December 4, 2023

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According to some analysts, policymakers are actively trying to stifle the avenues for the US dollar to enter the crypto market, thereby creating opportunities for other established markets to gain a competitive advantage.

The recent search for alternatives to Silvergate and Signature Bank by crypto firms in the United States has opened up a chance for Europe to make a profitable move.

While Europe has faced some struggles in keeping up with the U.S. in terms of crypto innovation, such as stablecoins and adoption, this setback may turn out to be a blessing in disguise for the continent.

Could Europe Become Crypto Dominant?

With the potential to capitalize on the current state of events, Europe may just have the opportunity to establish its foothold in the crypto market and give the U.S. a run for its money.

After all, in a constantly evolving industry like crypto, change is the only constant, and Europe could very well be the next major player to disrupt the status quo.

As U.S. banks continue to drag their feet in terms of embracing crypto, they risk losing out on the millions of dollars that were once parked at Silvergate.

This hesitation increases the likelihood of crypto firms turning towards more regulated and transparent alternatives, such as Europe.

The Markets in Crypto-Assets Act, offers much-needed clarity in the European crypto market, providing a sharp contrast to the ongoing regulatory uncertainties faced by U.S. firms.

This uncertainty poses a significant challenge for the operations of crypto organizations, both new and existing, making it an important factor to consider for market entrants.

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The Increasing Importance of Clear Crypto Regulations

As the global crypto market continues to evolve, regulatory clarity and ease of transaction will play a crucial role in determining which countries and regions will emerge as leaders in the industry.

The current efforts by U.S. policymakers to suppress the influx of the dollar into the crypto market could potentially hinder the country’s ability to keep up with its global competitors.

By limiting access to dollar on-ramps, the U.S. risks losing out on the numerous advantages that come with being a leader in the crypto industry.

Meanwhile, the rest of the world is presented with an opportunity to gain a competitive edge and solidify their positions in the market.

As the industry continues to evolve, it remains to be seen whether the U.S. will loosen its regulatory grip and adapt to the changing landscape or risk being left behind.

The good news for crypto investors is that the industry has gradually become less dependent on traditional fiat currencies in recent years, particularly in the realm of trading.

In just one year, the dominance of stablecoins has surged from 79% to over 90%, securing the vast majority of volumes on exchanges.

The Meteoric Rise of Stablecoins

The rise of stablecoins has also reduced the impact of a potential banking cutoff in the U.S. on crypto investors. Although investors are increasingly using stablecoins for transactions, the businesses behind the trading platforms are not.

Instead, it is the institutions themselves that will bear the brunt of any USD cutoff. This highlights the resilience of the crypto market and its ability to adapt to challenges by finding alternative means of transacting.

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Final Thoughts

The absence of access to a U.S. bank would undoubtedly force crypto exchanges and other related businesses to adjust their service offerings.

For instance, if an exchange cannot rely on 24/7 USD payment networks, it’s possible that they may only be able to serve customers during U.S. trading hours.

This scenario could have significant implications, including missed trading opportunities for U.S.-based investment funds that rely on 24/7 trading strategies.

Ultimately, the lack of access to U.S. banks may lead to a fragmentation of the global crypto market and disrupt the seamless, round-the-clock trading experience that investors have grown accustomed to.

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