Experts have warned that the US crypto industry could be in for tough times ahead, as regulators continue their crackdown on some of the biggest companies in the space.
The ongoing crypto crackdown, sometimes referred to as Operation Choke Point 2.0, is already on every industry leader’s mind. But according to Martin Grant, global head of regulatory affairs at financial services firm JST Digital, the regulatory clarity crypto companies seek won’t be delivered any time soon.
commenting in an insider Article On Wednesday, Grant said that regulatory agencies are currently “working hard to bend the current regime to provide more investor protection.”
As they do so, however, the question becomes whether the new regulations bring greater clarity to the industry, or if they instead “crippled a budding industry”. Ultimately, it’s clarity that the industry wants, Grant explained:
“At the end of the day industry participants are searching for regulatory clarity, which has not yet been received.”
Grant’s warning comes after a sweeping regulatory crackdown on crypto in the US. The most notable recent events have been Wales saw that Coinbase was served where the SEC threatened legal action, and a Lawsuit against Binance and its CEO Changpeng Zhao by the Commodity Futures Trading Commission (CFTC).
Meanwhile, Braden Perry, a former CFTC senior trial attorney, said in the same Insider article that more regulation is likely to come as more and more companies enter crypto.
Perry explained that the rise of crypto has meant that investors of all kinds have jumped on board:
“With the rise of cryptocurrencies, the crypto investment community has grown significantly, and both sophisticated and novice investors have joined the fray.”
He added that the investment climate for crypto exchanges and wallets has “transformed” and that this means the sector is now “ripe for novel products and services – but also abuse.”
“The growing volume of exchanges/wallets, and issues/hacks have undoubtedly served as a shot across the bow for regulators and will be the impetus for future regulations,” said the former CFTC attorney.
Furthermore, Perry also warned that the regulatory action we are seeing often leads to increased volatility in the markets, even if the pace regulators move is uncertain.
,[…] With relatively infamous companies such a public move would undoubtedly affect the market, as seen in price movement recentlyAnd ftxcollapse,” he said.