $1,636.

Must-reads

• Former FTX Executive Ryan Salame Expected to Plead Guilty in Crypto Exchange’s Collapse (The Wall Street Journal)
• Crypto Trading Volume Slumped to Lowest Level of the Year in August (Bloomberg)
• 22-year-old who lost $80,000 in crypto: ‘I was investing with money I didn’t necessarily have’ (CNBC)