The US is usually at the forefront of emerging trends, but that’s not the case with cryptocurrencies. Multiple financial institutions including Coinbase, Ripple, and others have called out the lawmakers for their negligence in devising a regulatory structure around crypto. Despite having no regulatory clarity on the status of crypto, the Securities and Exchange Commission (SEC) has been going after the crypto exchanges with full might, citing obscure regulations.
However, that might change sooner than you think as lawmakers have introduced a 162-page bill yet again in hopes of clearing up the fog surrounding cryptocurrencies. If the US Congress passes a bill that involves cryptocurrency, it would have a profound impact on crypto prices, as the US is a huge market for crypto.
If you currently own or are thinking about getting into crypto, now is as good a time as any. Make sure that you have a super-fast internet connection like CenturyLink so you can stay updated with the latest prices. Since crypto is inherently volatile, it’s best to stay ahead of the curve by utilizing technology. Speaking of volatility, many believe that another bull run might be around the corner. Here is what’s happening in the US crypto space and what the outcome will mean for the general public.
Some Republican lawmakers introduced a draft bill to get the discussion started yet again. The House has seen multiple draft bills in recent years, which would stall at some point. However, the co-authors of the bill are confident that they’re getting closer to clearing up the regulatory fog surrounding cryptocurrencies in the US.
The bill clearly separates the jurisdictions of the SEC and the CFTC. The SEC will oversee the registration and trade of crypto assets on alternative trading systems. The CFTC will oversee the spot commodity market.
There are two major regulators when it comes to securities and commodities in the US – the Securities and Exchange Commission and the Commodities Futures Trading Commission. As of now, it’s a mess when it comes to jurisdiction over crypto assets and institutions in the US.
The CFTC is Binance because they claim that the company didn’t seek authorization before selling derivates in the US. This might come as a surprise to a lot of people as there is no regulation regarding crypto in the first place.
The SEC is engaged in active legal action with multiple crypto exchanges over the controversial crypto status. Some of the cases have also garnered attention from mainstream media. Their case against Ripple is one of those. They alleged that the sale of crypto tokens breaches the SEC regulations, as the company didn’t register the tokens as securities. Moreover, they’re also actively pursuing Coinbase for similar reasons.
It’s surprising to see the SEC spend taxpayer’s dollars to selectively go after a few entities. Ripple CEO said at a conference that Ripple will have spent $200 million when the ongoing battle with the SEC is concluded. It’s safe to assume that the SEC’s expenditure will be in a similar ballpark.
The legal community predominantly believes that there is a minimum chance of the SEC winning the case outright. This is because the Hinman documents, which refer to a speech made by the then SEC finance division director stating that Ethereum was not a security. This significantly weakens the SEC’s stance in the current battle.
Surprisingly, the US is far behind the rest of the world when it comes to establishing a framework for crypto regulations. It’s widely acknowledged that institutions don’t jump into something that has no regulatory clarity as it could blow back on them in the future. That might be one of the main reasons why large financial institutions including some top banks and investment funds aren’t getting into crypto.
That doesn’t mean that they don’t realize its potential. HSBC issued a report detailing how central bank digital currencies (CBDCs) could be the future of payments worldwide.
It wasn’t too long ago when El Salvador became the first country in the world to recognize cryptocurrency as a legal tender. They formalized the inclusion of Bitcoin as one of the legal tenders. Users can buy and sell goods and services using Bitcoin as a widely accepted form of payment. They even launched their own crypto and a dedicated centralized wallet while also offering the users a lot of incentives.
The European Union has been quick to take steps in this direction. Their Markets in Crypto Assets (MiCA) is an extensive framework that has been passed after a lot of debate and will shortly take effect. This is one of the reasons why Coinbase CEO announced that they were thinking about relocating their headquarters from the US to some country in the EU.
The UAE has been one of the pioneers in accepting crypto with wide arms as it’s positioning itself to become the financial hub in the Middle Eastern region. They’re building a comprehensive regulatory structure to regulate crypto, but the signs look promising. They’ve implemented a renewed licensing regime for crypto exchanges that are looking to move or expand their operations in the Gulf region.
It’s high time the US got its set of crypto regulations in line with the world. This regulatory fog is not conducive to business growth. While the rest of the world is experimenting with digital currencies and exploring the integration of blockchains to optimize their processes, the US is lagging far behind the rest. Hopefully, the crypto world will have the much-anticipated regulatory clarity shortly. Let’s see what the future holds.
https://www.cnbc.com/2023/06/02/crypto-bill-from-republicans-to-define-roles-of-sec-cftc.html
https://financialservices.house.gov/uploadedfiles/digital_002_xml.pdf
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