Home / The Crypto Exodus Begins: Will Andreessen Horowitz Lead the Way for Crypto Away From the US?
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The Crypto Exodus Begins: Will Andreessen Horowitz Lead the Way for Crypto Away From the US?

Last Updated June 12, 2023 11:45 AM
Omar Elorfaly
Last Updated June 12, 2023 11:45 AM
Key Takeaways
  • Silicon Valley venture capital firm Andreessen Horowitz sets its first office outside the US
  • Why London
  • Major crypto exchanges shutting down business in the US
  • US Crypto Exodus explained

Silicon Valley Venture capital firm Andreessen Horowitz has chosen its first overseas office in London, UK. With over $35 billion in assets, the firm cites the move as a measure to combat the legal issues facing the crypto market due to SEC regulations. However, with the tech field not performing optimally in the city, why London?

Horowitz Goes Overseas

The company that was an early backer for now major corporations, such as Facebook, Twitter, Coinbase, and Stripe, announced  it would be setting up shop in one of Europe’s main capitals, London. Andreessen Horowitz’s first international office will have Sriram Krishnan, one of the company’s general partners and a recent advisor to Elon Musk during his Twitter takeover, at its helm. 

The London office will receive $7.6 billion backing from the headquarters and plans to focus on startups operating in the cryptocurrency and blockchain industry. The Andreessen Horowitz London office will also include a Crypto Startup School accelerator program starting in early 2024 as part of its mission towards giving the local fintech community a serious boost.

Why London?

With the EU set to set forth clear regulations on the crypto trade, cities like Madrid, Milan, and Paris are becoming attractive hot spots for startups in the crypto industry. However, Andreessen Horowitz has opted to penetrate the international market through London, one of the world’s financial and tech hubs. The move may surprise some as London has had its fair share of woes  in the tech space recently. 

Starting February 2023, the UK is putting in motion a list of regulations  that would provide a safer space for consumers in the crypto field and attract companies of all sorts in the industry. 

The new UK regulations will put a lot of emphasis on providing clarity and transparency within the crypto trading market. Addressing worries regarding new crypto trading platforms in the market, recognized by the UK government as Financial Conduct Authority (FCA) authorized crypto asset firms, the treasury department is making an exception where these businesses, which will register with the FCA for anti-money laundering, will be permitted to market their own promotions, while the government finalizes the details of the regulations. 

The UK Economic Secretary to the Treasury, Andrew Griffith, reports, “We remain steadfast in our commitment to grow the economy and enable technological change and innovation – including crypto asset technology.” He added, “we must also protect consumers who are embracing this new technology – ensuring robust, transparent, and fair standards.”

Crypto Businesses Jumping US Ship

The US crypto market is experiencing a high level of volatility right now. Companies are mainly struggling to deal with legalities, mainly clashing with the US Securities and Exchange Commission (SEC) on the basis of regulating and setting up clear rules that define traders and customers in the market. 

Most notably, two of the world’s crypto trading companies, Binance and Coinbase, are now reaching a chapter in their SEC clash that may jeopardize their survival in the US market. Binance is facing thirteen lawsuits filed by the SEC, claiming that the exchange took part in wash trading, commingling customer funds, artificially inflating their trade volumes to delude investors, and evading US regulators. These serious allegations have led the platform to halt all USD transactions, suspend all trade pairs and have its own crypto token BNB take a serious hit to its value. These allegations concern Binance.US, the company’s independent broker established specifically for the US market. 

Coinbase, on the other hand, is head-to-head with the SEC regarding its legitimacy as a crypto trader that is permitted to operate in the US market. Although the exchange’s IPO was approved by the SEC back in 2021, also having been used by the US government itself to sell off seized crypto assets, the SEC claims that Coinbase is operating as an unregistered trader of registered securities. Despite its clashes with the SEC, Coinbase is now welcome  to set up shop in Hong Kong, famously a progressive city when it comes to regulating the crypto trading market. 

On top of all that, Crypto.com, a major crypto exchange based in Singapore, announced  an exit from the US market, citing the reason being the current instability of the crypto space in the US. The company, however will keep its sponsorship deal of the grand arena  in Los Angeles, California, formerly known as Staples Center. 

US Crypto Exodus

The term originally coined by Brad Garlinghouse, CEO of Ripple, a crypto exchange that is also at a clash with the SEC, highlights the trend of crypto companies potentially exiting the US market in droves. Garlinghouse is currently dealing with a complaint issued by the SEC that claims Ripple is illegally trading in XRP, a crypto token, illegally, citing that XRP is a registered security, while Ripple is not authorized to do so. 

The above examples encapsulate the whole issue in the US crypto market into one word, regulations. The US government, namely the SEC, has struggled to define its understanding of cryptocurrencies, inconsistent in its decision on whether it considers crypto assets as securities or commodities. This indecision has caused constant clashes between the SEC and crypto companies and the seemingly indefinite delay in setting clear regulations that protect both crypto exchanges and customers. 

For that reason, Garlinghouse predicts  that major crypto-related companies, such as Binance, Coinbase, Crypto.com, Andreessen Horowitz, and Ripple are on a set course to exit the US market altogether, claiming that other countries, such as Singapore, Hong Kong, the UK, and others in Europe are far ahead when it comes to setting clear regulations and guidelines that help businesses thrive in the crypto space.