The battle for regulation: Can cryptocurrency be tamed?

The battle for regulation: Can cryptocurrency be tamed?

The recent enforcement actions targeting cryptocurrency exchanges in the United States have sparked a debate about the regulation of digital currencies. High-profile lawsuits filed against major platforms like Coinbase and Binance by the Securities and Exchange Commission (SEC) have demonstrated the SEC’s determination to establish its authority within the crypto industry.

In contrast, Hong Kong has chosen a more progressive path by legalising retail crypto trading. In this article, we will delve into the evolving regulatory landscape surrounding cryptocurrencies, analyse the potential consequences of the US crackdown on exchanges, and explore Hong Kong’s forward-thinking approach to crypto trading.

The Newsmakers is TRT World’s flagship current affairs programme, featuring in-depth reports and interviews with the drivers of the biggest stories of the week. The discussion is hosted by Andrea Sanke. The panel of experts includes Anndy Lian, Intergovernmental Blockchain Advisor, Vanessa Harris, Product Leader at Web3 Advisor and Andrew Leung, China Strategist.

The US crackdown on crypto exchanges

In an escalating series of actions, the SEC has filed lawsuits against two major trading platforms, Coinbase and Binance, accusing them of operating deceptively. The lawsuits allege that Coinbase traded 13 crypto assets that qualify as securities without proper registration.

The SEC’s lawsuits have the potential to transform the crypto market by establishing the commission’s authority over the industry. While the crypto industry has argued against regulation, the SEC argues that failure to regulate poses a risk to consumers. It seeks to bring these platforms into compliance with existing securities laws, emphasizing the need for proper controls to protect against fraud and manipulation.

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Coinbase and Binance respond

Coinbase, which has suffered significant net customer outflows since the lawsuit was announced, claims that the SEC’s refusal to provide clarity demonstrates its misguided approach to regulating the digital asset industry.

Binance, the world’s largest cryptocurrency exchange, has called the SEC lawsuit unwarranted and accuses the authorities of failing to engage proactively. Both platforms emphasize the importance of regulatory clarity to foster industry growth and protect investors.

“I think they’re treating it as a political football, and essentially, they’re not allowing the innovation to flourish. They’re not providing the clarity that the industry needs,” — Vanessa Harris, Product Leader and Web3 Advisor.

Hong Kong’s approach to crypto regulation

In contrast to the US crackdown, Hong Kong has embraced a different regulatory regime for virtual assets. Starting on the first of this month, the city now allows retail investors to trade major digital tokens at licensed crypto exchanges.

This move comes after a consultation process with industry stakeholders and requires exchanges to obtain a license from the Securities and Futures Commission. Hong Kong, as an international financial centre, aims to align with the global consensus that virtual assets are here to stay. It recognises the potential benefits of cryptocurrencies in enhancing economic ecosystems, payment systems, and efficiency.

“Hong Kong is an International Financial Center, so what we are trying to do is in line with an emerging global consensus that, first of all, virtual assets are going to stay, and secondly, it carries with it fundamental value in terms of enhancing efficiency in the economic ecosystem.” Andrew Leung, China Strategist, commented.

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The significance of Hong Kong’s approach

Hong Kong’s decision to legalise crypto trading reflects its desire to remain at the forefront of financial innovation. By offering a regulated environment for crypto activities, Hong Kong aims to attract talent and capital while ensuring investor protection.

The move also positions Hong Kong alongside other jurisdictions, such as Singapore, that are actively fostering the growth of the digital asset industry. While China maintains a ban on crypto trading, Hong Kong’s actions could serve as a testing ground for future regulatory developments in the mainland.

Anndy Lian, Intergovernmental Blockchain Advisor, said, “It seems like maybe China is treating Hong Kong as a form of the sandbox to trial and error and make sure that all possible teething issues are tested and resolved. I think what is happening right now is actually a very good thing because this shows that the industry is maturing. Big nations are more willing to try.

The future of crypto regulation

As the United States cracks down on crypto exchanges, there is a growing sense that regulatory clarity is lacking. Companies like Coinbase seek clear guidelines from the SEC to comply with existing laws.

The absence of such guidance may prompt crypto companies to explore jurisdictions that provide a more supportive regulatory environment, like Hong Kong and Singapore. These jurisdictions aim to balance innovation with the need for consumer protection, recognising the long-term potential of cryptocurrencies and blockchain technology.

Final thoughts

The regulation of cryptocurrencies remains a complex and evolving landscape. While the US crackdown on crypto exchanges raises concerns, Hong Kong’s decision to legalise retail crypto trading demonstrates a more progressive approach.

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As the industry matures, regulatory clarity becomes increasingly important to foster innovation, attract investment, and protect consumers. Moving forward, finding the right balance between regulation and innovation will be crucial to ensure the long-term success of the crypto industry.

Source: https://e27.co/the-battle-for-regulation-can-cryptocurrency-be-tamed-20230612/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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