How Will Recent Regulations on Crypto Impact the Industry This Year
The last year went down as quite a negative one for the crypto market and industry in general. The year 2022 brought forward the collapse of many stable crypto coins and bankruptcies of some of the biggest crypto exchange platforms. There was also a lot of volatility and illiquidity, as well as a free fall in the volume of trades. This year, members of the crypto industry are likely to be more cautious. One of the things that every member of the crypto industry is looking toward is the recent crypto regulations that will impact it. This is a market that’s needed regulation for a while now, especially after the collapse of several crypto exchanges. Crypto trends will need more regulation in the US to ensure this industry becomes more stable.
To introduce more regulation in the crypto market, it’s up to the relevant federal agencies first. Various bodies including the Exchange Commissions (SEC) and the US Securities need to create, review, and then approve and establish new regulations. But this is likely not going to immediately solve the problem in the crypto space for a few different reasons. One of the reasons is that the entire process of creating and establishing regulation takes a long time. It can take years from the time that a federal body drafts a rule for it to be agreed upon. Then it has to publish it and take comments from the public. The last step is for the new regulation to go through a judicial review. This is difficult to apply to the problems in the crypto industry because of how quickly things change. The odds are quite high that by the time that a regulating body starts implementing a rule, the industry will have completely changed. Or it can adapt itself to avoid the new regulation completely. Another reason is the fact that regulators have to work within the Bank Secrecy Act (BSA) framework. This is a law with a detailed framework with rules on anti-money laundering and combating the financing of terrorism. That’s difficult inside decentralized finance platforms like crypto exchanges. The biggest reason why is that the platforms aren’t holding the funds of the users. They only oversee and then approve the financial transactions of their users.
Legislation and regulation
One thing that lawmakers writing the US crypto regulations could do is take an example from the other side of the Atlantic. The European Union, for example, is pushing through new crypto regulations called the Markets in Crypto-Assets (MiCA) Regulation, a detailed bill that covers many elements. Things like the environment, consumer protection, money laundering, and corporate reporting are all included. The Biden administration proposed a regulation on stablecoins last year and a potential digital dollar. At the World Economic Forum this year, the CEO of deVere Group, Nigel Green, also talked aboutcrypto regulations with world leaders.