Choke Point or no Choke Point, Bittrex says it's leaving the U.S. and it's placing the blame flat on Uncle Sam.
"It’s just not economically viable for us to continue to operate in the current U.S. regulatory and economic environment," co-founder and CEO Richie Lai said in a message to customers in the country on Friday. "Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape."
With exchanges including Coinbase, Kraken and Binance all facing legal scrutiny from multiple U.S. regulators in recent months, a growing chorus of industry watchers has been calling for regulatory clarity as the issue starts to take on political tones ahead of an election year. Galaxy Digital CEO Michael Novogratz on Thursday said the crypto industry was “under assault” from U.S. regulators and that he believed “Operation Choke Point 2.0,” a term used by some to speculate about the possibility of a broader, coordinated crackdown, was real.
Securities and Exchange Commission Chair Gary Gensler said earlier this week that he didn't believe additional legislation was needed for the industry.
Bittrex volume had been dropping
While recent regulatory issues may have played a role in the exchange's decision to depart from the country, it's probably not the only reason, according to The Block research director Steven Zheng.
“Their volume in the U.S. is low enough that it isn’t worth the effort to continue maintaining operations,” he said, pointing to the planform's bitcoin volume of just $4.5 million over the past 24 hours.
Bittrex had been one of the largest exchanges in the U.S., with a market share of USD support of nearly 23% at the start of 2018, according to data from The Block. It collapsed to below 1% in 2021 and hasn't recovered since.
The exchange has had it's fair share of problems with regulators in the country. In 2022, the Office of Foreign Asset Control and the Financial Crimes Enforcement Network announced settlements totaling $29 million with the company over its alleged facilitation of sanctioned transactions between 2014 and 2017. In 2019, the New York State Department of Financial Services denied the company a BitLicense needed to operate in the state.
When asked if the company was attributing all of the lost market share to the regulatory troubles, a spokesperson referenced Lai's earlier statement and additional FAQ on the matter. Customers outside of the U.S. will not be affected.
Lai said that all customer funds were safe, and withdrawals for users who have met verification requirements will be processed until April 30.
"Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape," he said, adding that he would shift his focus to "helping Bittrex Global succeed outside the U.S."