Cryptocurrency industry is experiencing a new wave of sanctions as governments and financial authorities around the globe step up their efforts to coordinate their approach towards providing regulations for the digital assets. Regrettably, this shift in their landscape is opening the floodgate of complexities that are causing both wooing and upsetting to the business and investors in the crypto field.
In the United States, the Securities and Exchange Commission (SEC) has focused on increased enforcement measures against crypto companies stressing the fact that better regulatory frameworks are needed to adhere to the current securities laws. Current SEC Chair Gary Gensler said, “We have to make sure that crypto tokens trade on the same rules as equities and other securities. Protecting investors is our main focus. “
This approach has been seen by the SEC in several other cases and ongoing cases involving the issuer Ripple Labs and XRP classification as security. It can be noted that people of the industry have turned this case into an object of special attention as the decision given in this particular case, can be expected to precede other rules for cryptocurrencies regulation in the future.
However, the European Union is steadily progressing through the Markets in Crypto-Assets (MiCA) framework that is designed to set out a more coherent approach toward handling crypto. This complete set of rules is intended to bring legal clarity for virtual assets that the current legislation on financial services does not qualify.
The latest move on approval by the European Parliament for MiCA is set to be the biggest leap for the establishment of an overnight unified framework of regulation across the entire jurisdiction, that is most likely to be the new global benchmark in regulation of cryptocurrencies.
Across Asia it can be seen that legislation policies range from nations embracing the growth of cryptocurrencies to countries putting in place strict measures. Japan has been one of the most progressive countries in terms of crypto regulation, always focusing on maintaining a pro-crypto approach as well as consumers’ interests. On the other hand, China’s continuous regulation against cryptocurrency provocated many enterprises to shift their location, thus changing the world map of cryptocurrency.
Some of the existing risks include the changing regulatory standards that have encouraged many crypto firms to embrace regulatory frameworks and improve on their compliance programs. This is according to Coinbase CEO Brian Armstrong who noted that; “Having clear regulatory frameworks is crucial for the scaling and sustainability of the crypto industry which is why we are willing to engage with the regulators”.
However, the growing attention of the regulators has also posed questions about overburdening of business organisations as well as the effects on innovation. Critics of the legislation have claimed that they are too technical in their application and could slow the growth of emerging technologies and drive crypto innovation out of the country.
However, most people in the industry regard the shift in the regulations as a positive step towards bringing cryptocurrencies into the mainstream. Better-defined rules might bring the level of risk mitigation to facilitate the proper embracing of digital asset by the conventional financial institutions for investment and diversification.
While this regulatory environment remains dynamic, crypto businesses are aligning themselves for compliance while at the same time, seeking solutions that will keep their novelty alive. Hence, it is going to define the further development of the crypto industry, focusing on likely successful projects and platforms in the context of the growing regulation.
One can expect a number of new/regulations to be produced within the next few months; there a several important decisions followed by policies awaiting to be announced. Currently, private companies, governments, and regulators continue to make their stands by increasing or adjusting their positive or negative stances toward digital assets, and thereby defining the direction that the crypto industry might take—either closer to traditional finance systems or further away into entirely new and disparate models.
