Thus far, 2023 has been a challenging year for crypto organizations, especially in light of the anticipated heightened scrutiny that will likely persist throughout the year. This is how regulators in 2022 are handling cryptocurrency, from the Securities and Exchange Commission’s (SEC) new suggestions on crypto custody to the Canadian Securities Administrators (CSA) battle on algorithmic stablecoins.
2023 may be a trying one for Kraken as well
The first real regulatory shocker of this year was SEC exposing its claws on Kraken. Bloomberg recently noted that regulatory authority investigations against Kraken’s suspected unregistered securities transaction had made significant headway, providing 2023 with a significant boost.
Kevin O’Leary hinted that Binance may be next. Scott Melker, star of the popular ABC show Shark Tank, expressed his concerns in an interview. As there is growing global scrutiny of cryptocurrency exchanges, O’Leary has cautioned Binance’s investors that the exchange may soon be investigated by regulators.
The SEC continues to pursue Terraform and Do Kwon for fraud
The Securities and Exchange Commission’s investigation against Do Kwon and Terraform about fraud charges is one of the year’s most notable developments in the realm of crypto regulatory news. U.S. SEC officials specifically went after Paxos and Do Kwon in an effort to exert greater authority over the Bitcoin industry. Despite these setbacks, the cryptocurrency markets have recovered, giving hope to both enthusiasts and investors.
After receiving widespread criticism for its enforcement actions against Kraken two weeks before, the U.S. Securities and Exchange Commission (SEC) doubled down on Paxos and Do Kwon last week.
The SEC charges former NBA player Paul Pierce for endorsing cryptocurrency
Accusations made against Paul Pierce are another regulatory story to hit the crypto world this year. Paul Pierce, who worked with EthereumMax, created and disseminated false and misleading promotional statements about the EMAX token on social media. In court, Pierce did not reveal his marketing salary.
On the other hand, the SEC found out that he was paid over $244,000 in EMAX tokens in exchange for promoting the cryptocurrency on Twitter. Pierce, instead of pleading guilty, paid the $1.409 million in disgorgement, penalties, and interest imposed on him by the court system.
A new custodial proposal from Gensler
There have also been a few proposals on cryptocurrency custody this year. The legal foundation for digital assets was recently described by U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler, who also underlined the necessity for solid custody standards. According to him, appropriate security is necessary for both traditional securities and digital assets.
But he did concede that there are unique challenges to managing digital assets, such as risks, cyber threats, and the possibility of market manipulation. As a result, the SEC is investigating how digital assets could interact with both new and current regulatory regimes.
Paxos and the SEC at war
As regulators continued to step up their fight against crypto, the US Securities and Exchange Commission (SEC) issued a Wells notice to Paxos, a cryptocurrency exchange based in New York City that developed BUSD. According to the Wall Street Journal, the SEC plans to sue Paxos for allegedly breaking its first guidelines on the distribution of securities, which are designed to protect investors.
The banking authority may sometimes send out what are called “Wells notifications,” which are informative letters that serve as a legal warning. It is the company’s or individual’s right to respond to the SEC’s notice with reasoning why the SEC should drop the case.
Canada’s CSA rages war on algorithmic stablecoins
The Canadian Standards Association (CSA) has been slow to weigh in on the debate around crypto legislation. The Canadian Securities Administrators (CSA), a group comprised of securities regulators from Canada’s 10 provinces and 3 territories, made it clear that stablecoin platforms are now a focus of their attention late in February. Companies dealing in bitcoin in Canada now have a laundry list of new regulations to follow, according to the CSA.
The CSA stipulates that exchanges that deal in digital tokens shall only do so if their reserves are comprised of “highly liquid assets” (cash and cash equivalents) and are stored with a licensed custodian. They must also be subject to a monthly audit by independent auditors, with the results being made public in a “timely” manner. Token sales in Canada must also comply with Canadian securities rules since “fiat-backed crypto assets often fulfill the concept of security,” according to the notice.
2023 could see watchdogs double in more on crypto due to the market plunges witnessed in 2022 that were majorly contributed by the misconduct of big players in the space. As more countries are now looking into the adoption of crypto assets, many predict that 2023 will be a rough one for crypto entities.