Policymakers around the world are beginning to take action on cryptocurrency regulations after leaving the market to grow unchecked for years. According to Nicole Sandler, the Head of Digital Policy at Barclays, policymakers intentionally left the market alone to see what would happen, assuming that it would eventually die.
However, as the market continued to grow, regulators realized that they needed to regulate it. Sandler also noted that regulation is a lengthy process, and while it may have helped in preventing the collapse of crypto exchange FTX, which was charged by the SEC in November, it was not the sole reason for the collapse.
The SEC has been particularly active in the US, going after crypto firms for various reasons. Coinbase received a Wells Notice from the SEC in March, indicating that the exchange would be facing enforcement action due to its staking products allegedly constituting unregistered securities. A source close to the matter claimed that Coinbase’s leadership is frustrated with the SEC for allowing American investors to participate in crypto for years before suddenly deciding to take action.
The crypto community has been critical of SEC Chair Gary Gensler, with many accusing him of picking on the industry. However, fellow panelist Ijeoma Okoli pointed out that Gensler’s actions are consistent with his previous actions when he was the chair of the CFTC, where he was also disliked by the derivatives sector.
The regulatory crackdown is likely to have far-reaching implications for the crypto sector, as it could lead to increased scrutiny and a reduction in the number of exchanges and products available to consumers. However, it could also provide a more stable and secure environment for investors, which could help to legitimize the industry in the eyes of the general public. Ultimately, the success or failure of the regulatory crackdown will depend on how regulators strike a balance between protecting consumers and fostering innovation in the industry.