The lack of regulation has been a crucial factor in the spectacular rise of crypto emerging economies and this could change in the near future. The United States Securities and Exchange Commission (SEC) is progressively indicating that it plans to regulate the industry.
SEC’s Role in Regulations
The SEC’s intervention will significantly alter the way the crypto industry operates. Here is what the SEC can do regarding crypto:
- They have the capability to minimize volatility in cryptocurrency markets.
Institutional capital is awaiting regulatory clarity similar to that which has also been applied in other sectors. SEC standards for disclosure rules and record-keeping are expected to provide this clarity.
Regulations from the Securities and Exchange Commission (SEC) will set the stage for their admission and supply crucial liquidity to the crypto industry. With the entrance of institutional investors, private companies won’t be able to manipulate crypto values and market volatility will be reduced as a result.They can turn initial coin offerings (ICOs) into a solid investment opportunity.
Despite their meteoric rise, ICOs have now become associated with controversies and unfulfilled commitments. By mandating responsibility and transparency, the SEC has the power to make ICOs legitimate investment opportunities for investors. Startups and businesses will benefit from regulatory clarity as well.
- Crypto exchanges may be forced to close due to their high regulatory costs.
Exchange costs will rise as a result of SEC regulations that cover everything from documenting transactions to developing audit-ready technological systems. It’s probable that some crypto exchanges will have to shut down or scale back their activities.
SEC vs. Ripple
The SEC charged the Ripple Company, its CEO, and its Executive Chairman last year, arguing that the XRP currency should have been registered under securities legislation. The court has been asked to dismiss the lawsuit by Ripple and its directors.
The legal dispute between Ripple and the SEC is being eagerly watched by cryptocurrency specialists, who believe this trial will define the regulatory environment for cryptocurrencies.
The court proceedings might be a watershed moment for the cryptocurrency industry. Many industry insiders feel the SEC should make it clearer what constitutes a security and what does not. The SEC, on the other hand, appears to be happy with the disciplinary decisions it has already made.
SEC vs. Tether and Bitfinex
Tether is a challenging coin that Tether Limited Company issues its tokens. It used to boast that 1 Tether token was backed by 1 US dollar. However, in 2019, it altered its claim and included payments to related parties.
And Bitfinex is a crypto exchange. iFinex is the company that owns and runs it. Numerous events have resulted in the theft or loss of their users’ funds, and they are still unable to establish regular banking connections.
Both Bitfinex and Tether have been under investigation by the SEC. They ceased operations in New York upon promising to pay $18.5 million in fines for concealing losses totaling $850 million. The inquiry discovered that Bitfinex and iFinex lied about the USDT stablecoin’s backing.
The United States Securities and Exchange Commission (SEC) has done its part in attempting to regulate the cryptocurrency industry. Some cryptocurrency exchanges and affiliated businesses have been subjected to limitations and fines as a result of the procedure. In recent years, the SEC has had disagreements with crypto businesses such as Ripple and Tether.
Having said that, it should be noted that the United States Securities and Exchange Commission (SEC) released its regulatory agenda for 2021 in June, and the cryptocurrency industry is not included in this agenda.
So, ultimately, the fact is that there are still no clear laws for the crypto industry in the United States.
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