The main goals for regulators in 2023 are to snuff out instruments that may be used for financial crime and protect consumers. We saw regulators crack down on firms in 2022, such as Tornado Cash which was accused of being employed by North Korean hackers to launder $450 million of crypto. Regulators and authority's main response to potential wrongdoing is to shut down interactions with American firms. All of the actions taken by regulators have prioritized consumer protection by requiring proper disclosures and safeguards.
There is concern about crypto regulations in the United States, as regulators are attempting to apply existing rules. Former SEC enforcement lawyer Tuongvy Le believes that the lack of imagination when creating and enforcing regulations could hinder innovation. Moving forward in 2023, I believe that we can expect to see more regulations in the crypto market. With crypto being such a complex and innovative market, I think it could be difficult for regulators to impose broad regulations. However, I think this will benefit the financial market and create greater consumer confidence.
Source: https://www.economist.com/finance-and-economics/2023/02/16/scrutiny-of-major-crypto-institutions-is-intensifying
3 comments:
Hello Ethan,
Talks of cryptocurrencies have increased within the last decade, ranging from both positive and negative information regarding their safety. Given the Ponzi scheme with FTX coin, there has been a large decrease in trust between investors and crypto makers. After all, we are not always sure who is the creator behind some of these crypto coins which leads to the question, why should I invest? It is different then me being able to analyze a public company's financials and understanding the morals of the company and CEO before investing. Which usually gives me a good understanding of whether it is a good time to enter.
On top of everything, cryptocurrencies are not regulated by the government meaning that if all else fails then the currency has no way of returning investors their money. This leads to uncertainty and distrust. However, in light of your article, I believe it would be an important next step to enforce regulations on the production of a coin and how it is backed by the government. This would be encouraging and would likely show a large increase in investors.
Overall, very good post. Good insights!
Ever since Sam Bankman-Fried graced us with the comingling of assets between FTX and his pet project Hedge Fund Alameda capital, Crypto and Decentralized Finance (DeFi) has been under increasing scrutiny. Many exchanges have experienced something akin to a bank run, with many nations such as South Korea stepping up crypto regulation. My outlook on crypto is bearish in the short and medium terms, as exchanges face more scrutiny and regulations than ever before.
Great article Ethan!
I also feel that after the drastic tanking of the crypto currency market last year when the Ukraine-Russian war began has lead to the flakiness of the cryto space to have increased huge amounts, and I wonder if it will ever actually make a come back and have a future in the world, or be regulated for that matter. On the FTX topic, I also noticed how up until last year they were big time sponsors for the Mercedes F1 team, and obviously arent anymore, but I wonder if Mercedes can ever get FTX to pay them the sponsorship money that they owe, which is probably a huge amount.
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