Why the SEC’s crypto ruling has global ramifications
By Ian Silvera
Regulators are somewhat of an odd bunch. They’re often secretive, sometimes a bit awkward and you may never hear from them in years until they pop-up and become omnipresent. Such is the case with crypto and the world’s financial regulators.
For the blockchain industry, 2021 is the year of scrutiny and arguably the biggest ruling to date came down the track over the past months with the SEC urging Coinbase, which has recently listed on the NASDAQ, to drop an interest-generating financial product dubbed Lend.
The regulator quietly won this skirmish after Coinbase boss Brian Armstrong accused the SEC of providing little guidance on the issue in what some dubbed a “tweet storm”, accusing the regulator of “sketchy behaviour”.
It was a blow to Coinbase’s own plans of becoming the world’s one-stop-shop for crypto as well as the industry at-large as regulators across the world, no doubt especially Europe, will be taking notes from the SEC’s intervention. “We continue our work to seek regulatory clarity for the crypto industry as a whole,” Armstrong has admirably promised.
With any nascent or frontier industry, there is always a regulatory lag as law and policy makers catch-up. Perhaps the crypto industry would do well to their own standards through an industry-wide charter to get ahead of the game?
Prominent North American-based crypto miners did just that when Tesla boss Elon Musk raised environmental concerns around their practices, forming the Bitcoin Mining Council in the summer. The crypto platforms now face a strategic balancing act: offer-up their own potential restraints or face laws and regulators written by outsiders.