According to ChainCatcher, Variant Fund’s chief legal officer wrote on X yesterday that as U.S. regulators continue to crack down on the cryptocurrency sector, many cryptocurrency founders are considering geofencing as a compliance strategy.
In simple terms, geofencing means blocking people in a specific “geo-location” from accessing a product by creating a virtual “fence” around it. It can be used as a fallback option for compliance strategies if a company cannot comply with regulations, such as providing disclosures and KYC.
However, Chervinsky added: “This is a fairly extreme solution to the problem of regulatory uncertainty — abandoning the U.S. market entirely — but sometimes there is no alternative,” noting that geofencing “is an extreme and expensive measure to ensure compliance with U.S. law.”