The US Crypto Assets Industry is in Regulatory Quandary

The Crypto Assets industry in the United States is facing an increasingly complex regulatory environment. Recently, two major trading platforms were sanctioned by two regulatory agencies for allegedly violating different regulations, highlighting the jurisdictional dispute between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Since the collapse of a well-known Crypto Assets exchange in November 2022, these two regulatory agencies have adopted a more aggressive stance towards the Crypto Assets industry, asserting their jurisdiction through enforcement actions. A former government official stated that this hostile attitude is not the result of a single event, but rather the culmination of long-standing tensions.

Since the beginning of this year, the SEC has initiated a series of lawsuits against multiple Crypto Assets companies and individuals, involving charges of unregistered securities issuance, market manipulation, and more. These actions have sparked dissatisfaction among industry insiders, who believe that the SEC is demonstrating its power through enforcement rather than providing clear compliance guidance.

At the same time, the CFTC has also intensified its regulatory efforts on the encryption industry, especially lawsuits against certain large trading platforms. The CFTC chairman stated that this should be seen as a warning to the entire digital asset industry.

In the absence of clear legislative guidance, crypto assets companies have had to seek a balance between two regulatory agencies. However, due to the lack of specific guidelines for crypto assets, this task has become exceptionally difficult. An industry insider likened it to "driving on a road without signs or lanes."

Crypto Assets companies have stated that they are trying to communicate with regulatory agencies and seek clearer rules, but the results have been minimal. Some companies believe that the process of registering with the SEC is far more complex than described, and may even pose a "survival threat."

Industry insiders are calling on the U.S. Congress to enact comprehensive Crypto Assets legislation to address the current regulatory dilemma. In contrast, regions like the European Union have made progress in Crypto Assets legislation. However, due to political factors, it will be difficult for the U.S. to introduce similar bills in the short term.

Regulatory uncertainty may lead Crypto Assets companies to withdraw from the United States. Some companies have already begun to establish headquarters overseas or plan offshore operations. Even small Crypto Assets companies are considering countermeasures, such as pausing hiring in the United States.

Although the SEC states that its goal is to facilitate secure technological experimentation, industry insiders believe that the current regulatory approach may be counterproductive. One SEC commissioner has called for bringing all relevant parties together for mature dialogue, rather than simply asking companies to "register."