Is the Push for Global Crypto Regulations Killing Crypto?

Jay Crypto

Blogger

Global Crypto regulations have become a hot topic recently, and these regulations are killing crypto and stifling growth and innovation in the crypto space, ultimately leading to the end of cryptocurrencies. The crypto industry is rapidly developing, and every day we hear the name of a different cryptocurrency. The rise of cryptocurrencies and their highly unregulated nature is really triggering the authorities across the globe to regulate cryptocurrencies now more than ever. These regulations and restrictions are also hindering new technologies and innovations. We also cannot deny the fact that regulations are somewhat necessary for the growth and long-term sustainability of the crypto industry. Crypto regulations can help investors to protect themselves from fraudulent activities by reducing manipulative exercises to decrease market volatility, protecting users' financial assets, and making cryptocurrency safer overall. However, excessive regulation could lead to the end of cryptocurrencies, causing a ripple effect on the financial system.

Global Crypto regulations killing crypto

While some countries like The Central African Republic and El Salvador are legitimizing cryptocurrency, there are some states where digital assets are facing lawsuits, bans, and heavy fines. Here we will discuss how these regulatory actions and bans could ultimately lead to the extinction of cryptocurrency.

USAG Sues KuCoin

New York has expanded its crackdown against cryptocurrency. New York state Attorney General Letitia James announced in a tweet that she is going to sue cryptocurrency exchange KuCoin, which was unregistered and still operating in New York. She decided to file the case after she was able to buy and sell crypto assets on the platform.

She also has demanded an account of all individuals who have used the unregistered platform. The cryptocurrency exchange hasn't responded to these accusations yet.

Whitehouse wants a 30% tax on mining electricity

President Joe Biden's budget proposal, which aims to "limit mining activity," might eventually subject cryptocurrency miners in the United States to a 30% tax on electricity bills. The Department of the Treasury released a supplementary budget on March 9 explaining that any firm using computing resources, whether owned or borrowed, for purpose of mining will be subjected to a 30% tax. This taxation will start from December 31, 2023, and is anticipated to be implemented over three years, 10% annually.

According to Whitehouse, the US has a major crypto-asset sector and estimated global electricity usage for crypto-assets is between 120 and 240 billion kilowatt-hours per year, which exceeds the total electricity usage of a country like Australia.

SEC sued Kraken

The decentralized and highly under-regulated nature of cryptocurrencies is really a pain in the neck for the traditional financial system authorities. Last month, Kraken, a secure and reputable cryptocurrency exchange, was sued by SEC for not registering its staking-related services.

Kraken had to shut down its staking services immediately and additionally pay $30 million in disgorgement, prejudgment interest, and civil penalties.

Huobi token flash crash

Huobi token (HT), the native token of the Huobi exchange lost 90% of its value in minutes on Thursday. The token dropped from $4.6 to $0.31 in just 10 minutes. The price has since recovered but it is still 20% low over the past day and currently trading at 3.96.

Justin Sun, an advisor to Huobi explained in a tweet that the exchange and wallet are safe and declared this crash was normal market behavior.

DoJ trying to block Binance’s Voyager acquisition

The US Department of Justice filed an appeal against the decision of the bankruptcy court judge to allow Binance to acquire bankrupt Voyager Digital. Binance got the approval of the court to acquire Voyager Digital, but DoJ and SEC have challenged the court’s decision stating they Binance is a cryptocurrency exchange operating without registration. Voyager announced on Twitter that the Binance's acquisition of Voyager is being challenged in court by the Department of Justice and that could “significantly delay creditors recoveries."

The creditors are still waiting for the recoveries and it is estimated that they will receive about 73% of their funds. However, if the acquisition gets terminated, Voyager will pursue the liquidity option, resulting in much smaller returns of funds for the creditors.

Silicon Valley Bank Collapses

On Saturday, the crypto market faced a downtrend after the collapse of Silicon Valley Bank (SVB). Shortly after the bank’s collapse, stablecoin prices became highly volatile, and investors tried to scramble their money around, raising Ethereum gas fees. Circle, the operator of one of the world’s best stablecoins, USDC, has claimed that its $3.3 Billion are trapped in Silicon Valley Bank. The bank's collapse also triggered a downtrend in the value of USDC. Coinbase, the US-based crypto exchange announced that it is temporarily suspending the conversion between USDC and US dollar. Binance also did the same, pausing the conversion between USDC to BUSD, the native token of Binance.

Coinbase suspended BUSD trading

On February 27, Coinbase announced on Twitter that after March 13, it will no longer allow trading of BUSD, the third largest stablecoin by market capitalization, saying that the “listing standards” were the reason behind the suspension of BUSD, and trading will be suspended on Coinbase (Simple and Advanced Trade), Coinbase Pro, Coinbase Exchange, and Coinbase Prime. Coinbase has announced that users will be able to access and withdraw their BUSD funds at any time.

SEC wants to "kill" crypto in the US, lawyer says

Former federal prosecutor and defense lawyer James K. Filan has announced in a tweet the SEC doesn’t want to regulate crypto but to kill it once and for all in the US.

In December last year, James Filan tweeted that the Securities and Exchange Commission (SEC) wants to eliminate the cryptocurrency market in the US entirely. He tweeted this in a response to a lawsuit SEC filed against Ripple when it traded XRP without registering it as a security first.

Conclusion

Crypto is clearly having a tough time, especially in the US. Over-regulation of cryptocurrency could have negative consequences and could ultimately lead to its demise. While some regulations are necessary to ensure investor's wealth protection and prevent scams and illicit activities like money laundering, the authorities must keep a balance between protecting investors and allowing crypto innovations to thrive.