Crypto Regulation

Calls for regulation get louder as FTX contagion continues to spread

The FTX saga has made some crypto executives, researchers, analysts and politicians more aligned on regulation than ever.

Crypto executives and politicians are becoming louder in their calls for crypto regulation as the aftermath of the FTX collapse continues to reverberate through the industry. 

In just the last 24 hours, the European Central Bank (ECB) president Christine Lagarde called regulation and supervision of crypto an “absolute necessity” for the European Union, while United States House Financial Services Committee Chair Maxine Waters announced that lawmakers will explore the collapse of FTX in a Dec. 13 inquiry.

On Nov. 28, United States Senator and crypto supporter Cynthia Lummis described the collapse of FTX as a wake-up call for Congress, according to the Financial Times. 

During an interview at the Financial Times’ Crypto and Digital Assets Summit, Lummis said the bipartisan bill she introduced this year would have prevented the FTX collapse as regulators would be able to see if an exchange fell below the threshold “Immediately.”

“Those are things that had they been in place for FTX, would have set off alarm bells, that would have created regulatory enforcement actions and reviews by federal regulatory agencies,” she explained.

Meanwhile, in an on-stage talk at the University of Nicosia as part of a Binance Meetup Nicosia, Binance CEO Changpeng Zhao said he believes regulation is a way to help the industry develop, “protect consumers” and apply consequences to those caught breaking the law.

Stephanie Link, a chief investment strategist and portfolio manager at investment adviser Hightower Advisors, has called for more regulation as well, stating crypto is “broken and irrelevant” until there is regulation.

Tom Dunleavy, a senior research analyst from crypto analytics firm Messari, gave similar pro-regulation sentiment in a Nov. 28 post on Twitter, noting that clearer regulation around crypto will pave the way “for massive flows” of new investors.

“The biggest concern institutional investors have with investing in crypto is the uncertain regulatory environment,” Dunleavy said.

The crypto analyst cited the Coinbase-sponsored 2022 Institutional Investor Digital Assets Outlook Survey, which found just over half of the respondents considering investing in crypto were concerned about the uncertain regulatory environment.

Related: FTX collapse put the Singapore government in a parliamentary hot seat

Last week, banking and financial services JP Morgan in a Nov. 24 note, said that it expects there to be more urgency to get a consistent framework in place in the wake of FTX’s collapse.

According to the firm, regulations are likely to be imported from the traditional finance system, “Thus causing a convergence of the crypto ecosystem towards the traditional finance system.”

FTX fall was ‘incredibly damaging,’ crypto must foster real utility: Ripple policy lead

Ripple’s APAC policy director said the collapse of FTX is exactly why crypto needs to move away from “hype cycles” and towards “real utility.”

Ripple’s APAC Policy Director has described the fall of FTX as “incredibly damaging” for the crypto space, but says the industry should stand the test of time if its focus shifts towards building “real utility.”

In a statement sent to Cointelegraph, Ripple’s APAC policy lead Rahul Advani said he expects the FTX saga to lead to greater scrutiny on crypto regulations, while governments will re-evaluate “their stance towards crypto and blockchain technology,” adding:

“The collapse of FTX is incredibly damaging for the crypto space and once again underscores the need for greater regulatory clarity.”

Advani argued that the industry will need forward-looking and “flexible” regulations to boost confidence in the crypto sector while protecting consumers.

“[These regulations] must include robust measures for consumer protection but also recognize the different risks posed by business-facing crypto companies.”

“What we don’t want to see is a knee-jerk response that could stifle innovation within the sector,” he added.

Following the collapse of FTX, a number of regulators around the world pledged to focus on developing greater crypto regulation.

The Australian government is doubling down on its commitment to a crypto regulatory framework and the International Monetary Fund (IMF) called for more regulation in Africa’s crypto markets, one of the fastest-growing in the world.

Meanwhile, United States Commodity Futures Trading Commission (CFTC) commissioner Summer Mersinger said on Nov. 18 that the time to act on crypto regulation may have arrived, prompting experts to warn that crypto is in the crosshairs of U.S. lawmakers.

