Poloniex plans to relocate most of its crypto trading activities overseas, according to parent company Circle. The move is due to US regulatory requirements, which lack a clear legal framework for cryptocurrency related companies.
Circle CEO Jeremy Allaire said that 70% of Poloniex users are not resident in the US, resulting in a move to another jurisdiction. Allaire also stated that Poloniex has already acquired its license to operate the Digital Assets Business Act in Bermuda:
" The lack of regulatory frameworks severely limits supply for individuals and businesses in the US. "
In May, the Delaware-based exchange suspended its nine-dollar offer for its US clients for regulatory insecurity reasons: Ardor (ARDR), Bytecoin (BCN), Decred (DCR), GameCredits (GAME), Gas (GAS) , Lisk (LSK), Nxt (NXT), Omni Layer (OMNI) and Augur (REP). The CEO also confirmed that the recent downsizing of the company by about 30 employees is partly due to the lack of clarity among US legislators.
Although the company will continue its activities in the United States, the co-founders of Circle, Sean Neville and Jeremy Allaire, both in a recent blog post, have pointed out that US regulations have prevented Poloniex from filling US-based customers of features. The move should also allow Poloniex to explore new financial services.
"Unfortunately, due to regulatory restrictions in the US, we will not be able to offer many of these new services to US persons for the time being. However, we strive to serve US customers as well as possible, despite the limitations. "
Neville and Allaire also stated that they would continue to advocate changes in US policy. Among the reasons why they chose the location of the new subsidiary in Bermuda, the co-founders said that the island's comprehensive regulatory framework is ideal for promoting innovation.
"Bermuda has created an exceptionally well-designed and comprehensive regulatory framework with the Digital Assets Business Act of 2018 ("DABA"). DABA provides a comprehensive framework for the regulation and supervision of crypto-financial services. "
Will more companies say goodbye to the US?
Shortly after President Donald Trump voiced his thoughts on cryptocurrencies in a Twitter thread declaring that he was "not a fan" of Bitcoin, Finance Minister Steve Mnuchin held a press conference declaring that the lack of regulations represents a "national emergency" for the crypto markets. In addition, Mnuchin also said that the government would begin to monitor cryptocurrencies with so-called "very, very strong" regulations.
In addition, last week's congressional hearings on Facebook's Libra triggered extremely critical reactions from US legislators who seemed determined to keep the project on track. The hearings also sparked an intense debate over bitcoin and cryptocurrencies. Now it seems very likely that the new regulations in the US could stifle innovation and cause many more US blockchain and crypto companies to flee to other countries.
Poloniex is one of the 100 largest crypto exchanges in the world - with a 24-hour trading volume of approximately 16 million US dollars. Poloniex is also listed in Messari's Real 10 Volume Index, which reflects the legitimate trading volumes of leading industry participants.