From the outside looking in, the United States seems to present a host of amazing financial opportunities. However, when it comes to launching cryptocurrency exchanges or altcoin trading platforms, these possibilities start to dwindle and fade quite rapidly.

In this regard, over the past few years, the U.S. regulatory landscape has seemed so hostile toward the crypto industry that a number of prominent exchange operators have preferred not to serve U.S. citizens at all — a case in point being Bancor, a decentralized liquidity network, that recently decided to block American citizens from using its website to convert its tokens.

Related: US a Crypto Exchange Scarecrow — What Needs to Change?

All of these negative developments have their roots traced back to America’s lack of clear regulations — especially when it comes to securities legislation. However, despite all these hurdles, Binance recently announced the launch of its U.S. trading desk, a decision that has been welcomed by many from within the global crypto community. Speaking on his company’s recent launch, CEO Changpeng Zhao (better known as CZ) was quoted as saying:

“The U.S. has always been a very important market; globally it's one of the biggest markets for any business, including in cryptocurrency. We want to be fully compliant.”

With Binance finally making its long-awaited plunge into the U.S. market, the question that now begs an answer is: “Will other established ventures will now follow?” On the subject, Cointelegraph reached out to Dmitriy Berenzon, research partner at Zenith Ventures, a multistrategy venture fund for blockchain and cryptocurrency.

Berenzon believes that Binance’s entry into the market will open new doors for other similar firms for the simple reason that the U.S. market is too large for any crypto exchange to ignore. Berenzon pointed out that almost 30% of the world’s spot Bitcoin volume takes place on U.S.-based exchanges, so it’s more of a question of which exchanges have the resources to meet the country’s regulatory requirements than anything else. He further added:

“Exchanges and crypto firms have left the U.S. primarily due to the lack of regulatory clarity. While regulators are taking it slow with consumer protection in mind, they are continuing to lay the groundwork with clearer rules and expectations. I think it’s a question of “when” rather than “if” around regulatory clarity for this new asset class, and it's important for firms and exchanges to continue proactively engaging with regulators to expedite the process.”

Lastly, the launch of Binance US is currently restricted to only 12 states (including New York, Texas and Florida) and it seems that it may take some time for the company to expand its operations geographically. However, just the initial launch in itself should provide other exchanges with the impetus needed to enter or re-enter the U.S. crypto market.

Are more exchanges set to enter American soil?

Even though America’s regulatory regime currently treats crypto assets more like commodities rather than currencies, the country’s finance market is too important to be ignored in the long run.

Christophe de Courson, CEO of Olymp Capital, an asset management fund dedicated to blockchain and crypto, told Cointelegraph that even though a lot of exchanges have previously left (or encounter difficulties) with U.S. regulators — with many of them having to delist their digital offerings in the past — in the end, everyone realizes the immensity of what the U.S. has to offer, and thus they will all look to, in one way or another, re-enter the market in a compliant way.

In the past CZ has been quite reluctant to subject his company to U.S. regulations, so if he has had a change of heart, it will most likely prompt a number of other operators to reconsider their positions. In this regard, Daniel P. Simon, the CEO and co-founder of Vested, an integrated communications firm, pointed out:

“Crypto may be a global phenomenon but no country can compete with the liquidity and demand from the U.S. market. There’s no doubt investors are keen to get into this space, but the digital currency industry still has a lot of growing up to do before these folks feel comfortable jumping in.”

Moreover, Marc Bhargava, President of Tagomi — a digital asset prime brokerage, which is integrated with nine different crypto exchanges and several different over-the-counter (OTC) desks in the U.S. and abroad — pointed out that large funds, index products, venture capitalists and family offices simply can't afford not to participate in U.S. markets, especially if they want to be viewed as global players. Bhargava further told Cointelegraph:

“I think the key is to map out a regulatory strategy early and plan for significant spend there in terms of hiring the right people and for the various applications and filings. One thing that would make the US more regulatory friendly would be an increased standardization of rules and regulations across the different states."

In order for other exchanges and trading platforms to make their way back into the U.S. market, they will have to emulate Binance’s way of doing things — which is basically registering as a money services business with the U.S. Financial Crimes Enforcement Network (FinCEN) and comply with all of the state laws in which the proposed venture will be operational.

The core difficulty, however, for exchange operators that will continue to persist is how they will distinguish between cryptocurrencies or tokens that are securities under existing laws as opposed to those that are not. On the subject, Ken Witt and Marc Staines of Kutak Rock — a U.S. law firm — told Cointelegraph:

“Securities can’t be traded unless the exchange is registered with the SEC and FINRA as a securities exchange. Although there has been some progress, because of the inaction of Congress and the SEC, U.S. law on this point is still based on a 1946 Supreme Court Case — SEC v. W. J. Howey Co.”

Has the U.S. regulatory landscape become more welcoming for crypto?

Another thing important to determine in this case is whether the U.S. government has made any significant changes to its existing legal framework surrounding cryptocurrencies. To the average person, the position of U.S. regulatory agencies seems to have stayed the same.

However, one aspect that has definitely changed over time is the way in which exchanges are beginning to understand which cryptocurrencies they are able to trade under certain specific conditions.

Related: A Clear Path for Ethereum

To understand the situation, Cointelegraph approached Dixon Gardner, an attorney at Madison Law APC. He pointed out that the Securities and Exchange Commission (SEC) now requires private issuers of digital currencies to register their offerings as securities unless the issuer agrees to repurchase the assets at less than their original issuance price to avoid any possibility of a buyer realizing gains on his/her purchase. Gardner further added:

“See the SEC No Action Letter to Turnkey Jet, Inc. dated April 3, 2019. This decision will promote private issuers to issue a digital currency that functions more like money with a set value than a commodity and/or a security. This will support demand for existing digital currency (i.e. Bitcoin, EOS, Ethereum, Litecoin).”

Similarly, the SEC's approval of Blockstack and Props under Regulation A+, as well as FinCEN's guidance on crypto regulations, has set important precedents for token-based projects fundraising or operating in the U.S. However, in the long run, the U.S. government will have to create a conducive ecosystem at the federal level that offers clear guidance, as well as preempts all 50 states from creating a regulatory tower of babel, as Witt told Cointelegraph:

“The Token Taxonomy Act that has been introduced in the U.S. House of Representatives may be a good start, but it wont see any action in the near-to-mid term, now that Congress is consumed with impeachment”.

Looking ahead

While the U.S. government and various other agencies have been moving forward to implement necessary rules and regulations to govern the crypto industry, it is also important to note that many pertinent changes have been slow to come by.

On the subject, Mitesh Shah, CEO of Omnia Markets, told Cointelegraph that despite some early negative indications of clamping down on the industry, local authorities have yet to take any draconian steps, such as outright banning cryptocurrencies. Essentially, Shah believes that the go-slow, thoughtful approach of the SEC has been very positive for the industry — a sentiment that might not be shared by many from within the global crypto community.

Additionally, there are still many people that believe that as time goes on, the SEC’s rules and regulations combined with the increase in protective protocols will allow for the industry to continue to grow and become a safe place for investments and fundraisers.