The CEO of crypto exchange Panxora (formerly operating as First Global) says he is “unhappy” with the US regulatory model. The comments come following the Commodity Futures Trading Commission’s (CFTC) request for information on “crypto-asset mechanics” including Ethereum (Ether) and Bitcoin
Gavin Smith says he is pleased that the US is looking for more insight, but he believes the current US regulatory model “makes life difficult for crypto companies, even if they’re not based in the US.”
Panxora has offices in London and Hong Kong but does not provide services to US investors. According to their website, Panxora may be offering a crypto-based hedge fund as well as an ETF at some point in the future. Smith is of the opinion that overseas regulators must take action or they could risk losing control of crypto entirely to the US.
“While it’s a welcome move forward for the US to provide clarity, overseas regulators need to be more proactive or risk losing control of this exciting new asset entirely to the United States,” stated Smith. “US authorities are controlling the development of cryptocurrency globally by imposing draconian fines and sometimes criminal proceedings on companies. This can apply regardless of whether businesses are legally operating in their own jurisdictions.”
Smith expressed his concern that an operator could create a business that is perfectly legal in their home jurisdiction but risk prosecution by the US Federal Government. Smith’s anxiety is well founded as both state and federal regulators have not been shy about pursuing crypto offerings established outside the US that may be accepting, or soliciting, US investors.
In the past, blockchain legal experts have pointed to the challenges of using regulatory arbitrage to operate crypto companies.
“Until sovereign governments take a stand to protect businesses operating within their borders, the US is being handed unchecked power in controlling the development of the crypto-economy,” said Smith.