The United States Dominates the Global Cryptocurrency Market
A recent report by Chainalysis has revealed that the United States is the largest cryptocurrency market in the world, accounting for 24.4% of global transaction activity. Between July 2022 and June 2023, an estimated $1.2 trillion in value was received on-chain in the U.S. Furthermore, institutional activity makes up 76.9% of North America’s crypto transaction volume, with activity split between centralized exchanges and decentralized finance (DeFi).
Declining Crypto Activity Due to Regulatory Pressure
However, the report also highlights that crypto activity in North America has been declining due to regulatory pressure. Negative developments such as the collapse of FTX and the recent collapses of major banks have contributed to this decline. Stablecoin activity is also shifting away from America, with a relative decline observed compared to other digital assets. Confidence in stablecoins like USDC has been shaken following the collapse of Silicon Valley Bank.
Shift to Non-U.S. Licensed Services
The majority of stablecoin inflows to the largest crypto services have shifted from U.S. licensed services to non-U.S. licensed services, reducing regulatory oversight of dollar-pegged stablecoins in the U.S. Despite proposals for stablecoin regulation, Congress has been slow to act.
DeFi Adoption Continues to Grow
Despite regulatory challenges, DeFi adoption is still increasing in North America. The region accounts for just over 24% of the global on-chain value exchanged between July 2022 and June 2023. DeFi usage has particularly grown in protocols with highly speculative trading.
Hot Take: Regulatory Challenges Pose a Threat to North America’s Crypto Dominance
The United States’ position as the world’s largest cryptocurrency market is under threat due to regulatory pressure and a decline in crypto activity. The ongoing “war on crypto” by financial regulators, coupled with high-profile collapses and the shift of stablecoin activity away from America, has contributed to this decline. Congress’s slow response to regulate stablecoins further adds to the challenges. However, despite these obstacles, DeFi adoption continues to rise in North America. To maintain its dominance in the crypto market, North America needs to address regulatory concerns and foster a favorable environment for innovation and growth.
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