The pace of the SEC’s crypto crackdown ramped up in early June 2023 with the Commission’s highest profile actions against crypto trading platforms since the crypto market turmoil at the end of 2022. The SEC’s actions place crypto trading platforms and the market as a whole on extremely uncertain regulatory footing in the US, and the frustration from the industry is palpable.
The SEC’s enforcement activity comes immediately on the heels of promising legislative efforts from Congress, giving rise to conflict and uncertainty on the applicability of existing regulations to the crypto industry from different branches of the US government. Unfortunately, we are unlikely to have much clarity on these legislative efforts or from on-going litigated matters for some time. Thus, the question for crypto trading platforms operating or seeking to operate in the US market is: what to do we do now?
The threat of SEC enforcement is very real, and crypto trading platforms must seriously consider potential costs associated with defending a regulatory enforcement action. For a discussion of some of the major questions our clients are thinking about due to the recent events, click here.