Crypto firms will develop ‘offshore’ without clear US rules, Coinbase chief says

The US and Britain should make their rules for the crypto industry much clearer to prevent firms from developing in “offshore havens”, the chief of US crypto exchange Coinbase Global Inc (COIN.O), Brian Armstrong, said on Tuesday.

The failure last year of the Bahamas-based FTX exchange has highlighted the importance of major economies developing clear crypto regulations, Armstrong said at a conference held by the Innovate Finance industry body.

“This is the reason why we need clarity about legislation and regulation onshore because if the UK doesn’t have this, if the US doesn’t have this, these firms are going to be built in offshore havens,” Armstrong said.

While some major economies such as the European Union have drafted bespoke crypto rules, the sector is still mostly unregulated in the United States.

US regulators and law enforcement have launched a broad crackdown on crypto companies this year, aimed at illegal offerings and failures to comply with rules designed to prevent illicit activity. In March the US Securities and Exchange Commission threatened to sue Coinbase over certain products.

Still, Britain’s finance ministry laid out in February its first set of rules to regulate crypto, with its financial watchdog calling in March for tough rules to “detoxify” the sector.

Armstrong in a tweet on Monday that Britain was “moving fast on sensible crypto regulation, adding, without elaborating, that he was “excited to keep investing in the UK.”

Still, he voiced concerns over banks in Britain taking an increasingly hardline approach to customers transferring cash to crypto exchanges in an effort to stamp out fraud.

Top UK lender NatWest (NWG.L), for instance, imposed new limits in March on customer transfers to cryptocurrency exchanges, seeking to protect consumers from what it called “crypto-criminals.”

“Some UK banks are blocking fiat payments to crypto companies which is not ok,” Armstrong tweeted, referring to traditional currencies.

“Good fraud controls make sense, a blanket ban does not (and is likely not lawful).”