The cryptocurrency industry has developed rapidly in recent years, bringing a huge impact on the financial system. However, the U.S. Securities and Exchange Commission (SEC) seems to be very wary of cryptocurrencies, frequently investigating and formulating strict rules, as if to completely reform the development of cryptocurrencies. Why is the SEC so persistent in cracking down on this emerging currency industry? What are the motivations and impacts behind it?
Crypto regulation exists in different countries around the world. Due to the special status of the United States, the market size and the degree of perfection of relevant laws and regulations, the SEC has to choose to strictly regulate cryptocurrencies through legal provisions. The apparent starting point is to: investor protection, market stability maintenance, AML and other legal provisions, but from the launch of Bitcoin and Ethereum spot ETFs and past legal action targets, other clues can be seen.
One is the game behind the US election. Since the number of crypto enthusiasts in the US is huge and no longer a small group, Trump's previous goodwill towards the crypto industry has led to a relaxation of the attitude of the SEC controlled by Biden and his party, allowing the Ethereum spot ETF, which had no hope of passing, to go through the process one after another.
The second is the consideration of the status of the US dollar. Although encryption and Web3 innovation are there, financial innovation is also accompanied by certain risks. The rise of Bitcoin has challenged the hegemony of the US dollar to a certain extent, and crypto assets led by Bitcoin have become a tool to bypass the hegemony of the US dollar. At the same time, due to its decentralized nature, the United States, which advocates free values, knows that it is almost impossible to eliminate it. Therefore, "it is better to unblock than to block", guiding or even controlling this powerful tool to form a situation that is favorable to the future status of the US dollar is the only feasible way.
The current mission of the SEC is to suppress and prevent crypto financial companies from getting out of control in a timely manner. Crypto platforms and some mainstream projects with excessive market power are regulating their behavior through legal actions, which will ultimately lead to development in a direction that is beneficial to U.S. crypto financial innovation, the status of the U.S. dollar, and the digital dollar market.
In general, every crypto regulatory event of the SEC is very eye-catching, and behind it is the balance between innovation and risk and the consideration of maintaining the US dollar strategy. However, there has been a "conspiracy theory" in the cryptocurrency industry that the SEC is suppressing cryptocurrencies.
Some industry insiders believe that the SEC is deliberately creating advantages for banks to combat the development of cryptocurrencies. The reason is the "Staff Accounting Bulletin No. 121" (SAB 121) issued by the SEC, which has attracted widespread attention recently, requiring financial institutions holding customer crypto assets to list them as liabilities on their balance sheets. This regulation has been strongly opposed by the crypto industry and some members of Congress, because it will bring great obstacles to the cooperation between banks and crypto companies, and may cause more crypto companies to be forced to leave the US market, bringing a huge impact to the entire industry.
The United States tried to overturn SAB 121, but failed to gain enough support and ultimately failed to overturn President Biden's veto. At the same time, the SEC has opened up ways for some banks and companies to circumvent SAB 121 behind the scenes. It is reported that the SEC has allowed internal guidance to be issued, and some financial institutions report customer cryptocurrency holdings on the asset deposit table without reporting liabilities. However, this practice is seen by the outside world as the SEC "opening a back door for banks."
This has once again raised questions about the SEC. Many people fiercely criticized that the SEC's purpose is not purely for the interests of investors, but to protect the interests of the traditional financial industry. Cryptocurrency, as an innovative financial technology, threatens the interests of traditional banks. The SEC may be protecting banks and suppressing cryptocurrencies through strict supervision to maintain the monopoly of traditional banking financial institutions.
It is worth noting that the SEC may not really understand the characteristics of the cryptocurrency industry, but only unilaterally implies that it is essentially a security. The SEC has always advocated that cryptocurrencies are mainly securities and should be subject to strict supervision. It has taken enforcement actions against cryptocurrency projects and related companies many times. Recently, it has turned its hunting targets to crypto venture capital institutions. This year, it has subpoenaed three cryptocurrency venture capital companies to determine whether there may be violations of federal securities laws.
It can be shown that the SEC continues to "bite" cryptocurrencies and is expanding its regulatory efforts. This has once again caused tension in the industry, and people have speculated that the SEC's investigation into these companies is intended to further crack down on the financing channels of the cryptocurrency ecosystem. After all, venture capital institutions are one of the main sources of funds for cryptocurrency projects. The SEC's outlook may be intended to curb the inflow of funds into the cryptocurrency industry and block its development. In addition, the SEC may also want to take this opportunity to understand the venture capital dynamics in the cryptocurrency field and prepare for future regulatory policy formulation.
Regardless of the SEC's true motives, its actions have indeed caused strong dissatisfaction among people in the cryptocurrency industry. The SEC's continued suppression has undoubtedly dealt a heavy blow to the cryptocurrency industry. The continuation of this tension is likely to inhibit the further influx of capital in this field and limit the industry's innovative development space.
In general, the SEC's strict regulation of cryptocurrencies and the motivations behind it have always been a controversial focus. Although the SEC claims to be protecting the interests of investors, its actions have undoubtedly brought a heavy burden to the entire cryptocurrency industry. In the context of continued uncertainty in the policy environment, the prospects of the cryptocurrency industry are still subject to sudden uncertainties.
