Two major market makers, Jane Street and Jump Trading, are reportedly retreating from crypto trading in the United States due to the growing regulatory crackdown on the industry. According to Bloomberg, the decision was made in response to the intensified regulatory pressure from U.S. policy makers and regulators, following the collapse of centralized exchange FTX. The move has been viewed by some industry veterans and investors as a “war on crypto.”
Although both firms are still making markets and not abandoning the crypto industry entirely, Jane Street is reportedly scaling back its global crypto expansion plans, while Jump Crypto – the digital assets trading unit of Jump Trading – is pulling back from U.S. markets. However, it is still planning to expand internationally.
The news outlet cited two people familiar with the matter who said that the regulatory pressure has spooked industry giants like Coinbase, who have hit back at the SEC. In March, the U.S. Commodity Futures Trading Commission (CFTC) sued crypto exchange Binance and founder Changpeng Zhao on allegations the company knowingly offered unregistered crypto derivatives products in the U.S. against federal law.
It is worth noting that Sam Bankman-Fried, the disgraced former CEO of FTX, worked at Jane Street before entering the crypto industry. Bankman-Fried was known to hire former Jane Street employees as executives or employees, including former FTX US President Brett Harrison.
Spokespersons for both Jane Street and Jump Trading declined to comment on the story to Bloomberg.
The news of market makers retreating from crypto trading in the U.S. has raised concerns among investors, who fear that the regulatory crackdown could have a negative impact on the industry. However, industry experts believe that the move is necessary to weed out bad actors and promote a healthy and sustainable crypto ecosystem.
The regulatory pressure on the crypto industry is not limited to the United States. In recent months, several countries, including China, India, and Turkey, have either banned or restricted crypto trading and mining activities. The move has sparked a debate among industry experts about the future of crypto and its role in the global economy.
Despite the regulatory challenges, the crypto industry continues to grow at a rapid pace. According to a recent report by CoinMarketCap, the total market capitalization of cryptocurrencies has surpassed $2 trillion, with Bitcoin alone accounting for more than half of the market share.
As the industry matures, it is expected that more regulatory frameworks will be put in place to ensure investor protection and prevent fraud and market manipulation. While some may view the regulatory crackdown as a setback, it is ultimately a necessary step towards building a sustainable and trustworthy crypto ecosystem.