Emmanuel OchayiIn the fast-evolving world of digital currencies, the United States has stood out for its legal actions against major industry players, sparking a debate over its approach to regulating the crypto sector.
“This year witnessed significant crackdowns by US authorities, targeting prominent names like Binance and individuals associated with the industry,” stated Renato Mariotti, a former prosecutor with the US Justice Department.
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While global regulators in Europe and Asia have been shaping formal laws for digital currencies, the US has taken a stern stance through hefty penalties and lawsuits.
CNBC reported that the US Securities and Exchange Commission (SEC) alone filed high-profile lawsuits against five crypto companies in 2023.
Critics have raised concerns about the US strategy, labeling it as ‘regulation by enforcement.’ “The US’s actions against compliant market participants raise questions about their approach,” Mariotti added.
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The absence of comprehensive legislative frameworks in the US has forced regulatory bodies like the SEC, the Commodity Futures Trading Commission (CFTC), and the Department of Justice to operate independently, creating what some described as a fragmented regulatory landscape.
Richard Levin, a partner at Nelson Mullins Riley & Scarborough, highlighted these agencies’ role in shaping the industry. “US regulatory bodies have been highly active in guiding the crypto space through enforcement actions, offering insights into how digital assets should be handled,” Levin explained.
Since 2019, the US Justice Department’s efforts against cryptocurrency fraud have resulted in charging cases involving intended financial losses of over $2 billion to investors worldwide.
The US’s stringent measures contrast with other countries’ approaches, which have primarily focused on establishing comprehensive regulatory frameworks. Critics argue that the lack of clear legislative direction in the US leads to issues being settled through litigation rather than regulation.
As the global crypto landscape continues to evolve, the debate over the US regulatory approach intensifies, raising questions about the effectiveness of ‘regulation by enforcement’ in shaping the burgeoning industry’s future.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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