Advani however noted that a “one size fits all” approach to regulation “will not work” due to differing risk profiles presented by crypto companies. He instead advocated for a “risk-based approach” to regulating the industry.

He added that risks posed by crypto businesses include requirements on conduct, like segregating business accounts, disclosing conflicts of interest, and providing “retail investor safeguards.”

Related: After FTX: Defi can go mainstream if it overcomes its flaws

“We still firmly believe that crypto is here to stay and that real use cases will withstand the test of time,” Advani said. 

“I think that the crypto industry will have to take a more focused approach, shifting from hype cycles toward building real utility.”

FTX fall was ‘incredibly damaging,’ crypto must foster real utility — Ripple policy lead

Ripple’s APAC policy director said the collapse of FTX is exactly why crypto needs to move away from “hype cycles” and toward “real utility.”

Ripple’s APAC policy director has described the fall of FTX as “incredibly damaging” for the crypto space, but says the industry should stand the test of time if its focus shifts toward building “real utility.”

In a statement sent to Cointelegraph, Ripple’s APAC policy lead Rahul Advani said he expects the FTX saga to lead to greater scrutiny on crypto regulations, while governments will re-evaluate “their stance towards crypto and blockchain technology,” adding:

“The collapse of FTX is incredibly damaging for the crypto space and once again underscores the need for greater regulatory clarity.”

Advani argued that the industry will need forward-looking and “flexible” regulations to boost confidence in the crypto sector while protecting consumers:

“[These regulations] must include robust measures for consumer protection but also recognize the different risks posed by business-facing crypto companies.”

“What we don’t want to see is a knee-jerk response that could stifle innovation within the sector,” he added.

Following the collapse of FTX, a number of regulators around the world pledged to focus on developing greater crypto regulation.

The Australian government is doubling down on its commitment to a crypto regulatory framework, and the International Monetary Fund (IMF) called for more regulation in Africa’s crypto markets, one of the fastest-growing in the world.

Meanwhile, United States Commodity Futures Trading Commission (CFTC) commissioner Summer Mersinger said on Nov. 18 that the time to act on crypto regulation may have arrived, prompting experts to warn that crypto is in the crosshairs of U.S. lawmakers.

Advani, however, noted that a “one size fits all” approach to regulation “will not work” due to differing risk profiles presented by crypto companies. He instead advocated for a “risk-based approach” to regulating the industry.

He added that risks posed by crypto businesses include requirements on conduct, like segregating business accounts, disclosing conflicts of interest and providing “retail investor safeguards.”

Related: After FTX: Defi can go mainstream if it overcomes its flaws

“We still firmly believe that crypto is here to stay and that real use cases will withstand the test of time,” Advani said:

“I think that the crypto industry will have to take a more focused approach, shifting from hype cycles toward building real utility.”

DeFi pioneer echoes SBF in call for tighter crypto regulations

The Yearn.finance founder suggested that several cracks have shown in the crypto sector this year, and that regulation is needed to “reign in irresponsible actors.”

Respected former decentralized finance (DeFi) project founder and developer Andre Cronje has resurfaced after a lengthy hiatus to call for tighter regulations on the crypto sector amid the implosion of multiple firms this year.

The comments echo similar sentiments to that of FTX CEO Sam Bankman-Fried, also known as SBF, who also called for more stringent digital asset industry standards last week, including greater consumer protections, transparency and disclosures.

SBF was met with strong community pushback, however, with many people accusing the CEO of trying to monopolize or censor the DeFi space, among other things.

In an Oct. 25 blog post titled “The Crypto Winter of 2022,” Cronje called for greater regulation of the sector, noting that “the recent decline of the crypto-market has shown the flaws in the system and the need for regulation to reign in irresponsible actors and protect consumers.”

Cronje added that it had been a grim year for the crypto sector as he pointed to the collapse of the Terra ecosystem and several crypto firms — particularly crypto lenders — which has left consumers reeling:

“The resultant issues which appear to be most problematic are where users’ cryptocurrencies are locked in accounts handled by exchanges, or where the management of their funds is left in the hands of others.”

He went on to call for greater consumer protections, especially concerning crypto exchanges and crypto investment service providers, as highlighted the complex case of users getting their funds back from the ongoing Celsius bankruptcy case.

