Last week was an important week for the “cryptocurrency” industry. SEC approves 11 spot Bitcoin ETFs, allowing them to be legally traded in the US January 10th; but it was not without controversy, as a fake announcement was posted to the SEC's X account the day before the official announcement and was later determined to have been the result of a hack. It was a truly dramatic beginning.
For better or worse, regulators are here, and Wall Street has gotten involved with crypto ETFs posting a record first-day trading volume of more than $4.6 billion. So what happens next? on the one hand, JP Morgan's recently published forecasts We expect that $36 billion of other crypto investments will be moved into ETFs, but many other crypto investments will be moved into ETFs. Company is denying access To invest in products for customers.
In 2022, the “cryptocurrency winter” has arrived, with fraud, over-reliance on bad loans, and bankruptcies raging. These painful events triggered two things that are now being felt keenly across cryptocurrencies: industry maturation and regulatory backlash. First, the project will be more careful. The legal and compliance lateral market for cryptocurrencies remains active. Gray hair is often no longer seen as a completely bad thing, especially when it comes to institutional involvement.
Second, as the industry grew, regulatory oversight naturally increased as well. The SEC's announcement in May 2022, just before the Terra/Luna collapse, that it would assign 20 additional positions to the newly renamed Crypto Assets and Cyber Division (formerly the Cyber Division) received a lot of attention; This was the committee's way of responding. The explosion of the virtual currency market. Currently, given the aggressive enforcement environment and overall scrutiny placed on all activities and entities involved in digital assets, projects are either “going offshore” to protect themselves from U.S. regulatory pressure or It has become either a matter of redoubling compliance and best efforts. Practice on land.
2023 was a year of both challenge and stability in cryptocurrencies. Traditional financial services (“tradfi”) entities have scaled back their involvement with cryptocurrencies and DeFi, exploratory partnerships have failed to materialize, lawmakers are jubilant and furious at the industry, and more entities and individuals are We sought safe and reliable options in cryptocurrencies. Now, with the recent spot approval of Bitcoin ETFs, more institutional and low-risk investors are at least getting more involved with cryptocurrencies, but what will the US regulatory environment bring in 2024? How will it affect your investments and interactions with cryptocurrencies?
Regulators have said they will continue to focus on anti-money laundering, DeFi, financial intermediation, and conflicts of interest. To avoid enforcement, crypto regulated entities must have best-in-class transparency and compliance, and crypto regulated entities must have clear reasons to justify the absence of regulation. or have no ties to the United States. Or, at the very least, there will be no engagement or marketing to potential U.S. customers, and no active steps will be taken to prevent such activity.
In 2024, there are high expectations for growth in institutional and trade engagement with cryptocurrencies, and regulatory oversight will require projects to take a hard look at risk, compliance, and legal infrastructure. . Take a look at the growing areas of crypto trading and their regulatory risks below.
Cryptocurrency storage – An area where foreign banks continue to invest in response to customer demand, but is an area that is underserved in the United States due to regulatory concerns. As technology advances, more promising solutions for safety and security are emerging, but those solutions must pass regulatory and ultimately legislative scrutiny.
tokenization – Research and development in this area by both cryptocurrencies and tradfi exploded in 2023. Regulators seem to be more welcoming of tokenization. blockchain or fintech in contrast to cryptographyAnd banks are increasingly taking the lead in this area. Therefore, this will likely continue to receive scrutiny because big names are involved, but it should also receive legitimacy because big names are involved.
Anti-money laundering measures – As this is an area of existential risk for cryptocurrencies (unregulated and regulated), parties continue to seek engagement with entities with rigorous customer knowledge processes and best practices in sanctions review. need to be focused. Look out for more advanced advances in technology. zero knowledge proof To facilitate on-chain identity verification. Regulators will continue to demand accountability from “decentralized” organizations as well.
The flurry of action by U.S. regulators is expected to continue this year. The best thing that can happen is continued and growing engagement between industry, regulators, and legislators who strive to improve and build on the status quo.
What are the main regulatory hurdles for companies entering the crypto market in 2024?
The impact of regulatory changes on cryptocurrency businesses is significant, but the impact varies depending on the nature of the business. Key regulatory challenges this year include complying with evolving global AML standards and understanding the nuances of crypto asset classification between regions. For example, digital tokens may be considered a commodity in one jurisdiction but a security in another, requiring different approaches to compliance. Businesses need to invest in a robust compliance framework that provides flexibility to address a variety of regulations, including financial crime prevention, asset classification, and market integrity. There will be different approaches to implementing regulations in these areas.
How can companies effectively navigate various international crypto regulations?
Effectively addressing international cryptocurrency regulation requires a strategy that blends global compliance principles while adapting to local regulatory requirements. TradFi institutions have long operated in a globally fragmented regulatory landscape. In contrast, cryptocurrency companies need to mature in a fraction of the time to continue operating in a borderless environment. This includes continuously monitoring regulatory developments in key markets, having a skilled compliance team in place, and leveraging technology to streamline compliance processes. Success in this area often depends on how well a company integrates these compliance strategies into a broader operational framework and is able to remain agile in responding to regulatory changes while maintaining a solid understanding of the global regulatory landscape. It depends on whether or not.
Morgan Stanley expresses concern It is believed that central bank digital currencies (CBDCs), along with Bitcoin, have the potential to reduce the dominance of the US dollar.
blackrock ceo Larry Fink interview Covering his thoughts on ETF approval, Ether ETFs, and the path to tokenization.
