What Is the Concept of ‘Regulatory Arbitrage’ in the Crypto Space?
Regulatory arbitrage is the practice of exploiting differences in regulations between jurisdictions to gain a competitive advantage or reduce costs. In crypto, this often involves setting up operations or exchanges in countries with favorable or lax regulatory environments.
Arbitrageurs may move funds or execute trades in jurisdictions that offer lower taxes or less stringent compliance requirements. This practice is controversial but common.
Glossar
Stringent Compliance
Regulation ⎊ Stringent compliance refers to the mandatory, rigorous adherence to the complex and evolving regulatory landscape governing digital assets and their derivative products across multiple jurisdictions.
Regulatory Arbitrage
Jurisdiction ⎊ Regulatory arbitrage, within the context of cryptocurrency derivatives, options trading, and financial derivatives, fundamentally exploits discrepancies in regulatory frameworks across different geographic locations.