Approaching 2019, many ponder whether regulation will expand dramatically in the upcoming year.
Although 'immeasurable' might exaggerate, it's anticipated that the SEC and other financial institutions worldwide will significantly ramp up regulations on cryptocurrencies. Compliance or not, current regulations are already heavily impacting crypto businesses, with expectations for this influence to grow significantly in the coming year.
Basis Closes for Good
The latest victim of securities registration Take Basis, for instance, a cryptocurrency initiative that raised about $133 million from prominent investors back in April. Surprisingly, the company recently decided to shut down its operations and return investments to contributors from eight months prior.
The company points fingers at current securities regulations as a major hurdle. In a statement, Nader Al-Naji, CEO of Intangible Labs, Basis' parent company, remarked:
'Regrettably, integrating US securities regulations had a severely adverse effect on launching Basis. With this, I must reluctantly announce our decision to return capital to our investors and cease the Basis project. As regulatory guidelines began to solidify, our legal team concluded we couldn't avoid being categorized under securities.'
At that time, Basis was developing a novel stablecoin.
Do You Want Crypto to Remain Legit?
There's a dichotomy emerging here. On one side, both existing and forthcoming regulations could stifle innovation. We might witness more companies folding, while others hesitate to establish themselves. The crypto world could undergo a transformative phase where those unable to adhere to rules vanish.
Read: What is the Howey Test?
Conversely, one of the largest grievances with the crypto sphere is its perceived lack of legitimacy. By addressing this, we might usher in more institutional involvement, elevating Bitcoin and its crypto counterparts. The path to credibility necessitates the exit of smaller firms unable or unwilling to comply with extant laws concerning security, operations, and consumer safeguards, ultimately attracting the attention and recognition desired for the crypto industry.
Meanwhile, Across the Globe…
The SEC isn't alone in its pursuit of tamping down crypto-related issues. Globally, similar efforts are underway. In Italy, for instance, the Commissione Nazionale per la Societa e la Borsa (CONSOB), akin to the US SEC, has moved to protect investors has initiated 90-day suspensions on two dubious initial coin offering (ICO) ventures.
In a recent disclosure, the agency unveiled a slew of websites and Facebook pages they claim are dealing in deceptive or fraudulent tokens, comprising Bitsurge Tokens and Green Energy Certificates. The former lures investors with guaranteed monthly returns nearing six percent.
The latter alleges a backing by plots in Costa Rica's rainforest, marketed at about 80% over market prices, supposedly rewarding investors with six percent annually, disbursed monthly at approximately 0.5 percent.
Hong Kong Is Upping the Ante
Over in Hong Kong, delimiting 3,000 miles, the Securities and Exchanges Commission (SFC) intends to thwart illegitimate ICOs and says it will be improving all implement cryptocurrency regulations in the coming months. Historically lenient on crypto operations in Asia, Hong Kong's stance appears to be shifting.
Daisuke Yasaku, a Daiwa Institute analyst, feels that these regulations might be detrimental and prompt crypto entities to relocate:
'Regulatory compliance costs will be substantial. The new SFC regulations may overwhelm some businesses.'
