In a year that has seen heavyweight Binance hit with a $4 billion settlement and high-profile lawsuits against crypto companies, regulators overseas have been busy pushing formal laws.
This has caused some in the crypto community to worry that regulators are trying to kill crypto, but others see it as a sign of maturing of the industry.
The U.S. has been one of the most active enforcers of legal action against crypto companies this year, with the Securities and Exchange Commission suing both Coinbase and Binance.
The European Union has just approved its Markets in Crypto-Assets regulation, a world-first package of comprehensive laws for the crypto industry.
This is a huge step forward for the crypto world, as it provides much-needed clarity and guidance for businesses and investors alike.
The new regulations will come into effect in January 2020, and will cover everything from Initial Coin Offerings (ICOs) to crypto exchanges.
In 2023, regulators around the world from Europe to Asia ramped up efforts to bring about formal laws for digital currencies.
However, it was the U.S. that took some of the harshest legal actions against major players in the industry.
For example, the U.S. Securities and Exchange Commission (SEC) charged the founder of the world’s largest digital currency exchange with fraud and issued a cease-and-desist order against him.
In a year that has seen some of the biggest names in the crypto world face serious legal trouble, regulators overseas have been hard at work trying to bring the sector under control.
Binance was ordered to pay more than $4 billion to U.S. authorities, and its former CEO’s guilty plea created waves, while the SEC filed lawsuits against five crypto companies.
However, this has not stopped regulators from adopting new legislation — and pushing for more — to ensure the sector is clean.
U.S. tops the list globally for enforcement
The U.S. has taken a tough stance on crypto companies this year, as authorities have looked to counter bad practices in the industry that followed the collapse of Sam Bankman-Fried’s crypto empire — including his FTX exchange and sister firm Alameda Research.
Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities and Commodities Fraud Section, said that while some enforcement actions, like FTX, were necessary, U.S. enforcement actions against market participants that are more focused on compliance are questionable and the result of the U.S. ‘regulation by enforcement’ approach.
The United States is the only country that has taken significant action against large-scale crypto companies and projects.
This campaign against crypto firms by the US government has been primarily done through enforcement, with regulators punishing companies and projects with hefty fines and penalties.
Mariotti told CNBC that the United States’ lack of a comprehensive regulatory framework leads to unnecessary litigation of issues that should be determined by legislation or regulation.
The world of cryptocurrency is a Wild West of sorts, with no real governing body to set rules and regulations.
This has led to a sort of patchwork version of regulation, with different agencies stepping in to try and enforce their own rules.
The SEC, the Commodity Futures Trading Commission, the Department of Justice, and Treasury’s Financial Crimes Enforcement Network (FinCen) have all been involved in this process.