Digital Currency Group (DCG), a corporate venture capital firm based in Stamford, Connecticut, has decided to close down its TradeBlock subsidiary that provides trade execution, pricing, and prime brokerage services to institutional investors amid an uncertain regulatory environment for cryptocurrency in the United States.
Owing to tightening cryptocurrency regulations and heavy crackdowns in the US, numerous companies are shifting their base to other countries. While some of the crypto firms have closed their operations in the region due to the ongoing suppression, others have stated their desire to depart the US market due to fines and legal concerns.
Recently, Coinbase, one of the largest crypto exchanges in the US, that had come under the regulatory radar revealed the company could exit the US market and relocate its headquarters to the United Kingdom if the regulatory situation does not improve.
In early April, peer-to-peer (P2P) crypto trading platform Paxful said that it could wind up its operations on the back of regulatory concerns and internal quarrels.
Furthermore, crypto lending platform Nexo revealed its intention to exit the US market in December 2022 after negotiations with regulators in the country came to a screeching halt.
DCG Sunsets Another Subsidiary
Barry Silbert’s crypto conglomerate, Digital Currency Group, is shuttering its TradeBlock institutional trading platform https://t.co/duE4YnknrR
— Bloomberg Crypto (@crypto) May 25, 2023
In the latest development, TradeBlock will reportedly officially begin the process of shutting down effective May 31. A Digital Currency Group spokesperson told Bloomberg that the decision was reached due to the current regulatory climate, as well as the broader economic situation. The company also cited the effects of the prolonged “crypto winter” as a major factor. This comes after DCG previously shut down its wealth-management division headquarters in January 2023. DCG wrote,
“Due to the state of the broader economy and prolonged crypto winter, along with the challenging regulatory environment for digital assets in the US, we made the decision to sunset the institutional trading platform side of the business.”
Since the collapse of Sam Bankman-Fried’s FTX, there have been several rumors about the health of the Digital Currency Group. In January, Genesis, the first subsidiary of DCG terminated over 30% of its workforce, following a 20% staff cut in August 2022. After several months of uncertainty, Genesis lending arm filed for bankruptcy on January 19.
In addition, the venture capital conglomerate revealed losses exceeding $1 billion in the previous year. In more recent developments, DCG also missed a $630 million debt payment owed to US-based cryptocurrency exchange Gemini.
Crypto Crackdowns Draw Ire From Community
The recent series of crackdowns on digital asset firms have managed to draw scrutiny not only from crypto supporters but also from Members of Parliament. Recently Representative Patrick McHenry criticized the US Securities and Exchange Commission (SEC) Chair Gary Gensler for punishing crypto firms through regulations without providing a clear path to compliance.
#NEW: Chairman @PatrickMcHenry, Subcommittee Chairman @RepFrenchHill, and all members of the Committee's Republican leadership team sent a comment letter slamming @SECGov's disastrous custody proposal and demanding its withdrawal.
👇 Read more 🔗https://t.co/l9rMtwfJUy pic.twitter.com/4rzG5etjON
— Financial Services GOP (@FinancialCmte) May 11, 2023
Additionally, earlier this month, US Senator Cynthia Lummis blasted Scott Shay, the former chairman of the now-defunct Signature Bank, for trying to place the blame for the bank’s collapse on digital assets. Over the past few months, many industry figures and officials from the financial industry have come out in support of the digital assets sector, accusing regulatory agencies such as the SEC and Commodity Futures Trading Commission (CFTC) of waging an unnecessary war on cryptocurrency.