Regulatory Crackdown Impact: Bitcoin and Ether Reserves Dip Below 50% on US Exchanges

Reserves of Bitcoin and Ether on cryptocurrency exchanges based in the United States have recently dropped below the 50% mark, coinciding with an ongoing regulatory crackdown in the country.

According to a research report from CryptoQuant shared with The Block, U.S.-based crypto exchanges have experienced a decline in their Bitcoin reserves, reaching the lowest level since January 2017. The report also highlighted that offshore or international exchanges have surpassed U.S.-based exchanges in terms of the amount of Bitcoin they hold on behalf of their customers.

Crypto reserves typically facilitate trading activities and serve as a measure of liquidity. A decrease in crypto reserves may indicate that users are withdrawing their assets from exchanges, potentially due to concerns about security or holding their funds in private wallets.

Crypto Crackdown in the US

The crypto sector continues to face increased regulatory scrutiny from U.S. authorities, including the SEC and CFTC.

Last week, the U.S. Securities and Exchange Commission (SEC) filed lawsuits against Binance and Coinbase, accusing them of violating securities regulations. Meanwhile, jurisdictions such as Hong Kong have recently implemented crypto-friendly policies, attracting more crypto companies and users to those regions.

According to CryptoQuant, the U.S. federal government and regulators have introduced measures that make it more challenging for crypto businesses based in the United States to operate. The SEC’s guidance on compliance with its regulations has been unclear, prompting some exchanges to halt operations in the U.S. In response, certain U.S.-based exchanges have announced plans to establish new platforms operating outside of the country.

It is worth mentioning that the SEC’s lawsuits represent the latest regulatory developments impacting the crypto industry. Over the past few years, governments globally have been intensifying their scrutiny of cryptocurrencies, and there is an increasing possibility of additional regulations that may potentially affect prices in a negative manner. However, despite the recent decline in prices, the overall long-term outlook for cryptocurrencies is still viewed positively.