How a New York City court was the setting for the crypto industry

96
3
How a New York City court was the setting for the crypto industry

It feels like all eyes are trained on two New York City courthouses this week, as two men with distinctive hair launch defenses against their alleged bad behavior. But just as the Elizabeth Holmes trial was not about Theranos'diagnostic testing, the SBF trial is not about crypto. It's a story as old as fraud.

The actions of a single person should not, and should not, serve as a barometer for the crypto industry. Sam Bankman-Fried is experiencing a stunning and ongoing implosion, and as this trial progresses, we expect to see further evidence that Sam was out there primarily for himself.

While other countries are watching this trial, they are not seeing it as a referendum on an entire cryptocurrency industry or asset class. If we take a step back and look at what's happening outside the U.S. since the SBF news broke, other countries have doubled down on this tech. Governments around the world are actively developing legislative and regulatory frameworks, giving ecosystem operators substantial legal protection and crucially, increased consumer protection.

It lays out rules for the 27 member countries of the EU, covering issuers of stablecoins, unbacked crypto assets, trading venues and exchanges. Decentralized finance, non-fungible tokens and staking were all, sensibly carved out of this piece of legislation, though the European Commission has a obligation to study and report back to legislators before too long.

In May 2023, MICA was adopted, with rules on stablecoins governing from the middle of next year and CASPs governing from the end of 2024. Then, more detailed technical rules, fleshing out the law, are being worked on by the European Supervisory Authorities and will be finalized before MiCA applies.

This progress can be seen in a Consultative Consultation by His Majesty's Treasury, titled 'the future financial services regulatory regime for cryptoassets', which ended on April 30, 2023. The Treasury will publish its response to the Consultative Consultation in the coming weeks. The Financial Services and Markets Bill passed by the end of June, enabling legislative changes that would give regulators more control over cryptoassets.

The bill expands the Banking Act's scope, and includes payment systems using digital settlement assets. This will include some stablecoin activities and could pave the way for a new regulatory regime. The bill also allows the Financial Conduct Authority to oversee crypto asset promotions, with new rules implementing from Sunday.

The government's goal is to establish the UK as a global center for crypto assets. This objective grew from statements made in April 2022 by the former Economic Secretary to the Treasury John Glenn, and has been reiterated by the current EST Andrew Griffith. The speed and direction of policy-making is greatly influenced by these aspirations.

Japan has incorporated Web3 into its national economic strategy, which heeded lessons learned from a previous crisis and put consumer protections in place. In addition, the Japanese Financial Services Agency also amendments the Payment Services Act in June this year. The agencies wanted to change the regulation for stablecoins and crypto assets. The amendment updated the definition of crypto assets, included new guidelines for crypto asset exchanges, banking and travel rules, and a new framework for stablecoin issuers.

Despite SBF's lack of regulatory infrastructure and a default to deregulation, antisocial behavior in the cryptocurrency industry has done little to reduce antisocial behavior. Humans are going to human, and the objective of regulation should be to disincentive bad behavior, make it difficult to get away with, and create a path to accountability and consequences when some try it anyway.