The United States: Leading the Global Crypto Market
North America’s Dominance in Crypto
North America remains the epicenter of the cryptocurrency world, with the United States emerging as the largest market, accounting for a substantial 24.4% of the global transaction activity, according to a recent Chainalysis report.
Institutional Activity and Transaction Volume
The report, published on October 23, highlighted a staggering $1.2 trillion in on-chain value received within the United States between July 2022 and June 2023. Notably, institutional activity comprises a significant 76.9% of North America’s cryptocurrency transaction volume, spanning both centralized exchanges and decentralized finance (DeFi) platforms.
Stablecoin Activity Shifts
Declining Crypto Activity and Regulatory Challenges
Despite North America’s dominant position in the crypto world, the region has experienced a decline in crypto activity over the past year, largely due to the ongoing ‘war on crypto’ initiated by financial regulators. This crackdown has been a response to high-profile collapses within the crypto sphere, including the blowup of FTX.
Stablecoins: A Shifting Landscape
Stablecoin activity, in particular, is undergoing a noticeable shift away from the United States. The Chainalysis report revealed a relative decline in North America’s stablecoin usage, compared to other digital assets, beginning around February 2023. This shift is in part a result of declining confidence in stablecoins, notably Circle’s USDC, following the collapse of Silicon Valley Bank, where the firm had substantial exposure.
Regulatory Oversight and Legislative Delays
Notably, the majority of stablecoin inflows to the 50 largest crypto services have transitioned from U.S. licensed services to non-U.S. licensed services. While U.S. entities initially played a key role in legitimizing and cultivating the stablecoin market, more crypto users are now engaging in stablecoin-related activities with platforms and issuers headquartered abroad. Consequently, this shift has led to reduced regulatory oversight of dollar-pegged stablecoins in the United States.
Regulatory Challenges and DeFi Growth
Despite these regulatory challenges, DeFi (Decentralized Finance) adoption continues to flourish within the North American region. In the period between July 2022 and June 2023, the overall on-chain value exchanged exceeded $1.2 trillion, representing slightly over 24% of the global total. DeFi usage, especially within protocols featuring highly speculative trading, has seen a surge in raw transaction volume.
Conclusion: Regulation’s Role in the Future
In summary, the trajectory of crypto and stablecoin regulation will undoubtedly be pivotal in reversing the trends of declining activity and shifting dynamics within North America’s crypto landscape.