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London, United Kingdom, Dec 01, 2025, Crypto markets are often described as unified and borderless, but the reality is far more complex. Different countries enforce different rules, apply different taxes, and impose different trading limits. According to Douglas Shaw, Research Director at 21VC.io , those differences directly affect price. And in that gap, arbitrage lives.
Shaw explains that regulation is now one of the biggest sources of market inefficiency. Two investors may be looking at the same asset at the same time, yet seeing two completely different prices depending on where they are. It is not a glitch. It is the consequence of inconsistent policy.
“Regulation shapes liquidity, and liquidity shapes price,” Shaw says. “That is why Bitcoin can trade at a premium in one country and a discount in another. The laws matter as much as the market.”
The Spread That Shouldn’t Exist But Does
Crypto is supposed to be frictionless. But reality proves otherwise. A trader in Canada may have full access to regulated ETF exposure. A trader in India may face banking restrictions. In Nigeria, capital controls influence exchange access. In Argentina, currency limits distort conversion rates.
These constraints slow or block the ability to move assets smoothly across borders and that delay is all an arbitrage trader needs.
Shaw points out that the most profitable arbitrage moments often appear when regulation is shifting. New limits, new taxes, new compliance standards. These can push local prices sharply out of line with the global average.
Why Arbitrage Is Growing, Not Shrinking
Most people assume arbitrage disappears quickly as markets evolve. In crypto, Shaw believes the opposite is happening, the opportunities are increasing.
The reason is that the regulatory environment is not converging, it is diverging. The EU is building one framework. Canada uses another. The United States is split between multiple agencies. Asia spans every stance from open adoption to strict restriction.
The wider the policy spread becomes, the wider the price spread becomes.
Institutional Opportunity, Retail Potential
Professional traders were the first to take advantage. But Shaw notes that everyday investors now have access to the tools needed to observe and understand price variation across regions. Traders don’t need to physically move assets between countries, sometimes the trade is simply about picking the right exchange, jurisdiction, or settlement partner.
21VC research shows that crypto arbitrage strategies can perform independently of broader market direction. They do not rely on a bull trend. They rely on differences and those differences are not going away.
As always, regulation cuts both ways. Arbitrage fails if liquidity vanishes, if a platform freezes withdrawals, or if a government unexpectedly tightens rules. That is why Shaw emphasizes that knowledge of policy is as important as knowledge of price.
This is not a strategy for traders who ignore headlines. It is for those who study them.
A Market That Reflects Its Rules
For Shaw, the takeaway is philosophical as much as financial. Crypto has not outgrown the world, it is shaped by it. Each country’s stance becomes part of the market itself.
“People think blockchain creates one price everywhere,” he says. “But the law is still local. Until regulation aligns, price never fully will.”
Which means for those who understand map arbitrage is not just a possibility. It is a strategy.
Disclaimer: This article is purely informational and doesn't offer trading or financial advice. Its content is not intended to be investment advice. We do not guarantee the validity of the information, especially when it pertains to third-party references or hyperlinks.
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