“Remedies under the current regulatory regime are ineffective. Most investors sign away their rights to their crypto in voluminous terms and conditions of crypto-exchanges and many will (at best) rank as unsecured creditors should these exchange services be liquidated,” he wrote.

The former DeFi developer details current solutions used in traditional finance that the crypto sector hasn’t yet introduced, including deposit insurance, prudential supervision and consumer remedies in “being able to approach the relevant prudential authority, or at least using overarching legislation as a framework.”

Regarding deposit insurance, Cronje emphasized the importance of central banks across the globe adhering to mandatory insurance practices to ensure consumer funds are protected.

Related: US lawmakers question regulators over ‘revolving door’ with crypto industry

Under such practices, it generally means that people have a viable and relatively straightforward route to getting their funds back, unlike in the case of Celsius.

“The safety net of deposit insurance is a remedy available to consumers in traditional banking which is not available to depositors into crypto-exchanges (like Celsius),” he wrote.

Regarding prudential supervision, Cronje said that overarching authorities in the sector could improve confidence in cryptocurrencies, such as the case of central banks supervising private banks on factors such as “capital, asset quality, soundness of management, earnings, liquidity, and sensitivity to risk.”

Cronje is seen as one of the most influential figures in the DeFi movement, due in part to launching Yearn.finance in 2020 and his work on several other DeFi protocols. In March, however, he announced that he was stepping away from working in the industry entirely.

Regulators are ‘spending too much time’ on crypto: Comptroller

Michael Hsu stated that it is starting to worry him that “we’re not spending that time and attention on some other things,” like fintech, which he described as the “future.”

United States Acting Comptroller of the Currency (OCC) Michael Hsu has expressed concerns that regulators are spending “too much time on crypto,” rather than more pressing issues, such as technology and banking. 

The crypto skeptic OCC head made the comments during an interview with Reuters on Oct. 13, as he outlined a worry that crypto is “occupying a lot of brain space for an awful lot of people” in the regulatory community.

Hsu has been at the helm of the OCC since May 2021 and serves as the administrator for the federal banking system and chief economic officer of the OCC.

During his tenure, has called for greater supervision of crypto firms and standards around stablecoins, while also stressing the need for a cautious approach to crypto regulation due to “red flags” with the sector’s rapid growth.

“We’re spending too much time on crypto,” he told Reuters, adding that “it’s interesting, it has thorny issues… but relative to other technology and banking issues, I think we’re now kind of overweight crypto.”

Hsu went on to explain that there are other areas that need to be focused on at present, specifically relating to fintech, something which he emphasized last month required immediate oversight to avoid a “severe problem or crisis” due to the sector’s rampant expansion, adding:

“The persistence of the occupation of brain space, it’s starting to worry me now that we’re not spending that time and attention on some other things.”

The OCC head said he thinks fintech is the future, and therefore it needs proper time and considerations to help the sector thrive sustainably.

“This is the future, so let’s do the future right,” he said.

These sentiments are in stark contrast to Hsu’s views on crypto, given that he described the sector as “an immature industry based on an immature technology,” during a lecture at a Harvard Law School roundtable on Oct. 11.

Related: Rep. McHenry gives progress report on stablecoin legislation, says it’s an ‘ugly baby’

Hsu also outlined concerns with the crypto sector’s apparent fear of missing out (FOMO) syndrome which he argued fosters wild speculation as opposed to innovation.

“Promises of innovation and inclusion often mask crypto’s promotion of a gold rush vibe that exploits people’s fear of missing out on the next Google or Amazon.”

“My skepticism of crypto stems from a frustration that the most promising innovations have been crowded out by hype and a fixation on trading,” Hsu added.

Regulators are ‘spending too much time’ on crypto: Comptroller

Michael Hsu stated that it is starting to worry him that “we’re not spending that time and attention on some other things,” like fintech, which he described as the “future.”

United States Acting Comptroller of the Currency (OCC) Michael Hsu has expressed concerns that regulators are spending “too much time on crypto,” rather than more pressing issues, such as technology and banking. 

