Galaxy Digital Escapes US Regulatory Headache: Plans to Flee to Crypto-Friendly Shores as Crackdown Intensifies
Galaxy Digital, a major player in the world of cryptocurrency investment, is planning to increase its offshore operations due to the challenging regulatory landscape in the United States, according to CEO Mike Novogratz.
Speaking to analysts after the release of the firm’s Q1 earnings, Novogratz explained that the recent failures of digital asset companies such as FTX have prompted a crackdown by US authorities, prompting Galaxy to concentrate on driving growth overseas.
He also acknowledged that the regulatory hurdles in the US are likely to persist for the foreseeable future, and attributed this in part to a loss of trust caused by bad actors in the industry.
Novogratz believes that the US crypto sector is currently experiencing a period of stasis, as regulatory agencies like the SEC continue to use legal action to exert control over the market.
In the wake of FTX’s collapse last year, US regulators have intensified their crackdown on the cryptocurrency industry, taking aim at exchanges such as Kraken, Binance US, and Gemini. As a result, some companies have opted to establish offices in other jurisdictions.
For example, Galaxy Digital has recently hired a new team of traders in Hong Kong, while Coinbase CEO Brian Armstrong has said that his firm is considering the United Arab Emirates as a possible new crypto hub.
Despite these regulatory challenges, Bitcoin has been performing strongly so far this year, with a 67% increase following a dismal 2022.
These gains have had a positive impact on Galaxy’s financial performance, with the firm reporting Q1 net income of $134 million, a significant improvement on the $288 million loss it experienced in the final quarter of 2022.
Following the release of its earnings report, Galaxy’s shares on the Toronto Stock Exchange saw a slight increase of less than 1%, closing just above $5 CAD.