Guest post by Kadan Stadelmann, who is a blockchain developer, operations security expert and Komodo Platform’s chief technology officer.

Europe is a world leader in crypto regulation. The European Union has already adopted the Markets In Crypto-Assets (MiCA) regulation, which will govern crypto in the EU’s 27 countries starting late 2024.

The UK is also courting the crypto industry. For example, The Financial Services and Markets Bill is working its way through Parliament, and the Treasury

SEC Forces US Companies To Look To Ireland, UK, European Union

It’s not only Europe which is working on thoughtful crypto regulation. All over the world regulators are developing frameworks so that companies can comfortably operate there.  The UAE has telegraphed its intentions of becoming a global crypto hub with each of its three regulators having developed regulatory frameworks for crypto.

Australia’s Treasury is developing a crypto licensing framework, while Canada opened a Pre-Registration Undertaking (PRU) for which companies can sign up. Hong Kong’s crypto regulator began accepting license applications for crypto exchanges in June 2023 and Japan intends to create a crypto conducive environment. The Prime Minister included Web3 as part of his administration’s “new capitalism” economic policy.

U.S. based firms recognize that jurisdictions other than the United States offer them not only safer operating environments but also more efficient paths to innovation.  Therefore, they are spearheading far-reaching international efforts.

Ripple Looks To UK, Ireland, Singapore, etc.

Ripple, the global payment solutions provider, has an ambitious international expansion strategy, with the United Kingdom and Ireland as key markets in its sights. The Monetary Authority of Singapore (MAS) granted Ripple a license under the Payment Services Act, acknowledging Ripple’s commitment to stringent regulatory requirements.

Following its acquisition of a major regulatory license in Singapore, the company’s decision to target the UK and Ireland comes as no surprise, considering their status as two of Europe’s largest financial hubs.

Ripple’s decision to target Ireland stems from the country’s favorable business environment, robust fintech ecosystem, and increasing demand for innovative payment solutions. Ireland’s position as a gateway to Europe makes it an attractive destination for Ripple’s expansion plans.

Ireland boasts a highly educated workforce and has become a hub for technology companies. Additionally, Ireland’s regulatory framework supports blockchain technology adoption, creating an ideal environment for Ripple’s services. By establishing operations in Ireland, Ripple intends to collaborate with local financial institutions and leverage their existing infrastructure to facilitate faster cross-border transactions using blockchain technology.

Ripple CEO Brad Garlinghouse laments the situation, saying his firm plans to do more than 80% of its hiring outside the US. “You see markets like Singapore, Hong Kong, UK, Dubai where governments are partnering with the industry and you’re seeing leadership, clear rules, and growth.”

Coinbase

In order to counter uncertainty in the United States, Coinbase launched its “Go Broad, Go Deep” strategy for international expansion. Coinbase sees clear rules being developed across the globe, and needs to take part.

Therefore, the San Francisco-based Coinbase is focused on acquiring licenses, registering, and establishing operations in crypto friendly jurisdictions. Its near term priorities include Europe (EU and UK), Canada, Brazil, Singapore, and Australia.

This strategy will allow Coinbase to roll out new products and services “with the support of forward-looking regulators.” Coinbase wants to launch products such as derivatives. The international approach will allow Coinbase to establish key partnerships and initiatives with banks, local institutions, payment providers, strategic players, start-up ecosystems, and culturally relevant brands.

Coinbase CEO celebrates the fact that 83% of G20 countries have crypto regulation. “That is where we are investing our resources,” Armstrong says. He remains optimistic for the future of crypto in the US.

“It’s  true the US is a little bit of a laggard here, and that’s not good for America,” says Armstrong. “I’m an American. We started the company in America. America is gonna get this right…but it is disappointing to see it lagging behind now the rest of the G20.”

He adds of the SEC’s approach to crypto: “It doesn’t represent the will of the people, and in a Democracy the governments should be helping people with their own goals.”

He notes that roughly 56 million of Americans have used crypto now–one in five Americans or 5X as many Americans have used crypto as have an electric vehicle.

“This is not some minority thing,” says Armstrong. “It’s a mainstream thing in American society.”

Kraken Looks Abroad To Ireland, Europe, And Beyond

Kraken, one of the leading cryptocurrency exchanges in the United States, is also looking abroad. The firm recently obtained a license in Ireland. By securing a license in Ireland, Kraken aims to establish a stronger foothold within the European market and expand its services to customers across the continent. Additionally, this move allows Kraken to access the European Union’s Single Market, which provides significant benefits for financial institutions operating within its boundaries.

“It basically forces people to go offshore for things that they otherwise would be able to get in the United States,” former Kraken founder Jesse Powell told the Unchained Podcast. “Just take futures trading, for example. It’s not available in the United States. Trading certain tokens which the SEC would probably call securities is not allowed in the United States, and there’s actually no license to be able to do that whatsoever. It’s not just a matter of getting the right license. There’s no license, and so the SEC would say, ‘Yeah, there’s just no way to do this activity, period, in the US.”

No Brainer That US Companies Must Start Looking Abroad

US crypto companies are left with no choice but to seek overseas licenses. What’s more, frustration is brewing among the nation’s top crypto executives as unclear regulations and executive branch enforcement actions at home put them at a disadvantage in global markets.

Meanwhile, Ireland, European Union nations, and other jurisdictions have taken a clearer approach to cryptocurrencies, offering companies clear guidelines. US companies gain legal clarity, attract international customers, and foster innovation without fearing potential legal repercussions abroad.

The US government should of course be working to provide the kind of clarity being offered by other governments. Otherwise companies will continue their efforts elsewhere.

Kadan Stadelmann

Kadan Stadelmann is a blockchain developer, operations security expert and Komodo Platform’s chief technology officer. His experience ranges from working in operations security in the government sector and launching technology startups to application development and cryptography. Kadan started his journey into blockchain technology in 2011 and joined the Komodo team in 2016.

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