U.S. Crypto Industry Will Follow a Different Path From Rest of World: BitMEX Group CEO

As an analyst with a background in traditional finance and experience working for one of the world’s largest stock exchanges, I find Stephan Lutz’s perspective on the divergence of the global crypto industry fascinating. His prediction that the U.S. market will consolidate more with TradFi is plausible, given the regulatory environment and customer needs in the region.

SINGAPORE —The U.S. crypto market will take a different path from the rest of the world, consolidating more with traditional finance (TradFi), because of differences in the regulatory environment and customer needs, Stephan Lutz, CEO of crypto exchange BitMEX, said in an interview at Token2049 in Singapore.

According to Lutz, it’s likely that American cryptocurrency businesses will concentrate their efforts in integrating traditional finance (TradFi) with the crypto industry. He notes that companies like Coinbase, Circle, and Kraken are increasingly moving towards mirroring the traditional financial system digitally.

Essentially, Lutz’s term “split” refers to the situation where U.S. cryptocurrency businesses will concentrate on their domestic market, while foreign companies will avoid operating within the country. Notably, BitMEX doesn’t conduct business there, as it admitted guilt in July for breaking the Bank Secrecy Act and neglecting to establish proper know-your-customer (KYC) and anti-money laundering (AML) protocols from 2015 until 2020. In 2022, the three co-founders of BitMEX, Arthur Hayes, Benjamin Delo, and Samuel Reed, were collectively fined $30 million for disregarding money laundering regulations.

As a financial analyst with experience at PwC and Deutsche Boerse, I observed that BitMEX holds a more prominent position in the Asian market.

He stated that the sector has long been advocating for unique laws related to specific issues in the U.S., but he is pessimistic about the likelihood of cryptocurrency-focused legislation being passed by the Senate before the presidential election in November.

“Market institutions in Asia will take advantage of America’s confusion.”

Asia and India

In contrast to regions like the United States and the European Union, where a significant portion of the population can utilize traditional banking services, Asia is home to both banked entities such as family offices, accredited investors, and wealthy corporations, as well as a substantial proportion, exceeding half, who are not connected to conventional banking systems, often referred to as the unbanked.

That particular group requires specialized services like overseas money transfers from relatives who are employed abroad, serving as a genuine example of practical application.

Lutz explained, “This split in the markets occurs because they cater to distinct requirements instead.

As per Lutz’s prediction, over the course of the next decade, it is likely that India will lead the global cryptocurrency industry if companies remain transparent and open, and if policymakers recognize that digital currencies can enhance their ability to preserve monetary policy autonomy.