The crypto skeptic OCC head made the comments during an interview with Reuters on Oct. 13, as he outlined a worry that crypto is “occupying a lot of brain space for an awful lot of people” in the regulatory community.

Hsu has been at the helm of the OCC since May 2021 and serves as the administrator for the federal banking system and chief economic officer of the OCC.

During his tenure, he has called for greater supervision of crypto firms and standards around stablecoins, while also stressing the need for a cautious approach to crypto regulation due to “red flags” with the sector’s rapid growth.

“We’re spending too much time on crypto,” he told Reuters, adding that “it’s interesting, it has thorny issues… but relative to other technology and banking issues, I think we’re now kind of overweight crypto.”

Hsu went on to explain that there are other areas that need to be focused on at present, specifically relating to fintech, something which he emphasized last month that required immediate oversight to avoid a “severe problem or crisis” due to the sector’s rampant expansion, adding:

“The persistence of the occupation of brain space, it’s starting to worry me now that we’re not spending that time and attention on some other things.”

The OCC head said he thinks fintech is the future, and therefore it needs proper time and considerations to help the sector thrive sustainably.

“This is the future, so let’s do the future right,” he said.

These sentiments are in stark contrast to Hsu’s views on crypto, given that he described the sector as “an immature industry based on an immature technology,” during a lecture at a Harvard Law School roundtable on Oct. 11.

Related: Rep. McHenry gives progress report on stablecoin legislation, says it’s an ‘ugly baby’

Hsu also outlined concerns with the crypto sector’s apparent fear of missing out (FOMO) syndrome, which he argued fosters wild speculation as opposed to innovation:

“Promises of innovation and inclusion often mask crypto’s promotion of a gold rush vibe that exploits people’s fear of missing out on the next Google or Amazon.”

“My skepticism of crypto stems from a frustration that the most promising innovations have been crowded out by hype and a fixation on trading,” Hsu added.

Anchorage co-founder to US regulators: ‘What we want is clarity’

There are “15 different regulators” and “basically no clarity” when it comes to cryptocurrency regulation in the United States, according to Diogo Mónica.

Anchorage Digital co-founder and president Diogo Mónica has called for regulatory clarity in the United States, which he said remains muddy due to the politicization of Web3 technology and a lack of coordinated effort from the industry.

Speaking to Cointelegraph ahead of the company’s push into the Asian market, Mónica said there was a night-and-day difference between the regulatory experience in Singapore compared to the United States.

“Singapore, it really is a breath of fresh air. […] It’s very different to have one regulator,” Mónica said, adding regardless of the asset type it’s the Monetary Authority of Singapore (MAS), the country’s central bank, “that you interact with for everything.”

While in the U.S., he believes there’s “basically no clarity” with little information on where assets legally fit, adding even if a company understands the rules governing an asset “you barely know which regulator you actually have to engage with:”

“We have 15 different regulators, and all of them are fighting in the public eye for dominance of the industry and making contradicting statements. What we want is clarity. We want some kind of regulation.”

Mónica said the U.S. made Web3 a partisan issue, politicizing the technology and labeling it as left or right wing, which afterward became “political jockeying sticks versus actually being [about the] technology.”

“I have no idea how we did this, but it’s supposed to be bipartisan, it’s not ‘blue’ or ‘red’ it’s supposed to be, in the case of Bitcoin, ‘gold,’ right? It’s ‘digital gold’, so that’s the color it should be.”

He believes the industry’s lack of a “concentrated and coordinated approach” in communicating certain aspects, such as its environmental, social, and corporate governance (ESG) message, has played a part in this, though high-profile mistakes have also contributed to the issue.

“Of course, there’s been tons of unforced errors,” Mónica added, making particular reference to the U.S. Securities and Exchange Commission’s (SEC) crackdown on celebrities who promoted cryptocurrencies.

Related: Crypto and decentralization could influence voters in 2022 US midterm elections: Report

He also mentioned the collapse of the Terra ecosystem and how the industry “should have self regulated” beforehand by being more explicit about what an algorithmic stablecoin is:

“Lots of people knew this, the code was open source, we all knew what was happening and still we allowed it to get to $40 billion without a lot of without a lot of naysayers.”

