SEC to Intensify Enforcement in the Crypto Industry in 2024
The US Securities and Exchange Commission (SEC) is expected to increase its enforcement efforts in the cryptocurrency industry in 2024, according to a report by global law firm Norton Rose Fulbright. The SEC will continue its aggressive pursuit of cases related to unregistered offerings, non-fungible tokens (NFTs), and unregistered exchanges, signaling a regulatory crackdown in the crypto space.
Focus on Digital Asset Platforms
The SEC’s primary focus will be on bringing enforcement cases against digital asset platforms. The commission argues that certain tokens sold on these platforms qualify as “securities,” which would subject them to regulatory requirements for broker-dealers and exchanges. This highlights the SEC’s determination to subject digital assets to existing securities laws, emphasizing the need for compliance and regulatory preparedness within the industry.
“We expect to see even further ramp-up in enforcement and regulatory actions with respect to US securities laws in the crypto space in 2024.” – Norton Rose Fulbright
MiCA and TFR Implementation
Norton Rose Fulbright’s analysis points to the implementation of the Markets in Crypto-Assets Regulation (MiCA) and the revised Transfer of Funds Regulation (TFR) as key milestones. These regulations will introduce new requirements for crypto assets and service providers:
- Applying the “travel rule” for crypto assets
- Regulating various digital asset service providers
The provisions of MiCA will be phased in gradually, with asset-referenced tokens and e-money tokens falling under regulatory purview from June 30, 2024. The remaining provisions, including obligations for crypto asset service providers and the TFR’s travel rule, will take effect from December 30, 2024.
The European Union also aims to strengthen its anti-money laundering (AML) and counter-terrorist financing (CTF) framework to include a broader range of participants in the crypto sector. The upcoming Anti-Money Laundering Regulation (AMLR) will require most crypto asset service providers to conduct due diligence on transactions exceeding €1,000 and report any suspicious activity. The legislation will also address risks associated with transactions involving self-hosted wallets and introduce enhanced due diligence measures for cross-border correspondent relationships.
Regulatory Developments in the UK
In the United Kingdom (UK), the government plans to comprehensively regulate crypto assets. However, specific details of the regulatory regime have yet to be released, with draft secondary legislation expected in 2024. The Financial Conduct Authority (FCA) and the Bank of England (BoE) will play a crucial role in shaping the regulatory framework, and consultation papers on the stablecoin regime are expected in the second half of 2024.
The Future of the Crypto Industry
As the digital asset landscape continues to evolve, both market participants and regulators face the challenge of finding the right balance between fostering innovation and maintaining regulatory oversight. Significant developments are expected in 2024 that will shape the future of the industry, including increased enforcement actions and regulatory changes in both the United States and the European Union.
Hot Take: SEC’s Strong Stance on Crypto Industry Regulation
According to a recent report by Norton Rose Fulbright, it is clear that the SEC is determined to intensify its enforcement efforts in the crypto industry in 2024. This indicates a growing focus on regulating digital asset platforms and bringing enforcement cases against them. With new regulations such as MiCA and AMLR coming into effect, the industry will face increased compliance requirements and scrutiny.
It is crucial for crypto market participants to stay informed about these regulatory developments and ensure they are prepared to meet the compliance standards set by the SEC and other regulatory bodies. The coming year will be a critical time for the industry, with significant changes on the horizon that will shape its future.
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