2023 marks a turning point, with major regulatory developments sending shockwaves through the industry.

Here, we take a deep dive into 5 crypto regulatory moments that will shape the landscape in 2023. Each moment helps advance the ongoing conversation about the role of regulation in the crypto space.

1: SEC’s Collateral Crackdown

There were rumors that the U.S. SEC was showing a keen interest in staking. The drama reached a peak when Coinbase CEO Brian Armstrong expressed his concerns on social media, suggesting that the SEC wanted to eliminate cryptocurrency staking for U.S. retail customers.

The storm became a reality as the SEC announced a $30 million settlement with Kraken over its staking program in the United States. Kraken was forced to cease its staking operations in the United States. The regulator sent a clear signal that staking activities will face greater scrutiny. The crackdown raised questions about the future of staking in the United States and prompted the industry to reevaluate its compliance strategies.

2. SEC launches war on stablecoins

Stablecoins, often considered a stable and compliant aspect of the crypto ecosystem, have become a focus of U.S. regulators in 2023. The U.S. Securities and Exchange Commission (SEC) has taken legal action against two issuers, and Paxos has been ordered to stop issuing Binance's BUSD. This move was initiated by the New York Department of Financial Services (NYDFS) and the SEC's Wells Notice, which has promoted regulatory measures against stablecoins.

Regulatory scrutiny has raised concerns about the future of stablecoin projects and the need for a clear regulatory framework to ensure their stability and compliance with existing laws.

3. CFTC comes to the fore: DeFi under the regulatory microscope

In September, the Commodity Futures Trading Commission (CFTC) made an appearance. The CFTC’s enforcement action targeted decentralized finance (DeFi) protocols in the United States, casting a shadow over the decentralized space.

The three protocols were charged for illegally facilitating leveraged and margin retail commodity trading. Deridex and Opyn face additional charges for failing to register with the CFTC and implement a customer identification program. The CFTC's move raises key questions about the future of DeFi regulation in the United States

  1. SEC goes after cryptocurrency exchanges

Cryptocurrency exchanges face unprecedented challenges in 2023. Signs of trouble emerged earlier this year when Coinbase revealed it had received a Wells Notice from the SEC. This provides for potential enforcement actions for violations of federal law. In June, the SEC filed consecutive lawsuits against Coinbase and Binance, accusing them of operating unregistered securities exchanges.

These legal disputes add to the ongoing debate over the regulatory status of cryptocurrency exchanges. In addition, the industry needs a regulatory framework that balances innovation with investor protection.

5. Binance settles, CZ faces time

US regulators surprised Binance, one of the world’s largest cryptocurrency exchanges, with criminal charges on Thanksgiving. CEO Changpeng Zhao (CZ) resigned and could face 18 months in prison. As part of the settlement, Binance agreed to pay a fine of up to $4.3 billion, highlighting the high risk of regulatory noncompliance.

The landmark case has raised concerns about the fate of other major exchanges and highlighted the importance of regulatory compliance for industry leaders.Binance’s settlement marks a pivotal moment in the cryptocurrency regulatory landscape, highlighting the need for clear guidelines and compliance with existing laws.

Conclusion: ​Regulatory developments in 2023 have reshaped the cryptocurrency landscape, highlighting the need for a balanced and comprehensive regulatory framework. This year’s events have sparked an ongoing discussion about the intersection of innovation, decentralization, and regulatory compliance.
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