US crypto crack causes problems for EU regulators – The Irish Times
US-based crypto companies are caught in a sort of pincer movement, with federal regulators, on the one hand, taking a series of enforcement actions, and on the other, banks becoming more discerning about their relationships following the collapse of Silvergate and Signature Bank in recent weeks. Could this mean more headaches for European regulators?
Just this week, the world’s largest crypto exchange, Binance, felt the full force of this newfound sense of regulatory zeal on the other side of the Atlantic. In a landmark move, the Commodities and Futures Trading Commission brought federal charges against Changpeng Zhao’s nomadic company, laying out a series of extraordinary allegations against the business and its senior management in the process. Mainly, the complaints revolve around an allegation that the “opaque web of corporate entities” that make up the group – including two companies registered in Dublin – allowed US customers to trade crypto derivatives without registering with federal authorities.
It appears to be part of a wider attack on the sector. Separately, the US Securities and Exchange Commission recently told Coinbase that it is preparing to take legal action against the digital asset exchange over some of its offerings.
On the business side, things don’t look much better. Since the collapse of Silvergate and Signature Bank — two lenders with strong ties to the digital asset industry — Bloomberg reported this week that already cautious institutions are getting tougher on crypto companies, even rejecting business from smaller firms. Against this uncertain backdrop, “some firms are looking at moving overseas,” Coindesk’s Kevin Reynolds wrote in an editorial this week. With the EU’s sweeping regulation of Markets in Crypto Assets (MICA) set to come into force this year, Europe could look like a natural destination for any legitimacy-hungry crypto-refugee hoping to pack up and start afresh.
Politicians, in Ireland and across Europe, have gone toe-to-toe with the crypto and, more broadly, the blockchain industry, hoping to, at some point in the future, reap all the benefits that come from innovation and growth, while keeping it on the arm. length because of its reputation.
But while MICA, which sets strict rules for companies operating in the crypto space, will go a long way to protecting businesses and customers from its worst excesses, recent scandals suggest that those excesses may be worse and more ingrained in the sector than lawmakers may have hoped.
It’s hard to believe that a sudden flood of crypto businesses is a headache that European regulators would be happy to endure.
