With 2019 on the horizon, there's a growing curiosity about the potential for explosive growth in regulatory measures concerning cryptocurrencies.
Although 'immeasurable' might seem exaggerated, it's quite certain that cryptocurrency regulation is poised to capture significant attention from bodies like the SEC and other financial authorities worldwide. Whether companies comply with SEC directives or not, the existing rules are already heavily impacting the cryptocurrency industry, and this impact is anticipated to proliferate in the coming year.
Basis Closes for Good
The latest victim of securities registration A notable example of stringent protocols is Basis, a cryptocurrency venture that collected around $133 million from prominent investors earlier in April. Recently, the company declared its permanent closure, opting to reimburse all contributors who financed its operations eight months ago.
The firm's executives pinpoint current securities regulations as a substantial obstacle. Intangible Labs' CEO, Nader Al-Naji, articulated in a statement:
\"Applying U.S. securities regulations significantly hindered our prospects to launch Basis. Consequently, we are unhappily announcing the redistribution of capital to our backers, leading to the unfortunate conclusion of the Basis project. As regulatory clarity surfaced gradually, our legal team concluded there was no feasible way to bypass securities classification.\"
At that point, Basis was in the process of developing an innovative stablecoin.
Do You Want Crypto to Remain Legit?
The scenario reveals a dual-edged sword. On one side, the existing and forthcoming regulations may stifle innovation, possibly prompting more businesses to close or deter new entries. The crypto industry may witness a shift, with entities that can't align with the regulations fading away.
Read: What is the Howey Test?
Meanwhile, one of the prevailing issues in the cryptocurrency sector is its perceived lack of credibility. If this can be addressed, it might entice more established institutions to engage in the market, elevating bitcoin and allied digital currencies. To achieve this level of validation, smaller entities that either cannot or choose not to comply with current security, operational, and consumer protection stipulations might need to exit, paving the way for the desired industry acknowledgment.
Meanwhile, Across the Globe…
The SEC exemplifies a regulatory authority tightening the reins on cryptocurrency concerns. Similar actions are happening worldwide. For instance, in Italy, CONSOB, akin to the U.S. SEC in its operations, has moved to protect investors has initiated 90-day suspensions on two dodgy-looking ICO projects.
In a recent release, the agency published a list of web pages and Facebook posts they suspect of peddling bogus or deceptive tokens, including Bitsurge Tokens and Green Energy Certificates. The former, for instance, claims to offer investors a secured return of around six percent monthly.
The latter purportedly is backed by sections of rainforest in Costa Rica, marketed at about 80% over the usual rate, with promises of a yearly return of six percent, disbursed at roughly 0.5% monthly.
Hong Kong Is Upping the Ante
Approximately 3,000 miles away, Hong Kong's Securities and Exchanges Commission (SFC) has pledged to combat fraudulent ICOs and says it will be improving all revamp its cryptocurrency regulatory framework in the months ahead. Historically, Hong Kong has been relatively lenient towards cryptocurrency undertakings, but a shift might be on the brink.
Daisuke Yasaku, from the Daiwa Institute, argues this could adversely affect the nation, possibly causing some crypto enterprises to relocate abroad:
\"Compliance costs will be significant. The SFC's regulatory agenda may prove excessively demanding for certain actors.\"
