Record Enforcements Against Crypto Projects: US Regulatory Crackdown
• U.S. regulators have set a new record for enforcement actions against crypto projects and companies.
• The SEC has taken the lead with 30 actions in 2022, while the CFTC and FinCEN have taken 19 and 9 respectively.
• The SEC’s “regulation by enforcement” approach has been a detriment to the nascent industry.
The United States is currently at the forefront of a new era in the cryptospace, one where regulatory enforcement is on the rise and the nascent industry is under attack. According to data shared by Solidus Labs, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN) have taken a total of 58 legal actions against crypto projects and companies, shattering all previous records since 2013.
The SEC has been the biggest opposer to the cryptospace, announcing 30 enforcement actions against projects and companies in the sector this year alone. The agency appears to be following a “regulation by enforcement” approach, which has been a detriment to the industry. The SEC has been successful in their legal battles against the peer-to-peer digital marketplace LBRY and payment company Ripple, among others, and their case against the latter is still ongoing.
The CFTC has also been increasing its legal action against the sector, with 19 cases in the past year. The agency has taken aim at companies such as Block.one, a blockchain software company that was fined $24 million for conducting an unregistered initial coin offering, and BitMEX, a crypto derivatives trading platform that was charged with operating an unregistered trading platform and violating multiple CFTC regulations.
FinCEN has also been active in the cryptospace, issuing nine enforcement actions this year. Most recently, the agency fined a U.S. individual $60 million for willfully violating the Bank Secrecy Act and operating an unlicensed money transmitting business involving cryptocurrencies.
Overall, the U.S.’s stance on the cryptospace has been clear – it will not tolerate any violations of its regulations, and it is willing to take the necessary legal action to ensure that the industry is compliant. While this may be a detriment to the cryptospace in the short-term, the increased regulatory clarity should be beneficial in the long-term, as it will provide more certainty and stability to the sector.