There are several reasons why some crypto companies are fleeing the US. One of the main reasons is the growing regulatory pressure on the cryptocurrency industry and the lack of transparent rules for business. In recent years, US government agencies have become more active in controlling the cryptocurrency space, which has caused some concerns in the industry.
At the moment, the US seems to be lagging far behind other countries and regions in terms of crypto legislation. So on April 20, the European Union adopted the MiCA rules, which will come into force as law in 2024, while most countries are much further from achieving such a goal.
The pressure of US regulators and their situational approach to regulation instead of a clear and transparent legislative framework generate a lot of discrepancies and are the main factors of instability and risk, which, of course, slow down the development of the industry and lead to the flight of companies from the country.
The extremely negative position of the Biden administration in relation to cryptocurrency is perhaps one of the main reasons for the deplorable state of regulation in the United States. According to Republicans, the existence of a well-developed regulatory framework for cryptocurrency regulation can give the sector a basis of legitimacy that will give impetus to the development of the industry. On April 28, the chairman of the Financial Services Committee of the House of Representatives, Patrick McHenry, noted that a bill on the regulation of cryptocurrencies could be signed by President Joe Biden and adopted within the next year.
There is now more convenient and flexible legislation for cryptocurrency transactions in Europe. This applies to almost all aspects of the activity.
So taxation in Europe is much more lenient. In the United States, cryptocurrencies are treated as property, and taxes are charged upon sale. In Europe, taxes are usually charged only when converting cryptocurrencies into fiat money.
Licensing of cryptocurrency activities in the USA, unlike in the EU, is fraught with great difficulties. Some crypto companies cannot get permission from US regulatory authorities so that they can continue their activities.
Things are also not easy with ICO. The SEC believes that many ICOs are securities and must comply with federal securities laws, that is, they must register and issue permits for sale. There is no clear regulation of ICO in Europe yet.
In addition, cryptocurrency mining, which developed quite successfully in the United States, began to be persecuted and attempts to impose additional taxes on this activity.
In general, the European approach to regulation is also different. In the US, regulators such as the SEC and CFTC believe that most cryptocurrencies are securities, and therefore should be regulated as such. In Europe, competent authorities are more focused on regulating market integrity, transparency and user protection.
Even if the legislation that will eventually be introduced may be tough for the industry, the very fact that cryptocurrency can become fully implemented into the financial system and regulated will probably open up opportunities for institutional financing and investment.