Regulatory outfits entered 2023 with a united resolve: to heighten their efforts in the crypto space. If there was anything that 2022 did, it exposed the lapses that lurked in the crypto industry. Now, several months into a new year, the bruises from last year are still fresh, raw, and driving regulatory outfits into revisiting existing laws and policies. The 2022 crypto crash started with the fall of the Terra ecosystem. In the months that followed, other platforms barreled right into the wreckage – a wave of contagion that drew the attention of regulators worldwide. And ultimately, the last icing that would topple the cake came in November when FTX, a top exchange led by crypto golden child Sam Bankman-Fried, fell apart. As Iuliia Goncharova, Growth Product Manager at Choise.com, emphasizes, this is all happening against the backdrop of the crypto winter, where new audiences are not entering the crypto space and existing ones are becoming less active. For crypto companies already experiencing losses and fund outflows, tightening regulations feel like a final blow. Additionally, it is important to note that advertising platforms like Facebook and Google are not making any concessions for the crypto industry, and due to strict regulations, attracting new users has become difficult and expensive. All of these events set up a legally precarious 2023. Well, it’s roughly 6 months into the year, and here’s what regulators across the globe have been up to all this time. Recent Developments in Crypto Regulation The SEC and Its Hunting Expeditions To begin with, the US Securities and Exchange Commission (SEC) launched what I’ll describe as a major crackdown on the space. While Binance and Coinbase have been in the spotlight of late, its hunt began right on the cusp of the new year. In January, the Commission was rather interested in Genesis and exchange firm Gemini, charging both companies with selling unregistered securities, and leading Genesis to file for bankruptcy protection. The next month saw the regulator order another exchange – Kraken – to halt its U.S. crypto staking business and pay $30 million in penalties. By March, the SEC’s warpath had hit Coinbase’s doorsteps as the firm received a Wells notice stating that the SEC had identified potential violations of the US securities laws. The SEC is not the only entity seemingly out to get crypto platforms. In March, the Commodity Futures Trading Commission (CFTC) legal action against Binance. The CFTC accused Binance of enabling U.S. customers to trade unregistered securities, adding to the regulatory scrutiny faced by the world’s largest exchange. took According to a May statement from Eun Young Choi, director of the Department of Justice’s National Cryptocurrency Enforcement Team, the DOJ is also to join the action. The department reportedly has plans to tackle crypto companies involved in criminal activities or facilitating money laundering. set Consequences: Binance Dips Out Of Canada, Might Focus On The UK All of the fire directed towards exchanges, especially from the SEC, may be pushing crypto platforms out of the states. Binance’s chief strategy officer explained just last month that it’s a “very difficult time” to function in crypto space. So, the firm is reportedly working to be regulated in the UK. Notably, Binance did withdraw its services from the USA’s next-door neighbor, Canada.  This was after the Canadian government unveiled new guidelines requiring cryptocurrency trading platforms to obtain regulatory approval before allowing customers to buy or deposit stablecoins. To comply with these regulations, Binance needed to undergo a due diligence process conducted by the Canadian Securities Administrators (CSA) to receive approval for facilitating stablecoin transactions. However, as by Bloomberg, Binance Canada began the registration process for the review in March but ultimately decided to withdraw from the Canadian market. reported North America has not been Binance’s only run-in with the authorities this year. Back in April, the firm reportedly got in trouble with the authorities in Brazil. They were being investigated by the Federal Prosecutor's Office and Federal Police for supposedly still offering crypto derivatives to their clients, even though they were ordered to stop in 2020. The Prosecutor’s office claimed Binance asked Brazilian users to change their language settings to access Binance Futures, and the Portuguese content didn't warn them about any restrictions. Like Binance, Coinbase is also currently facing a suit from the SEC. That’s right, the Commission claims the firm is putting customers at risk as an unregistered broker.  Before this though, on May 2, Coinbase launched Coinbase International Exchange, a new crypto derivatives platform based in Bermuda. The Safer Crypto Industry: Introducing MiCA Should any of the aforementioned firms, Binance for instance, actually focus mainly on the UK, would the regulatory landscape be any more accommodating? It is worth considering that in April this year, European lawmakers approved the long-awaited Markets in Crypto Act, or MiCA for short. The vote took place in April, and the results showed that the EU Parliament voted 517 in favor and 38 against passing the new legislation. MiCA aims to protect customers in the crypto space as under its rules; providers will be held responsible if they lose investors' assets. Although in its early days, MiCA might be one of the few positives this year for the legislative future of crypto. For one, MiCA offers some legal certainty and integrity – features that have been missing amongst many crypto outfits in past years. The EU’s new bill may be just what the market needs after last year’s events thoroughly shook investor trust in the space. Also, in addition to the MiCA, the Parliament passed another law focused on reducing anonymity when transferring cryptocurrencies like Bitcoin and stablecoins. This law, as the Resolution on the Transfer of Funds, received overwhelming support with 529 votes in favor and only 29 against. known However, while we can’t deny that these developments are commendable, there’s the persisting question of how a bill that involves government supervision affects an industry that is meant to exist outside of their control. Other Regulatory Changes and What to Expect in the Future Across other nations, crypto regulation is likewise advancing. Brazil's central bank is the Real Digital project, emphasizing the adoption of new technology while maintaining current regulations. Germany has for providing clarity through its regulatory environment, with goals set by BaFin to regulate DeFi and protect consumers. India, despite previously banning crypto, overturned the ban and now maintains a cautious attitude, while South Korea is working on the Digital Asset Basic Act to combat crypto crime and provide clarity for legitimate players. leading received praise The general crypto crackdown is concerning for the US and investors in other countries, plus it threatens the decentralized nature of cryptocurrencies. However, clear regulations are needed to protect investors, despite potential limitations on crypto usage and innovation. At the same time, regulation can also attract new users, who would feel more secure with clear rules in place, especially after last year. Regardless, the crypto market continues to show strong growth and positive price movements, indicating ongoing investor interest. As we continue through 2023, the crypto regulatory landscape will likely witness more twists and turns.

The is an opinion piece based on the author’s POV and does not necessarily reflect the views of HackerNoon.

This writer has a vested interested be it monetary, business, or otherwise, with 1 or more of the products or companies mentioned within.

Recent Trends in Crypto Regulations: SEC’s Warpath, MiCA, Developing Markets

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