Experts say 2024 may become the most important crypto year with the BTC halving and expected SEC approvals of crypto ETFs! 2023 was a year of bold enforcement actions against the crypto industry but also saw the EU crypto framework MiCA. While the U.S. has been formidable in enforcing laws against crypto companies, it has notably lagged in establishing a regulatory framework specific to the industry.
The 2024 Firework
The year 2024 commenced with a significant price hike in cryptocurrencies, fueled by anticipations of a soon-to-be-approved Crypto ETF in the U.S. and heightened by the Bitcoin halving scheduled for spring. These expectations may have roots in the tumultuous events of 2023, including the FTX collapse, lawsuits against Coinbase and Binance by the SEC, and Binance‘s $4.3 billion settlement with U.S. authorities.
While the U.S. demonstrated aggressive enforcement, imposing legal actions and hefty settlements against major crypto players like Binance, it still lacks a bespoke regulatory environment for the crypto sector. In contrast, regions like the European Union have implemented comprehensive laws, such as the Markets in Crypto-Assets (MiCA) regulation, setting a precedent in the global crypto regulatory landscape.
The situation will probably arise that the next bull cycle unfolds while some of the old heroes like SBF or CZ have to watch from prison. Indirectly, however, these fallen heroes have contributed to the evolution of the crypto industry.
Regulation by Enforcement?
The U.S.’s “regulation by enforcement” approach has been a subject of critique. Experts like Renato Mariotti, a former U.S. Justice Department prosecutor, have pointed out the inadequacy of this method, highlighting the necessity for legislation or regulation over litigation. This gap has led U.S. regulatory bodies like the SEC, CFTC, and FinCEN to adopt a piecemeal approach to crypto regulation.
In 2023, the SEC’s actions against Coinbase and Binance for alleged securities violations exemplified this aggressive enforcement stance. The U.S. also led in criminal enforcement, with significant cases like the trial of Sam Bankman-Fried (SBF), the former CEO of FTX. However, this approach has prompted some crypto companies to consider moving their operations out of the U.S., seeking jurisdictions with clearer regulatory frameworks.
Yet, as of 2024, there remains no specific law for the crypto industry in the U.S. This scenario contrasts starkly with regions like the European Union, which has moved towards a unified regulatory framework with its MiCA regulation, fully applicable from December 2024.
Countries like France and Germany have also been proactive in adapting their regulatory environments to better accommodate crypto businesses. Meanwhile, non-EU countries like the UK and jurisdictions such as Singapore and Hong Kong have been refining their crypto regulatory frameworks, with Singapore notably finalizing rules for stablecoins.
The Middle East and Africa are not far behind in this race. The UAE, with initiatives like VARA in Dubai, has emerged as a favorable destination for crypto businesses, propelled by its proactive regulatory stance.
The Prospect
As 2024 unfolds, the crypto industry is witnessing a global shift towards more structured regulation and enforcement. While the U.S. continues to lead in enforcement actions, the absence of a comprehensive regulatory framework puts it at odds with other major economies swiftly adapting their legal systems to the evolving needs of the crypto market. This disparity underscores the urgent need for the U.S. to develop a more cohesive regulatory strategy for the burgeoning crypto industry.
