Mike Novogratz: Galaxy Digital 'Looking at How Fast We Can Move People Offshore'

Crypto investment firm Galaxy Digital is accelerating plans to move its operations offshore in the wake of the SEC's crypto crackdown.

Speaking at Piper Sandler's Global Exchange & Fintech Conference Wednesday, Galaxy Digital CEO Mike Novogratz said that, "Companies like ours are looking at how fast we can move people offshore." He added, "The regulatory environment has made institutional crypto a difficult, difficult place to be."

A recent draft regulatory bill attempts to provide clarity around the security vs commodity debate that the crypto industry currently faces. But Novogratz believes that the bill is "not going to pass" and is just a "placeholder" for now.

“Certainly in the short run, we’re going to look to move people out of the U.S., overseas, and lots of companies are,” he said. He pointed to digital asset exchange Bullish as a firm that’s “running that playbook right now,” adding that as a result the U.S. is “going to lose jobs, you’re going to lose taxpayer money and you’re going to lose the locus of innovation.”

That said, Novogratz believes that in the medium-term the "U.S. has to be part of the system" pointing to the draft regulatory bill as a good starting point.

Crypto’s U.S. ‘legislative stalemate’

Novogratz highlighted the collapse of FTX under "sociopathic fraud" Sam Bankman-Fried as the driving force behind U.S. regulators’ aggressive stance on crypto.

Bankman-Fried was close to regulators and lawmakers, testifying before the U.S. House of Representatives in December 2021. "He was the unofficial face of this industry—we didn't vote for him,” said Novogratz. Bankman-Fried’s actions “set the industry back a couple years,” he added, with the result that “Democrats are petrified of crypto."

He claimed that the U.S. now has a "legislative stalemate," prompting Galaxy Digital’s plans to offshore its operations. Last month, the investment firm announced plans to move more of its operations offshore, citing the "regulatory headache" in the U.S.

Galaxy Digital operates across five business lines: trading, asset management, principal investments, investment banking, and mining.