Circle is packing up and moving a section of its crypto business to the cryptocurrency regulation-friendly island of Bermuda.
The move, which was announced by the company on July 22, 2019, is meant to help serve Circle’s clients based outside of the United States. Circle CEO Jeremy Allaire told CoinDesk that 70 percent of the customer base for Poloniex, the cryptocurrency exchange wholly owned by Circle, is based outside of the U.S.
Per the announcement, Circle has received a Digital Assets Business Act of 2018 (DABA) license, a regulatory framework for the "oversight of crypto financial services including digital asset issuance, sale and redemption, exchange operations, and custodial services."
The move also underscores a growing trend within the crypto industry. More companies are moving their operations out of the U.S. to crypto-friendly countries with clearer regulations, while the regulatory climate in Washington, D.C., seems mixed at best.
Earlier this year, for instance, Valerie Szczepanik, a senior advisor with the U.S. Securities and Exchange Commission (SEC) explained that issuers of Initial Exchange Offerings (IEOs) might be breaking securities laws if they aren’t registered.
SEC Commissioner Hester Pierce chided the agency back in May, emphasizing that a delay in enforcing crypto regulations has stymied innovations in the crypto industry.
The same sentiment was captured last week, when Facebook's David Marcus sat before Congress to speak on the social media giant's crypto plans. While some lawmakers questioned Facebook's decision to set up shop in Switzerland, Representative Andy Barr seemed to understand that the country's crypto friendliness spurred the move.
“I think, given the commentary we’ve heard today, we are discovering why a decision has been made to locate in Switzerland instead of the U.S,” Barr said.
It won't be especially surprising if more companies choose to follow Circle by moving a significant chunk of their business out of the U.S. They can only ask for regulatory clarity or friendliness in a country for so long before deciding to set up shop somewhere more favorable.
The wait for regulations might soon be over, however, especially now that the government seems to be turning its focus on the crypto sector in the wake of libra.