Tips:
- SEC has increased its investigations against various well-known crypto firms
- Congress is proposing bills to implement practical crypto policies to protect the global economy
- FTX collapse has motivated authorities to regulate cryptocurrency strictly
SEC and Congress are tightening ropes around unregistered crypto firms, stablecoins, and cryptocurrencies this year.
It’s been two months since the FTX-Alameda and Sam Bankman-Fried fiasco took over the world. The US suffered from a trillion-dollar loss as over $100,000 creditors lost all their money to the market crash.
From Terra/LUNA, Celsius, and BlockFi to 3AC and Voyager, the constant fall of the crypto market and investors caused a $1.5 trillion market cap wipeout.
The shock waves still persist but the US authorities are now tightening their investigations against crypto firms
2023: The year of Crypto regulation
Since 2022 was a year of bankruptcies, the beginning debate in 2023 regarding cryptocurrency, blockchain, and Web3 is the need for regulations.
Expert economists are warning countries to properly authorize the crypto interactions to ensure no crimes, scams, or rug pulls like FTX exchange sabotage the global economy. They have also warned investors to avoid making investments in unregistered crypto firms.
“Stronger financial regulation and supervision, and developing global standards, can help address many concerns about crypto assets,” says Bo Li & Nobuyasu Sugimoto in an article.
A recent report by the National Bureau of Economic Research (NBER) informs that almost 70% of unregulated crypto exchanges are involved in wash trading, which is recorded to be 80% of total traded volume.
This high percentage is quite alarming as it could signal a massive amount of illegal transfers, money laundering, wire fraud, bribery, and other cybercriminal activities.
According to CoinDesk, the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are pushing toward regulating crypto firms.
SEC reveals many crypto assets are illegal securities
New investigations against decentralized exchanges, crypto lending firms, and other Web3 platforms reveal a history of the violation of the existing laws. Last year the SEC declared a majority of the crypto assets were unregistered/illegal securities.
However, crypto advocates claim there’s no clear definition under the law to know what is considered a commodity and security in Web3.
With the FTX collapse, the investigations have gotten tougher than ever. The most recent example is the bankrupt case of crypto lender Genesis charged with selling illegal securities by the SEC.
U.S. Securities and Exchange Commission Chair Gary Gensler claims the laws exist but firms refuse to comply. “Investors deserve to be protected against fraud and manipulation. The law requires these protections,” he said in a statement.
So far, 6 bills were proposed by US politicians to regulate digital currency, one of them by Elizabeth Warren to probe against the increasing money laundering cases on crypto platforms.
Congress eyes Stablecoins and crypto regulation
According to sources, Congress people are eyeing regulations against stablecoins. These coins are pegged against a dollar to maintain the crypto market. The official wants to ensure stablecoins are transparent and reliable so that they don’t affect the wider financial system.
Learning lessons from TerraUSD and FTX exchange, McHenry’s new crypto subcommittee led by Rep. French Hill (R-Ark.) is working on proposing a proper bill to regulate these coins and overall cryptocurrency.
Conclusion
Whether you call it the positive effects of FTX insolvency or the SEC’s consistent investigation, Congress is now on its toes and ready to implement laws in America.
Crypto enthusiasts are highly supportive of regulations. Many believe strict laws would not only protect their assets but also lead to mass adoption and give more investment opportunities for developers.
As the Web3 industry continues to work on development, experts closely watch the next moves of the US Congress
