SEC’s Crypto Crackdown is the Best Thing that Ever Happened to the Industry- Here’s Bloomberg’s Reason

US regulators and the crypto market seem to be on an exhilarating rollercoaster ride, destined for a high-stakes showdown. The future of many issuers and intermediaries hangs in the balance, as they could soon be thrust out of business or forced to seek refuge abroad. Bloomberg’s editors have boldly declared the SEC’s crypto crackdown as the “greatest thing to ever happen” in the industry

Crypto is Messed up with Scams

In a spectacular turn of events, the face-off between US regulators and the crypto world “might just be the industry’s saving grace,” purging it of unsavory elements, as per Bloomberg Opinion’s editorial board.

The Securities and Exchange Commission’s relentless pursuit of the sector “threatens to slam the door on crypto’s future” in the US, the column asserts. However, this daring move gambles with the possibility of dismissing a revolutionary technology that holds the promise of redefining money, supercharging financial tools, and pioneering innovative governance models for enterprises.

The crypto realm can be a treacherous landscape. Lured by celebrity endorsements and dreams of wealth, unsuspecting individuals have been drawn to countless tokens with zero intrinsic value. Out of over 40,000 issued last year, a staggering one in four were deemed pump-and-dump schemes.

Even the most reputable intermediaries fail to provide sufficient investor protections, as exemplified by the FTX trading platform’s downfall. Additionally, blockchain-powered payments have abetted various criminal activities, ranging from human trafficking to financing North Korea’s nuclear ambitions.

To build a secured and reliable infrastructure, the SEC is taking bold moves, aiming to protect investors and traders. Recently, the agency launched a lawsuit against Bittrex, accusing it of functioning as an “unregistered national securities exchange, broker, and clearing agency.” Earlier in March, Coinbase found itself in the SEC’s crosshairs, receiving a Wells Notice scrutinizing its exchange, staking service Coinbase Earn, and Coinbase Wallet.

Blockchain Needs Proper Identification Requirements

In a bid to harness the untapped potential of crypto technology, US authorities ought to pave the way for legal trading of financial instruments that defy traditional classifications like securities or derivatives, suggests the editorial. Bloomberg highlights bitcoin and ether as two prime examples of such robust instruments.

The team said, “With proper identification requirements, blockchain networks could even be a lot more transparent, and less conducive to crime, than the existing banking system.”

The opinion piece suggests that disclosure requirements could be put in place by Congress or an industry-funded entity similar to the Financial Industry Regulatory Authority. This would endow the SEC and the Commodity Futures Trading Commission with expansive powers to swiftly eliminate a multitude of bad actors from the market, circumventing definitional complexities and preserving their authority in their usual domains.

The article concludes that while speculators would inevitably make mistakes as in any market, the overall decline in deceptive practices would offer genuine innovators an unparalleled opportunity to achieve something significant, which is all that crypto’s ardent supporters could ever hope for.