Rostin Behnam, the chairman of the Commodity Futures Trading Commission (CFTC), has predicted a spike in new enforcement proceedings in the coming months, suggesting that authorities would continue to keep a tight eye on the cryptocurrency market. Robinhood Crypto was recently the target of the Securities and Exchange Commission (SEC) enforcement action.
Behnam’s remarks raise the possibility that US regulators are using the Robinhood case as a springboard for a more significant effort to control the cryptocurrency industry. According to news reports, this planned crackdown will occur within six to twenty-four months.
When this news is released, the crypto market is experiencing instability and uncertainty. Significant price swings for cryptocurrencies have occurred within the past year, coupled with well-publicized frauds and breaches. As a result of these occurrences, stricter rules are needed to safeguard investors and maintain market stability.
What the Crackdown is Expecting
It is yet unclear exactly what the planned enforcement steps will entail. Nonetheless, regulators may choose to concentrate on the following areas:
Cryptocurrency classification
Regulators are still having trouble deciding how to group various crypto assets. Are they commodities, securities, or any other kind of asset? more precise classification will make it easier to ascertain which regulatory agency is in charge and which laws are in force.
Asset custody and security
The recent failure of the cryptocurrency exchange FTX brought attention to the significance of appropriate asset custody and security protocols. Authorities might concentrate on ensuring exchanges have strong security measures to protect customer funds.
Market manipulation
Because the cryptocurrency market is comparatively unregulated, it is vulnerable to manipulation. Regulators will likely impose more stringent measures against pump-and-dump scams and fraudulent trading practices.
Compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML)
Criminals have been drawn to cryptocurrencies because of their anonymity. To stop illicit activity, regulators may enforce more stringent AML and KYC regulations on cryptocurrency exchanges and enterprises.
Effect on the Market for Cryptocurrencies
The cryptocurrency industry will be affected differently by the upcoming crackdown. More regulation would boost investor confidence and stability. This might lead to increased institutional funding and broader acceptance. Stricter laws, however, can impede innovation and the expansion of the cryptocurrency market. Some worry that the potential of this new technology may be stifled by overly strict regulation.
