The latest uptick in regulatory action around the world may be due to policymakers finally waking up to cryptocurrencies.
During a recent panel at the Citi Digital Money Symposium in London, which discussed crypto regulation in the UK, Europe and the US, Barclays head of digital policy, Nicole Sandler, argued that the apparent late arrival of policy makers was in fact intentional.
“I think one thing that some policy makers said was they let this market do what it wanted to do because they thought it was basically dying,” she said. “And he didn’t die, he grew up, he grew up, he grew up.”
Drawing on her experience in 2016, when she discussed a legal framework around digital assets with the European Commission, Sandler argued that the space may have been nascent at the time, but it wasn’t. is certainly not the case now – and repeated again that his birth was not the reason regulators stayed away until recently.
“It wasn’t that it was nascent and they couldn’t regulate it, it was a choice to see where the market was going,” she said. “And now they know they have to regulate it. But the problem is that regulation takes a long time from start to finish.”
Crypto Regulations in the United States
The regulatory crackdown has been particularly fierce in the United States.
Following the collapse of Sam Bankman-Fried’s FTX empire in November, the Securities and Exchange Commission (SEC) took swift and decisive action. After loading Bankman-Fried, the SEC also accused the crypto exchange’s co-lead engineer Nishad Singh of defraud investors.
Yet, Sandler insisted, FTX’s collapse had “nothing to do with technology.”
And while regulation certainly would have helped, the exchange’s downfall mostly revolved around a “bad actor,” she said, adding that the company’s terms and conditions “didn’t say you can take your clients’ funds and use them for something other than what they said.”
The Commission also sued other crypto companies for different reasons. On March 22, the SEC released Coinbase with a Wells notice, advising the California-based exchange that it would pursue enforcement action against the company. The notice alleged that Coinbase staking products were unregistered securities.
A source familiar with the matter said Decrypt that Coinbase management is frustrated that the SEC allowed US investors to participate in crypto for years before “suddenly deciding to pull the rug out.”
The crypto community has been outraged over this, targeting the SEC chairman in particular.
“People don’t like Gary Gensler, who’s the SEC chairman, in the crypto space,” said colleague Ijeoma Okoli. “But if people think back to a decade ago, in the aftermath of the financial crisis, when the same man was chairman of the CFTC, the vast majority of the derivatives industry – the global derivatives industry – hated it. So it’s not that he’s going after crypto, it’s just his MO”