Mónica thinks people were “lulled” into a thought pattern of “things only go up and things only go right,” adding that now, “we’re paying for it.”

Anchorage provides infrastructure for institutions to enable digital asset custody, exchange, staking and other Web3-related services, it was the first crypto firm in the U.S. to receive a national crypto bank charter in January 2021.

Canadia’s new opposition leader is a Bitcoiner

The new Conservative Party of Canada leader has previously advocated for financial freedom through crypto tokens, smart contracts and decentralized finance.

Canadian politician and noted crypto advocate Pierre Poilievre has taken the helm of Canada’s Conservative Party, which looks set to give the current administration a run for its money in the next federal election. 

The pro-crypto politician reportedly won the leadership of the Conservative Party of Canada in a landslide victory on Sept. 10, securing 68.15% of the electoral points up for grabs, an far outpacing his nearest opponent Jean Charest who received just 16.07% of the vote.

Poilievre has been a member of the Conservative Party since 2003, first winning office in the 2004 election. He has since served as a Member of Parliament for seven terms and held various roles including Shadow Minister for Finance and Minister of Employment and Social Development.

Poilievre has been known as a supporter of crypto and Bitcoin (BTC), advocating for more financial freedom through tokens, smart contracts, and decentralized finance.

His latest appointment means that Canadians may be able to eventually vote for a pro-crypto Prime Minister in the 2025 federal election, which is set to take place on or before Oct. 20, 2025, to determine who will be the 45th Canadian Prime Minister. 

Earlier this year, Poilievre urged the Canadian public to vote for him as leader to “make Canada the blockchain capital of the world,” adding:

“Let people take back control of their money from bankers & politicians.”

In March, YouTube channel BITCOIN posted a video of Poilievre at a Tahinis Restaurant during his leadership election campaign talking about his support for crypto, saying: “We must keep cryptocurrencies legal.”

“People should have the freedom to choose other money. If the government is going to abuse our cash, we should have the freedom to use other, higher quality cash.”

He also briefly spoke about ideas to simplify crypto taxes, rules and regulations so there was a consistent law across Canada.

In the same video, he bought chicken shawarma using the Lightning Network.

However, Poilievre has offered very few specifics on how his party would implement the regulation and adoption of crypto if they unseat current Prime Minister Justin Trudeau’s Liberal party.

The Conservative Party of Canada currently holds 16 out of 105 seats in the Senate and 119 out of 338 in the house of commons, while Trudeau’s Liberal government has a minority government with 160 seats in the house of commons.

To form a majority government requires at least 170 seats in the house of commons. 

Related: Canadian PM candidate supports freedom to use Bitcoin as money

Canada made its foray into the global digital asset space when its Parliament passed a national law on digital currencies in 2014.

The Canadian regulatory council also created a new preregistration filing for crypto platforms in August of this year.

Only a relatively small number of Canadians currently hold BTC, according to the Bank of Canada Financial System Review released in June 2022 — with about 13% of Canadians owning some in 2021, up from 5% in 2020.

Canada’s new opposition leader is a Bitcoiner

The new Conservative Party of Canada leader has previously advocated for financial freedom through crypto tokens, smart contracts and decentralized finance.

Canadian politician and noted crypto advocate Pierre Poilievre has taken the helm of Canada’s Conservative Party, which looks set to give the current administration a run for its money in the next federal election. 

The pro-crypto politician reportedly won the leadership of the Conservative Party of Canada in a landslide victory on Saturday, securing 68.15% of the electoral points up for grabs, and far outpacing his nearest opponent Jean Charest who received just 16.07% of the vote.

Poilievre has been a member of the Conservative Party since 2003, first winning office in the 2004 election. He has since served as a Member of Parliament for seven terms and held various roles including Shadow Minister for Finance and Minister of Employment and Social Development.

Poilievre has been known as a supporter of crypto and Bitcoin (BTC), advocating for more financial freedom through tokens, smart contracts and decentralized finance.

His latest appointment means that Canadians may be able to eventually vote for a pro-crypto leader in the next federal election — set to take place on or before Oct. 20, 2025, to determine the 45th Canadian Prime Minister. 

