While the crypto industry is attractive to many people, there certainly are some issues in the USA. In the previous period, the biggest news was that the US SEC has been suing Binance and Coinbase, two leading crypto platforms. This causes a lot of price fluctuations on the market, as people lose trust and back off from these giants.
There are many rumors about the US government targeting the cryptocurrency world. But this time, it may be more than a rumor. According to Andrew Durgee, the managing director of the crypto division for tech firm Republic, the US government is indeed targeting the industry. Unfortunately, this has increased the risk associated with investments in the US because of the uncertainty surrounding regulations.
The established anti-money laundering system in the US, which relies on well-established laws like the 1970 Bank Secrecy Act and the post-9/11 Patriot Act, may struggle to keep up with the requirements and complexities of decentralised finance. In other words, it suggests that the traditional regulatory framework is not adequately adapting to the decentralised financial landscape’s challenges.
A real-life example of this we can take from the many lawsuits the US SEC has against popular cryptocurrencies and related platforms, such as Binance. Very often, the SEC finds gray areas in the work of these crypto platforms as they rapidly grow and change and opens a lawsuit that negatively affects the market volume of the currency. More precisely, when people read such news, they start doubting the reliability and security of the overall crypto industry, not just the particular coin.
As a result, people avoid making payments with cryptocurrencies when using different services, such as online shopping, VPN subscriptions, playing real money slots online, and even bank transactions. That’s why the crypto industry encounters drastic price fluctuations and a decline in trading volume.
The cryptocurrency sector was already facing challenges following the collapse of virtual currency prices in the previous year. In addition, the industry’s reputation suffered further when high-profile companies, such as FTX, were accused of significant financial fraud, drawing attention from prosecutors.
Due to the ups and downs and scrutiny faced by the industry, US regulators have intensified their oversight. They claim that since 2017, crypto firms have been aware that their operations often violate US financial regulations designed to safeguard investors.
Consequently, there have been filed many charges against crypto companies and their executives. More precisely, the US SEC accused them of different offenses, from inadequate registration and disclosure practices to mishandling customer funds and engaging in fraud.
The most famous debate nowadays is whether Bitcoin is a commodity. However, this doesn’t affect it as much as it affects smaller coins and tokens that have faced substantial price fluctuations. This situation also impacts digital asset exchanges that assist in buying and selling cryptocurrencies, as they often hold customer funds and execute trades.
Gary Gensler, the Chairman of the SEC, has defended the recent regulatory actions in the crypto world. He compared the current state of affairs in the sector to the 1920s when the US lacked many of the rules that are now questioned.
Gensler used strong language, referring to “hucksters,” “fraudsters,” “scam artists,” and “Ponzi schemes” so he could emphasise the need for increased supervision to protect the public from potential financial harm and bankruptcy.
Moreover, according to Will Paige, a research analyst for Insider Intelligence, the crypto industry’s sentiment has significantly soured since 2021. When the industry was at its peak, it was worth more than $3 trillion and appeared to be heading toward broader acceptance.
Unfortunately, in the wake of regulatory actions and increased scrutiny, the trust in the system has been severely damaged. Now, the industry is back on the fringes of the financial mainstream.
The future of the crypto industry remains uncertain as the US SEC continues its regulatory crackdown. On top of that, Hilary Allen, a law professor, believes that crypto’s inherent susceptibility to boom-and-bust cycles and potential manipulation by insiders should get a complete ban. According to her, the SEC’s actions, combined with diminishing public trust and venture capital interest, may re-confine crypto to the realm of tech enthusiasts.
On the contrary, insiders like Mr. Stephens are quite optimistic about the future of this industry. He states that Bitcoin and Ethereum prices have increased, which is a good sign. Due to this, he also believes that new companies and protocols are still forming despite the challenges.
However, Gina Pieters, a crypto expert, says that losing the American market will severely limit the industry’s goals.
Overall, the future of the crypto industry may be affected by legal decisions, Congressional legislation, or changes in government policy. But regardless of the outcome, Angela Watch, a prominent researcher, highlights that the sector is currently at a crucial turning point, giving hope to the whole crypto industry and eager investors.
