The U.S. and Canada Lead Global Crypto Activity
A recent report from Chainalysis reveals that the United States is driving the majority of crypto activity worldwide, with over $1 trillion in transaction volume between July 2022 and June 2023. Together with Canada, the region accounts for almost one-fourth of global transaction volume. The main contributors to this activity are large institutional investors, who make up 76.9% of the transaction volume in the region.
Impact of Recent Events
Following the FTX exchange scandal and the criminal trial of its former CEO, Sam Bankman-Fried, there was a contraction in crypto activity in the North American region. However, this shock appears to have been smaller than the banking crisis in March when regulators shut down Silicon Valley Bank and took action against other crypto-friendly banks like Silvergate and Signature.
Chainalysis suggests that the decline in overall activity was primarily driven by a pullback from institutional investors, while retail users and sub-institutional pro traders’ estimated activity remained consistent.
Stablecoin Usage and Regulation
The same banking shock that affected crypto activity may also have an impact on stablecoin usage in North America. According to Chainalysis, stablecoin use decreased from 70.3% to 48.8% of the region’s on-chain transaction volume over the past year. Additionally, stablecoin activity is shifting away from U.S.-licensed services, with over half of all stablecoins traded flowing to non-U.S. licensed exchanges.
U.S. regulators are interested in exercising regulatory authority over stablecoins due to their reliance on USD-denominated reserves. However, data suggests that an increasing amount of stablecoin activity is occurring through entities that are not licensed in the United States.
Decentralized Finance (DeFi) and Centralized Exchanges
North America continues to dominate global DeFi volume, but the share of decentralized protocols in overall volume has been declining over the past year. As of June, on-chain activity in the U.S and Canada was split relatively evenly between DeFi and centralized exchanges.
Hot Take: North America Leading the Way in Crypto Activity
The United States and Canada are at the forefront of global crypto activity, with large institutional investors driving the majority of transactions. Despite recent setbacks, such as the FTX exchange scandal and banking crises, the region remains a key player in the crypto industry.
However, there are concerns about stablecoin usage and regulation. The decline in stablecoin usage and the shift away from U.S.-licensed services raise questions about regulatory oversight and control. U.S. regulators are keen to assert their authority over stablecoins, but an increasing amount of activity is happening through unlicensed entities.
While decentralized finance (DeFi) continues to be prominent in North America, centralized exchanges are gaining traction. It will be interesting to see how these trends evolve as the crypto market continues to grow.
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