Some industry experts say the SEC’s recent actions against U.S.-based Coinbase and Cayman Islands-based Binance could be a net positive for companies operating in the U.S, given the regulatory clarity they could help bring in the long run. In the short to medium term, however, these actions could force these firms to focus their efforts elsewhere.

“Regulatory pressure does create an incentive for exchanges to move overseas; for the digital asset industry specifically, it’s a much easier shift because there are no factories to move,” said Jason Allegrante, Chief Legal and Compliance Officer at infrastructure firm Fireblocks.

Coinbase recently announced it received a license to offer its services in Bermuda, where it reportedly plans to set up a crypto-trading platform outside of the U.S. The exchange is also doubling down on its operations in Canada, which has tightened its regulations for crypto firms but allowed Coinbase to sign an enhanced Pre-Registration Undertaking, signaling its intent to comply with the coming new regulatory framework.

“I suspect we will see more and more moves like this,” Andrew Lawrence, co-founder and CEO of Censo Inc., an on-chain custody solution said. “Yes, the U.S. is the biggest market, but people who are building in the crypto industry are doing so not because of the size of the market now, but because of the size of the market in the future and people are seeing that this future is not looking good in the United States.”

Ben Caselin, Vice President & Chief Strategy Officer at centralized crypto exchange MaskEX, agreed. “All eyes are now set on other jurisdictions,” he said. “This is not the best time for crypto startups in the U.S. Larger players such as Coinbase are able and should engage the regulator to come to solutions, but entrepreneurs and small businesses in crypto are probably better off in other jurisdictions.”

For his part, SEC chief Gary Gensler signaled he’s not too worried about the prospect of crypto firms leaving the U.S. On Tuesday he told Bloomberg TV that “we don’t need more digital currency… we already have digital currency, it’s called the U.S. dollar.”

Fireblocks’ Allegrante said even though the U.S. might be the most profitable market for some exchanges, that may not be reason enough for them to focus all their efforts there. “When a company publicly announces plans to establish exchange operations outside of the United States, you can assume that there are plans in place to shift that balance over time,” Allegrante said about Coinbase.

At the same time, the U.S. market won’t be so easy to ignore.

“The U.S. market was supposed to deliver the next major wave of crypto interest, so it will be hard to completely abandon it,” Edward Moya, senior analyst at foreign exchange Oanda, said.

Even after the SEC warned Coinbase about law enforcement action against the exchange in March, CEO Brian Armstrong said that the exchange remains “100% committed to the U.S.” and in response to the lawsuit, Coinbase said it will continue to dedicate its efforts to operating in the U.S.

Mark Palmer of brokerage firm Berenberg Capital Markets said the battle may be just beginning.

“The exchanges, led by Coinbase, will likely take their fight to the courts while hoping that the political winds change in the U.S. such that more crypto-friendly leaders would be in charge,” Palmer noted.

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