Regulatory Arbitrage and "Flight to Jurisdictions" in the Crypto Economy: How Fragmentation of Rules Creates New Risks and Distorts Enforcement

This report analyzes regulatory arbitrage in the crypto economy and the practice of “flight to jurisdictions” as a response by businesses and users to the fragmentation of national regulatory regimes. It examines the drivers of crypto project migration across legal systems, the institutional consequences of regulatory competition, and the risks for law enforcement, user protection, and financial stability. Particular attention is paid to how regulatory arbitrage fosters grey practices, encourages selective prosecution, and undermines the predictability of international regulation.