Advertisement
Advertisement

US Crypto Crackdown Intensifies in Risky Market Landscape

By:
Gerelyn Terzo
Updated: Jun 6, 2023, 15:47 GMT+00:00

The other regulatory shoe has dropped in the U.S. cryptocurrency market and the industry is having to regroup.

US Crypto Crackdown Intensifies in Risky Market Landscape

There’s only one way to describe the regulatory climate in the U.S. cryptocurrency landscape at the moment — risky. Now that the other shoe has dropped. SEC Chairman Gary Gensler seems to have one thing on his mind and that is to ban crypto. Whether or not he has the power to do that remains to be seen. The ongoing Ripple case should offer some clarity on that. 

Meanwhile, U.S. regulators have made it clear that they are leaving no stone unturned in their pursuit, including individual altcoin projects and the trading platforms that support them. Most recently, the U.S. SEC has gone after leading crypto exchanges Coinbase while Binance for allegedly peddling unregistered securities, as blockchain innovators continue to look abroad to friendlier jurisdictions. 

Gensler and Warren – ‘Batman & Robin’

If there were any doubts about where U.S. regulators stood, SEC Gary Gensler’s statement about the Binance charges – which he shared with journalists before submitting to the exchange – has removed them. Gensler stated: 

“Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.” – Gary Gensler 

Zhao, whose future at the company he founded is uncertain, says the SEC’s tactics are not just an attack on him but the entire cryptocurrency industry. 

 

Famous investor Anthony Scaramucci shared with CNBC that SEC Chairman Gary Gensler and Senator Elizabeth Warren are the masterminds behind this regulatory crackdown, riding around in what he described as a “Batman and Robin car together.” According to Scaramucci, this approach is “not in the best interest of the United States” or those consumers Gensler has sworn to protect.  

Coinbase Fights Back

On Coinbase, the SEC has gone after the company for allegedly breaching securities laws and for its staking program in which investors can earn dividends. Gensler has stated,

“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions.”

Coinbase CEO Brian Armstrong has gone on offense against the SEC after first being shocked with a Wells notice from the regulator. In addition to countersuing the regulator, he has asserted that China stands to benefit from the hostile environment in which crypto companies are facing in the U.S. market.

As a result of the scrutiny, the cryptocurrency industry is likely to experience a shift. One of the trends that could emerge as a the solution for innovators, investors and traders alike is decentralized exchanges (DEXs) that are not controlled by a single entity. It puts traders more in control of their own assets but it also places the responsibility of custodying assets squarely on the investor. 

In addition, the trend of blockchain innovators going overseas is likely to persist. For example, Gemini, the trading platform launched by Tyler and Cameron Winklevoss, has already redirected its focus to other jurisdictions like the U.K. where they won’t have to look over their shoulders as much while trying to build out crypto infrastructure.

The SEC has sued two cryptocurrency exchanges in two days. It’s entirely possible that the securities regulator has something else up its sleeve. In the meantime, the cryptocurrency industry has something to be unified about, which could ultimately prove to make them stronger.

About the Author

Gerelyn is a cryptocurrency and blockchain journalist who has been engaged in the space since mid-2017 when bitcoin was embarking on its first major bull run

Did you find this article useful?

Advertisement