The regulatory battles against the crypto industry continue, with new ones instigated daily it seems – as, in the US, the latest to find itself as the mark is crypto exchange Kraken. Yet, while some warn of bulldozing power of regulations, others argue that crypto in its essence is unstoppable.
Yesterday, the US Commodity Futures Trading Commission (CFTC) issued “an order filing and settling charges against respondent Payward Ventures, Inc. d/b/a Kraken […] for illegally offering margined retail commodity transactions in digital assets,” including bitcoin (BTC), and failing to register as a futures commission merchant. The company must pay a USD 1.25m civil monetary penalty.
This is what Kraken CEO had to say about the state of crypto regulation:
Meanwhile, per Acting Director of Enforcement Vincent McGonagle, this is part of the regulator’s “broader effort to protect US customers,” stating that margined, leveraged, or financed digital asset trading offered to retail US customers “must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”
Meanwhile, the US Securities and Exchange Commission (SEC) Chairman Gary Gensler said that US cryptocurrency markets and regulated platforms will “not end well” if they stay outside regulators’ purview, Bloomberg reported. “There are trading venues and lending venues where they coalesce around these, and they have not just dozens but hundreds and sometimes thousands of tokens on them,” he reiterated on Monday during the Code Conference in California.
And there are more reports that crypto will not see an ally during the President Joe Biden’s administration. The White House nominated Saule Omarova to lead the Office of the Comptroller of the Currency, reported Bloomberg, noting that Omarova’s “critiques of digital tokens fit right in with statements that have recently emerged from government watchdogs” – such as that of Gensler.
“It took several years for regulators to wake up, but it’s like a bulldozer,” Jim Angel, an associate professor specializing in market structure at Georgetown University is quoted as saying. “It’s slow, it’s steady and it will grind down anything in its path.”
Yet, some, like Karen Shaw Petrou, a managing partner at research firm Federal Financial Analytics, suggest that it may be too late for market participants to find common ground with regulators, stating that crypto “conveniently believed that spouting often dubious inclusion and innovation propositions would forestall regulation,” and that the sector “was extraordinarily intoxicated with the cool factor.”
Tesla chief Elon Musk shared his own opinion, during the Code Conference, on the US regulating crypto, opining that – it shouldn’t. On the question of whether the US government should be involved in regulating the space, he replied: “I would say, ‘Do nothing’.”
Slowed down maybe, but not stopped
Per CNBC, Musk said that, while it’s impossible to destroy crypto, “it is possible for governments to slow down its advancement.”
Similarly, Timothy Spangler, a partner at Dechert LLP, told Bloomberg that innovation is “not going to be denied; It’s not even going to be meaningfully delayed.”
As for China’s ongoing crackdown on the crypto industry, the Tesla chief noted that the country’s electricity shortages may be a part of it, as well as that “cryptocurrency is fundamentally aimed at reducing the power of a centralized government,” which the Chinese government doesn’t “like.”
Per Aaron Tilton, CEO at cryptocurrency platform SmartFi, who is also a former Utah state legislator, “Ironically the SEC Chair enforcement approach reminds me of the earlier tactics the Chinese regulators had taken a few years ago by warning people that crypto must be re-made in an acceptable image of regulators for protection of the people. After all the “warnings” China made their own digital currency and outlawed private cryptocurrencies.”
“The Congress, the SEC and crypto users should be engaging in proactive collaboration to serve the people, but it appears to be saber rattling warning the people to fall in line or else,” Tilton told Cryptonews.com in an emailed comment.
There are even more opposing voices, stating that crypto, despite the regulatory pressure, is not that easy to put a full stop to – even if regulation is inevitable or necessary in certain cases. As a matter of fact, quite a few entities in the space are already regulated, experts argue.
Kristin Smith, executive director of the Blockchain Association, said at Yahoo Finance’s All Markets Summit Plus: Crypto Investing, that:
“Decentralization is incredibly powerful and these networks can exist in many different places. China has attempted to crack down on crypto multiple times now. They may be getting more aggressive on that front, but as long as the internet persists, crypto networks will persist as well.”
Per Nic Carter, co-founder at CoinMetrics and general partner at Castle Island Ventures, markets will eventually win if they clash with the state. “It just so happens, cryptocurrency [being] virtual, being something that is peer-to-peer by its very nature, something you can take full ownership of on a smartphone, is uniquely resistant to state control.”
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Learn more:
– Brace For ‘Really Volatile’ 6-12 Months in Crypto Regulatory Sphere – Novogratz
– Bitcoin Shows Resilience Amid Global Political Pushback
– ‘Don’t Be Lulled’ as European Commission Mulls a Crypto KYC Trap
– SEC Chief May be Gunning for Crypto Exchanges and Altcoins
– Regulators Must Make Sea Change on Crypto, and IMF Is Ready To Engage
– Crypto Exchange Self-Regulation Kicks In as Regulators Start to Kick
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