Earlier this year, Poilievre urged the Canadian public to vote for him as their leader to “make Canada the blockchain capital of the world.”

In March, YouTube channel BITCOIN posted a video of Poilievre at a Tahinis Restaurant during his leadership election campaign talking about his support for crypto, saying: “We must keep cryptocurrencies legal:”

“People should have the freedom to choose other money. If the government is going to abuse our cash, we should have the freedom to use other, higher quality cash.”

He also briefly spoke about ideas to simplify crypto taxes, rules and regulations so there was a consistent law across Canada.

In the same video, he bought chicken shawarma using the Lightning Network.

However, Poilievre has offered very few specifics on how his party would implement the regulation and adoption of crypto if they unseat current Prime Minister Justin Trudeau’s Liberal party.

The Conservative Party of Canada currently holds 16 out of 105 seats in the Senate and 119 out of 338 in the house of commons, while Trudeau’s Liberal government has a minority government with 160 seats in the house of commons.

To form a majority government requires at least 170 seats in the house of commons. 

Related: Canadian PM candidate supports freedom to use Bitcoin as money

Canada made its foray into the global digital asset space when its Parliament passed a national law on digital currencies in 2014.

The Canadian regulatory council also created a new preregistration filing for crypto platforms in August of this year.

Only a relatively small number of Canadians currently hold BTC, according to the Bank of Canada Financial System Review released in June 2022 — with about 13% of Canadians owning some in 2021, up from 5% in 2020.

Bermuda confirms crypto hub ambitions despite market downturn

“We are aware of the recent devaluation in the price of cryptocurrencies and remain confident that it does not threaten the island’s ability to become a crypto hub,” said Bermuda’s Minister of Economy and Labor Jason Hayward.

The Bermuda government is pushing on with its ambitious plans to become a cryptocurrency hub despite the massive market downturn in 2022.

The small island territory known for its pristine pink sand beaches and attractive taxation policies has been actively expanding its crypto sector since 2017, according to Bermuda’s Minister of Economy and Labor Jason Hayward.

He noted on Friday that the government remains unfazed by the recent crash caused by the collapse of the Terra ecosystem in May, as the market has weathered many storms since 2017.

Speaking with the Wall Street Journal (WSJ), Hayward pointed to the experience of local regulators in dealing with foreign business as a key factor that will help Bermuda become a crypto hub. He also bullishly stated that the crash will not hamper its plans moving forward:

“We are aware of the recent devaluation in the price of cryptocurrencies and remain confident that it does not threaten the island’s ability to become a crypto hub.”

“This industry downturn is likely to advance our goal and positively impact our long-term growth and role in this sector,” he added.

So far the Bermuda Monetary Authority (BMA) has granted a total of 14 licenses for crypto firms to operate out of the British island territory, with four of those being approved in 2022, noted Crag Swan, chief executive of the BMA.

The total list includes companies such as multi-asset-class trading firm Class T, crypto exchange Bittrex Global, USD Coin (USDC) issuers Circle Internet Financial Ltd., and crypto interest account provider  BlockFi, which obtained a license in January earlier this year.

Swan highlighted, however, that the BMA is not looking to accept anyone that wants to set up shop in Bermuda and is looking at quality over quantity as part of its crypto hub ambitions.

“So obviously the persons that we want in Bermuda must be fit and proper because essentially we’re looking at maintaining the jurisdiction’s quality name,” he said.

Related: Bitcoin price needs to close above $29,450 for its first green weekly candle since March

Hayward stated that Bermuda’s licensing process is broken down into three stages: the testing license, a modified license and finally the fully approved operating license. The testing phase usually lasts between three to 12 months but he did not comment on how long it takes to get fully licensed by the BMA.

Commenting on the regulatory landscape in Bermuda, the president of the Financial & International Business Association (FATF) David Schwartz, told the WSJ that the Bermuda government has been making strides in its Anti-Money Laundering (A

The Paris-based FATF sets global AML-standards, and Schwartz suggested the success of Bermuda’s crypto sector may hinge on how strongly the government oversees and regulates the companies that it offers licenses to:

“They’ve got great rules and regulations and laws, but it’s all about the implementation at the end of the day.”