Many wonder what regulatory arbitrage really means in crypto and how certain compliance moves can backfire. Take the custody business as an example. When the SEC released SAB 121 guidance in early 2022, one major exchange initially dominated this space due to their first-mover advantage on compliance. The key insight: pushing for deregulation might seem advantageous short-term, but regulatory expertise and early compliance positioning often create more durable competitive moats. Understanding how policy shifts reshape industry economics—particularly around custody and accounting standards—reveals why strategic regulatory positioning matters more than simply championing blanket deregulation. The winners aren't always those demanding rule removal, but those who navigate the rules effectively.