U.S. Regulators Fine Coinbase $100M
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An editor at Coincrop
10 Jan 2023 | 4 min read
oinbase's $100M fine has illuminated the gaps within the crypto industry, as well as demonstrating that U.S. regulators are increasingly enforcing their regulations and strengthening control over digital assets. This momentous event signals a turning point in space with cryptocurrency exchange FTX coming to an end and more regulatory clarity being sought after by investors and institutions alike.
Companies must step up and demonstrate to regulators that they are operating in an open, honest manner; otherwise, the traditional business-as-usual attitude will no longer suffice. To illustrate this point, Coinbase recently had to settle with the New York Department of Financial Services (DFS) for a staggering $100 million dollars due to their compliance issues dating back to 2018. This serves as a warning to the industry: if businesses do not prioritize transparency and good faith practices now more than ever before, there could be dire consequences down the line.
Coinbase stands out among its competitors with more transparency and a partnership with the Big Four auditing firm Deloitte's Blockchain and Digital Assets team, yet still falls short of regulatory requirements. This demonstrates just how much further the cryptocurrency industry needs to go in order to prove that it is a secure platform for users' assets.
The resolution of the settlement could potentially have a negative impact on Coinbase in the future, considering that they are currently facing an active class action lawsuit accusing them of “misled investors regarding material risks attendant to Coinbase’s operations.”
In contrast to other jurisdictions that are more open to rapid changes in the crypto industry, the U.S. enforces strict regulations and consumer protection laws with an aim of ensuring secure operations on domestic soil as well as transactions between organizations and US citizens.
When enforced consistently, these regulatory frameworks are highly effective in achieving their intended purpose.
Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), recently made the following statement regarding the cryptocurrency industry: “If they’re in U.S. markets, they need to come into compliance,”
JonathanAn editor at Coincrop
Jonathan is a Coincrop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely sailing.
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