According to a research report released by a blockchain analytics company, TRM Labs, approximately 80% of jurisdictions worldwide have enacted measures to strengthen regulations in the cryptocurrency sector. Nearly half of these jurisdictions specifically promoted initiatives aimed at bolstering consumer protection in 2023.
Though different jurisdictions prioritize distinct national objectives, analysts at TRM Labs have found that cryptocurrency exchanges operating in countries with well-established licensing and supervision frameworks exhibit “lower rates of illicit activity than those in less regulated jurisdictions.”
Even in the absence of a comprehensive regulatory framework for cryptocurrencies in the United States, TRM Labs expects crucial rulings from federal courts in 2024 that will determine whether certain crypto assets could be classified as securities.
We can also expect the enforcement momentum to continue, especially against mixers and other anonymity enhancing tools.
Analysts recognize uncertainties within the decentralized finance space, particularly concerning matters of responsibility, accountability, and the practical implementation of oversight and authority by regulators. Although definitive answers to these questions may not emerge in 2024, TRM Labs suggests that the year should be viewed as a period of “implementation and benchmark-setting in the next, hopefully less wild, chapter of digital assets.”
The stance of American regulators on cryptocurrencies remains ambiguous, with earlier indications suggesting that current financial laws are deemed applicable to digital assets. In December 2023, the U.S. Securities and Exchange Commission (SEC) clarified its rejection of Coinbase’s Rulemaking Petition, citing three reasons: the applicability of existing laws to crypto securities markets, the SEC’s engagement with crypto securities markets through rulemaking, and the necessity to uphold Commission discretion in determining rulemaking priorities.
However, Paul Grewal, Chief Legal Officer of Coinbase, asserted that the company would make further efforts to persuade the SEC to relinquish its responsibility for establishing standards in crypto regulation through another appeal.