The world of cryptocurrencies has undoubtedly created a significant buzz in recent years, as a number of prominent figures and platforms have emerged to champion the merits of the technology, while dismissing its shortcomings. One of which is the controversial legal propriety of selling cryptocurrency tokens in the United States.
Back in 2014, the idea of an “Initial Coin Offering” (ICO) was still in its nascent stage, as Ethereum launched its ICO and reaped the benefits of the explosion in the cryptocurrency market in 2017. However, behind the scenes, U.S. regulators struggled to keep up with the rapid developments and a spate of irregularities and fraud cases emerged.
In response, the SEC moved in to assert its stance, as former SEC Director Bill Hinman famously delivered his “Hinman Speech,” noting a “sufficiently decentralized” exception to the Howey test. Yet, what followed was a series of confusing settlements and enforcement actions that failed to deter further ICO issuance or provide an effective regulatory framework.
Despite some projects managing to evade stringent regulatory scrutiny, others like Kik Interactive, Telegram, and Ripple Labs faced the brunt of federal legal action. The SEC’s recent lawsuit against Coinbase is a testament to the regulatory whirlwind that has engulfed the cryptocurrency space. If the SEC wins, it could potentially lead to the shutdown of Coinbase’s core business operations.
This raises the question of where the crypto industry will go from here in the face of such regulatory pressure. While some may argue that the steadfast growth of cryptocurrencies across Latin America and Africa would ensure their survival, the regulatory struggle faced in the U.S. cannot be ignored. Increased lobbying efforts and a willingness to compromise may be required from crypto giants to establish a middle ground that would eventually regularize the crypto business.
For the time being, it seems that the success of crypto platforms will depend on their ability to strategically navigate around the U.S. market while focusing on growth opportunities in other regions, such as the United Kingdom. There is certainly the potential for a more compliant and effective crypto landscape ready to be forged—although the road to get there may be far from straightforward.
Source: Coindesk
