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Sujit Kumar
Oct 1, 2024
by Sujit Kumar

Crypto Founders Turn to Geofencing Amid U.S. Regulatory Pressure

Geofencing
As regulatory uncertainty grows in the United States, crypto founders are increasingly considering geofencing as a solution. Geofencing involves blocking access to users in specific jurisdictions, effectively creating a virtual "fence" around a region. On September 30, Variant Fund’s Chief Legal Officer Jake Chervinsky highlighted this trend in a post, noting that many crypto companies see it as a way to manage compliance challenges.

Geofencing can be used when companies face stringent regulations, such as KYC (Know Your Customer) requirements and disclosures, that they cannot meet. By blocking users from the U.S., companies can avoid potential legal complications.

Examples of Geofencing in Crypto

Major players in the crypto industry are already using geofencing. Binance, the world’s largest crypto exchange, blocks U.S. users from accessing its platform, displaying the message, "Binance.com is unavailable in your country." Similarly, Eigenlayer, an Ethereum restaking protocol, blocked users from 30 countries, including the U.S., Canada, and China, from participating in its airdrop.

Decentralized exchange Orca, based on Solana, has also restricted U.S. users from trading through its web interface. These examples illustrate how companies are adapting to the complex regulatory landscape.

Costs and Challenges of Geofencing

While geofencing offers a potential solution, it comes with drawbacks. According to Chervinsky, it's an "extreme and costly measure." Compliance experts like GeoComply suggest that tailored geofences can help firms expand into new markets while maintaining compliance. However, the financial and operational costs of implementing such strategies can be significant.

Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
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Crypto Founders Turn to Geofencing Amid U.S. Regulatory Pressure
Sujit Kumar
Sujit received his Bachelors in Science from the LNMU Darbhanga. He is currently working as a Content Strategist. He has more than three years of professional experience in information systems, security policies, technologies, and Cryptocurrency. He has published 6 books in the area of information security and assurance. He has published more than 50 research articles in leading journals Regarding the Latest and Breaking Crypto News and updates. His research interests include access control, computer forensics, Digital Marketing, Web development, business hacks, player experience, and virtual storytelling.

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