U.S. Crypto Industry Will Follow a Different Path From Rest of World: BitMEX Group CEO

• The U.S. crypto industry will diverge from the rest of the world, becoming more of a digital twin of TradFi, BitMEX Group CEO Stephan Lutz told CoinDesk.

• Lutz said Asia is strong and that outside the U.S., India will power the industry through the next decade.

SINGAPORE —The U.S. crypto market will take a different path from the rest of the world, consolidating more with traditional finance (TradFi), because of differences in the regulatory environment and customer needs, Stephan Lutz, CEO of crypto exchange BitMEX, said in an interview at Token2049 in Singapore.

“I think that the U.S. crypto businesses will pivot in one direction that is consolidating TradFi with crypto,” Lutz said. “If you look at Coinbase, if you look at Circle, you look at Kraken, they are basically going more and more into becoming a digital twin of the TradFi system.”

The split, Lutz called it a bifurcation, means U.S. crypto businesses will focus on domestic customers, and companies from the rest of the world will stay out of the country. BitMEX itself does not operate there, having pleaded guilty in July to violating the Bank Secrecy Act and failing to set up an adequate know-your-customer (KYC) and anti-money laundering (AML) program between 2015 and 2020. In 2022, co-founders Arthur Hayes, Benjamin Delo and Samuel Reed were fined a total of $30 million for violating money-laundering rules.

Instead, BitMEX is more prominently placed in Asia, said Lutz, who was previously a partner at PwC after spending time at Deutsche Boerse, the operator of Germany’s largest stock exchange.

The industry has been “begging for issue-specific legislation in the U.S. for years,” he said, though he’s not optimistic of the chances for crypto legislation moving through the Senate before November’s presidential election.

“Market institutions in Asia will take advantage of America’s confusion.”

Asia and India

Unlike the U.S. and European Union where almost everyone has access to the conventional banking system, Asia has the banked – family offices, accredited investors and wealthy corporates – alongside the so-called unbanked, who comprise more than half of the continent.

It’s that group that needs alternative services such as international remittances from family members working abroad to support relatives at home, a real use case.

“This is why you have a bifurcation of the markets. You serve completely different needs,” Lutz said.

According to Lutz, outside of the U.S., India will power the crypto industry in the next 10 years provided the companies are reasonably open and if policymakers understand that crypto “actually adds to their capability of maintaining” monetary policy independence.