The regulatory battles against the crypto industry continue, and new ones are being launched every day, it seems – as in the US, the latest to emerge as a brand is Crypto exchange Kraken. While some warn of the bulldozing power of regulations, others argue that crypto is unstoppable in its essence.
Yesterday, the U.S. Commodity Futures Trading Commission (CFTC) issued “an order to file and settle 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 civil fine of $ 1.25 Million.
This is what Kraken CEO had to say about the state of crypto regulation:
In the meantime, according to Vincent McGonagle, acting director of enforcement, this is part of the regulator’s “broader efforts to protect U.S. Customers,” which states that marginal, leveraged, or funded digital asset trading must take place on properly registered and regulated exchanges in compliance with all applicable laws and regulations.”
Meanwhile, Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), said that US cryptocurrency markets and regulated platforms will “not end well” if they remain outside the jurisdiction of regulators, Bloomberg reported. “There are trading venues and credit places where they join together, and they have not just dozens, but hundreds, and sometimes thousands of tokens,” he reiterated Monday during the Code conference in California.
And there are further reports that crypto will not see an ally during President Joe Biden’s administration. The White House nominated Saule Omarova to head the office of the calculator of the currency, Bloomberg reported, noting that Omarova’s “criticism of digital tokens closely matches statements that have recently emerged from government guards” – such as that of Gensler.
“It took several years for regulators to wake up, but it’s like a bulldozer,” Jim Angel, associate professor of market structure at Georgetown University, is quoted as saying. “It is slow, it is stable and it will grind everything in its path.”
Yet some, such as Karen Shaw Petrou, managing partner at research firm Federal Financial Analytics, suggest that it may be too late for market participants to find common ground with regulators, and that crypto “conveniently believed that spitting out often dubious inclusions- and innovation proposals of regulation”, and that the sector “was extraordinarily intoxicated by the cool factor.”
Tesla CEO Elon Musk shared his own opinion during the Code conference on U.S. Regulation of crypto, when asked if the U.S. Government should be involved in regulating space, he replied”I would say, ‘do NOTHING.'”
Slowed down maybe, but not stopped
According to CNBC, Musk said that while it is impossible to destroy crypto”it is possible for governments to slow its progress.”
Similarly, Timothy Spangler, partner at Dechert LLP, told Bloomberg that innovation “will not be denied; It will not even be meaningfully delayed.”
Regarding China’s continued crackdown on the crypto industry, the Tesla chief noted that the country’s power shortage may be part of it and that “cryptocurrency is fundamentally aimed at reducing the power of a centralized government,” which the Chinese government does not like.”
Per Aaron Tilton, CEO of cryptocurrency platform SmartFi, who is also a former Utah state legislator”Ironically, the SEC’s enforcement approach reminds me of the earlier tactics, which the Chinese regulators had seized a few years ago by warning people that crypto needs to be remade in an acceptable image of the regulators to protect people. After all the “WARNINGS”, China made its own digital currency and banned private cryptocurrencies.”
“Congress, the SEC, and crypto users should proactively work together to serve people, but it seems to be saber-rattling that warns people not to fall into a row,” Tilton said in an email comment.
There are even more dissenting voices saying that despite the regulatory pressure, crypto is not so easy to stop – even if regulation is inevitable or necessary in certain cases. In fact, some entities in the room are already regulated, experts argue.
Kristin Smith, executive director of the Blockchain Association, said at Yahoo Finance: Crypto Investing’s All Markets Summit Plus that:
“Decentralization is incredibly powerful and these networks can exist in many different places. China has now tried several times to take action against crypto. They may become more aggressive on this front, but as long as the Internet persists, crypto networks will also persist.”
According to Nic Carter, co-founder at CoinMetrics and general partner at Castle Island Ventures, markets will ultimately win if they collide with the state. “It’s just that cryptocurrency is [virtual], is something that is inherently peer-to-peer, something that you can take full ownership of on a smartphone, is uniquely resistant to state control.”