As Binance faces the latest in a series of U.S. regulations by enforcement, the future for crypto looks about as uncertain as it ever has, and many are rightly worried about what’s happening in particular in the United States and how much of it is going through the legal system.
Is Innovation Leaving U.S.
At a time when Asia is pivoting hard towards crypto Web 3 and blockchain more generally, America’s future on this front is bleak. Well, we asked Ripple that, and they said yeah, finance and its boss Easy are being sued by the US Commodities and Futures Trading Commission.
The suit was a bit of a surprise, at least based on the crypto market’s reaction, but the action itself is just the crescendo of a chorus of enforcement actions that we’ve seen this year in January. U.S. President Joe Biden’s administration issued a roadmap to try and mitigate risks from cryptocurrency, and then the country began to see what seems to be some kind of crackdown on the digital asset sector.
Last month, US-based crypto exchange Kraken said it was shutting down its own chain staking services for American users. It said it was doing so in order to settle charges with the SEC. Meanwhile, Paxos faced both the SEC and the New York State Department of Financial Services for allegedly violating investor protection laws in its issuance of Finance USD, or the busd stablecoin. Just this month, Ku Coin faced a lawsuit from the New York State Attorney General for allegedly violating securities laws.
By offering tokens, including ether, just last week, the SEC sent a Wells notice to Coinbase and alleged that the crypto exchange had broken the law and warned about potential legal action. The SEC has also charged.
The crypto entrepreneur Justin’s son and his companies, along with celebrities including Lindsay Lohan and Jake Paul, have had to settle charges over promoting products as part of that SEC action.
So, that’s basically where we stand as of the end of March, and it’s got people a little bit worried. Speaking exclusively to forecast Ripple president Monica Long, she has said that U.S. authorities might be taking the wrong approach.
If the early days of the internet in the 1990s are any indication, it’s really important for the U.S. to embrace this innovation and understand how to make it work within their regulatory systems. So we’re protecting consumers while allowing innovation to thrive right now.
It’s a bleak picture for the US ripple May yet prove to be the key player in all of this for the US. It has been fighting the SEC in US courts over the definition of its token XRP, which the SEC claims is a security, and this case has been going on since December 2020.
In an interview with forecasts in January, a ripple executive said that they were hoping to see a judge’s decision on this case in the first half of 2023, and some reckon that could come soon. Ripple’s XRP token has been soaring in price; it’s up more than 40 percent or so over the last month, and that huge rise comes amid expectations that Ripple Labs may be poised to win a favourable ruling in the suit.
Whether Ripple is proven to be a security or not has potential ramifications for the whole of crypto, and all of this is also happening as policy makers look a long way off from writing rules for the sector in a CoinDesk report.
The Republican senator, Tom Tillis, said all the ideas coming from various offices are still under review, and he advocated the two-party approach, saying it’s the only way to get something done in the current progress. So far, none of last year’s crypto bills have made progress through Congress, as the latter believes.
The US is way off the pace in the crypto regulation race. You see lots of countries in Asia, like Singapore or Japan, really showing leadership in providing clarity around how they’re going to regulate crypto, and you know, coming off of Paris Blockchain Week, we see European countries also showing leadership there.
The European Union is currently working on its common regulatory framework called markets and crypto assets, or Mica, and that could come into law as early as next month. Ripple says this is part of a broader change in attitudes that we are seeing around the world and that could help facilitate better growth and better practises everywhere except the US.
You, Jax, suppose this with what’s happening in the United States, where the government kind of can’t get their act together in terms of deciding how they’re going to regulate the industry. Not everyone agrees that the US is getting things wrong, though, and in particular in the after-math of FTX, some say.
Better to be right than quick. A lot of people perceive the US as sort of coming down on crypto, and that narrative has some truth behind it, but I think the bigger picture is that the US is just trying to position itself to win in the space. The banking crisis, however, has thrown things further into relief. The closure of Silvergate SVB and Signature Banks, crypto’s two biggest depositors, has hit the sector hard.
But it’s also led some to accuse the US of trying to further cutoff liquidity to the sector, which some in the industry are calling “operation chokepoint 2.0.” So this is the idea: that the US government is seeking to unbank and kind of snuff out crypto as an industry by shutting off its access to banking Asia, meanwhile, is stealing a lead on Washington as new rules are about to come into force in Hong Kong.
We are seeing scores of companies from all over the world flocking back to the fragrant harbour at a time when places like Japan and South Korea are also opening up their large economies to crypto entrepreneurs.
Everywhere is looking east for ripples, but it’s actually elsewhere in Asia where the real potential lies and where we’re seeing the most growth.
Throughout south-east Asia, so in markets like Singapore, the Philippines, and Thailand, there’s, you know, a wealth of different cross-border payment and remittance use cases. Also, you know, down into the Pacific Rim, Australia as well as what long says, that Ripple still believes.
Right now, there will be big progress on regulation in 2023; however, whether the US is at the forefront or even near the forefront of that looks difficult to see.
