European cryptocurrency investment powerhouse CoinShares has launched a new division in the United States, marking its first foray into the world's largest capital market. The move comes despite regulatory uncertainty and ongoing legal battles between crypto firms and the SEC.
CoinShares asserts that contrary to popular belief, the US is leading in crypto adoption and regulation. But with SEC crackdowns ramping up, is the US still a crypto safe haven? Or does Europe offer a more welcoming regulatory environment for digital assets?
This article will cover the key details around CoinShares' US expansion, opinions on the US crypto regulatory landscape, predictions for the future, and answers to two pivotal questions: Should crypto firms set up shop in the US or Europe? And will the SEC approve a spot Bitcoin ETF anytime soon?
On September 22, CoinShares announced its new US division called CoinShares Hedge Fund Solutions, which will provide offerings to qualified US investors for the first time.
The company believes the US is pioneering crypto regulation by treating digital assets similarly to traditional securities. It cites collaborations between legacy financial institutions like BlackRock and Fidelity with crypto firms as evidence of growing integration.
CoinShares says it remains committed to Europe despite its US expansion. Its Hedge Fund Solutions will be registered in both the US and UK. But it asserts the US has more interconnectivity between traditional finance and crypto.
The move comes after CoinShares’ CEO declared Europe's crypto regulation more problematic than the US earlier this year. The company is a major provider of crypto exchange-traded products (ETPs) in Europe but has yet to disclose plans to launch a spot Bitcoin ETF.
While the US has issues with crypto regulation clarity, CoinShares makes a fair point about its integration with traditional finance. The sheer size and influence of the US capital markets incentivize both crypto firms and traditional institutions to work together.
Europe offers a more fragmented regulatory landscape. Individual countries have taken divergent approaches, creating a complex web of rules for crypto companies to navigate across borders.
The US markets allow for more scalability given appropriate regulatory guardrails are in place. However, the SEC must provide clearer guidelines to give both investors and crypto companies confidence to engage with digital asset opportunities.
Despite CoinShares’ optimism, the reality is regulatory uncertainty remains a dark cloud over crypto innovation in the US. More crypto companies may follow Coinbase in expanding overseas until concrete frameworks are established.
While the SEC drags its feet, other jurisdictions like Switzerland and Singapore are rolling out clear crypto regulations to attract businesses. The US risks losing its first-mover advantage if overly stringent restrictions stifle growth.
But CoinShares is likely playing the long game. The US can’t ignore crypto forever. When sensible rules are finally introduced, companies already positioned will reap the rewards.
CoinShares’ entry is reminiscent of major US tech companies expanding into China years ago despite regulatory uncertainty. The likes of Facebook and LinkedIn ultimately had to pull out when Beijing cracked down.
Cryptocurrencies face similar skepticism from governments as the early internet did. But much like the web, crypto is a global decentralized invention that no one country can fully control.
Just as the music industry fought file-sharing, legacy finance rails against “disruptive” crypto. But the Spotify generation shows that old guards can modernize without leaving consumers behind.
Should crypto firms set up shop in the US or Europe?
For now, Europe offers smoother sailing for crypto companies thanks to more defined regulations across countries like Germany, France, and Switzerland. But the sheer size of US capital markets is hard to ignore once regulatory frameworks improve.
The ideal approach is having operations and headquarters in crypto-friendly Europe while still accessing US investors. As regulations evolve, expanding US operations can provide a dual competitive advantage. But companies need to be wary of regulatory risks.
Will the SEC approve a spot Bitcoin ETF anytime soon?
Unfortunately, a spot Bitcoin ETF remains elusive for now. The SEC continues to slow-walk applications despite growing industry pressure and evidence that consumer protections are ensured.
But crypto is only growing, and the new generation of investors demands access. The SEC would be wise to approve a spot ETF sooner than later before innovation moves too far overseas. If global competitors launch before the US, it would be a symbolic failure.
Approval is likely at least 1-2 years away given the glacial regulatory speed. But when sensible rules are introduced, investing in digital assets will finally get its full democratization moment.