As CFTC and SEC Crackdown on Crypto, Some Experts Think Regulatory Teardown Has Just Started – Here’s Why
The US crypto industry could face a tough time ahead, as regulators continue to crack down on some of the biggest companies in the space, experts have warned.
The ongoing crypto crackdown, sometimes referred to as Operation Choke Point 2.0, is already on top of all industry leaders.
But according to Martin Grant, global head of regulatory affairs at financial firm JST Digital, the regulatory clarity crypto companies want won’t necessarily be delivered anytime soon.
Commenting in an Insider article on Wednesday, Grant said regulatory agencies are currently “pushing hard to overturn the current regime to provide more investor protection.”
When they do, however, the question becomes whether new rules simply provide more clarity for the industry or whether they instead “cripple an emerging industry.”
After all, it’s clarity the industry wants” Grant explained:
“At the end of the day, industry participants are seeking regulatory clarity, which has yet to be achieved.”
The warning from Grant follows a broad regulatory crackdown on crypto in the US.
Among the most notable recent developments has been the Wells notice that Coinbase was served in which the SEC threatened legal action and a lawsuit against Binance and its CEO Changpeng Zhao by the Commodity Futures Trading Commission (CFTC).
Meanwhile, Braden Perry, a former senior litigation attorney for the CFTC, said in the same Insider article that more regulation is likely to come simply because more and more companies are getting into crypto.
Perry explained that the rise of crypto has meant that all kinds of investors have jumped on board:
“With the rise of cryptocurrency, the crypto investment community has grown significantly, with both sophisticated and novices joining the fray.”
He added that the investment environment for crypto exchanges and wallets has been “transformed”, saying this means the area is now “ripe for new products and services – but also abuse.”
“The ever-increasing number of exchanges/wallets and problems/hacks has undoubtedly served as a shot across the bow for regulators and will likely be the driving force for future rulemaking,” noted the former CFTC attorney.
Furthermore, Perry also warned that regulatory interventions such as the one we are seeing now often lead to increased volatility in the markets, although the pace at which regulators move may be uncertain.
“[…] Such a public move with relatively notorious companies will undoubtedly affect the market, as seen in the recent price swings, and FTX’s collapse,” he said.
