What Is the Role of Regulatory Arbitrage in Crypto Competition?

Regulatory arbitrage is the strategy of locating a protocol or operation in a jurisdiction with more favorable, less stringent regulations to gain a competitive advantage over those operating in stricter regimes. This can lower operational costs and expand the serviceable market (SAM).

However, it introduces high regulatory risk, as jurisdictions may change their stance, and the protocol may be blocked from major markets, which is a major factor in the risk premium.