Over the past decade, crypto businesses have operated largely beyond the reach of global regulators. Entrepreneurs have created vast fortunes by offering financial products that are not limited by financial regulations. All of this is about to change.
This week, the SEC announced plans to sue America’s largest crypto exchange, Coinbase, over an offer that is attracting investor interest. The SEC claims that Coinbase is not regulated to offer such a product as they consider it to be security.
This marks a turning point in the crypto world. Cryptocurrency No Longer Lends To A Fringe Asset Class Operating In The Wild West Of The Internet; the time has come for the sheriff to lay down the law. The SEC move should be seen as an important warning sign that it intends to clash with crypto-related companies.
In the coming year, financial regulators around the world are likely to turn to crypto firms and force them to comply with specialist regulations being drafted as well as traditional securities laws. The only exception will be companies that are already regulated to sell securities or that are regulated banks and will benefit from continued trading and will likely have a survey for any changes in the requirements.
Most of the big crypto companies have been regulated as money service businesses, but if crypto and crypto loans are classified as security, they need to sell their products in a very different way and change the way they treat. with their clients. On top of that, new regulations are being drafted for any financial institution offering crypto services that are only offered to those who are already registered securities firms.
It is an ironic situation where the companies that disrupted the financial markets are now disrupted by the regulators of those markets.
Crypto firms that do not have regulatory approval to offer securities will be forced to form an orderly lineup which could take each of them a year or more to gain approval. When it comes to the SEC and other regulators, you just can’t rush or intimidate them. The process could delay the plans and ambitions of some of the bigger companies for years and give way to smaller companies that are willing to offer crypto investment and lending products sold in the form of securities to surpass those constrained. by bureaucracy.
PayPal has announced plans to enter the cryptocurrency space with an offering that will launch later this year. It’s no longer the disruptive startup it once was, but its advantage today is a long history of dealing with regulators and that could give it an edge.
To my knowledge, there is only one company in the world that has obtained regulatory approval as a provider of virtual asset services and is a registered securities firm and operates in accordance with securities laws. furniture for more than a decade. A relatively small investment platform called “Bnk to the Future” which has only 150,000 registered investors (mostly higher net worth investors) is the only crypto-focused company that offers buying services, of crypto stock lending and investing sold in accordance with securities laws and new registrations of virtual asset service providers.
Bnk To The Future was the original platform that helped raise funds for giants like Kraken, Coinbase, BitFinex, BitStamp, Circle, and Blockchain.com. Although it is a relatively small company, it now occupies a unique position due to its consistent ability to stay on the right side of regulation.
At the 2000 Summer Olympics, Eric Moussambani Malonga, a swimmer from Equatorial Guinea who had never even seen an Olympic-sized pool, won his heat after all other swimmers were disqualified due to false starts. His victory is a reminder that decision-makers can sometimes disqualify players who are strong on a technicality and make room for unlikely winners.
Coinbase and other large cryptocurrency lenders like BlockFi and Celsius are in a strong position right now, but the future of the crypto business will likely depend more on regulatory approval than white papers, branding. and well-designed smartphone apps.
Disruptors face serious disruption as the entire industry finds itself on the radar of global regulators who have been given the green light to start cleaning things up.