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When regulators crackdown on crypto, you know that crypto has crept out

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The cryptocurrency industry is maturing and, as it does so, the government, statists and regulators are diving in to control it, as are the banks and financial institutions. In fact, it intrigued me when talking with a major institution the other day that they said they could have been Coinbase, if only their management team had been more visionary a few years ago. This was said with regret, and almost like an indictment of lack of management and leadership. I replied it was more the Stockholm Syndrome of most corporations: Does your company suffer from Stockholm Syndrome?

Over time, companies behave in a herd of their culture and avoid risks or, more plainly, people challenging their leadership and culture with hard questions like: could we be a cryptocurrency firm?

Bear in mind, for years, most incumbent firms have said crypto bad, blockchain good.

Repeat after me: Bitcoin Bad, Blockchain Good - Chris Skinner's blog ( (May 2015)

Almost a decade later, many banks are now offering cryptocurrency custodial services and more. From custodial services at State Street to trading with JPMorgan to paying by crypto with Revolut and Stripe, the digital coin world has grown rapidly.

Now the regulators are muscling in. In particular, the US regulators. A good example is this week, when the US Department of Justice leaked that it is seeking $4 billion from the cryptocurrency exchange Binance – remember them? they’re the one that brought down FTX and Sam Bankman-Fried – d

US DOJ Seeks More than $4B From Binance to End Criminal Case - Bloomberg

The US Justice Department is seeking more than $4 billion from Binance Holdings Ltd. as part of a proposed resolution of a years-long investigation into the world’s largest cryptocurrency exchange.

Negotiations between the Justice Department and Binance include the possibility that its founder Changpeng Zhao would face criminal charges in the US under an agreement to resolve the probe into alleged money laundering, bank fraud and sanctions violation

The DOJ probe is one of a string of legal and regulatory headaches the world's biggest crypto exchange faces in the United States. And it’s not just in the United States. As Coindesk reported two years ago, more than half a dozen national regulators have published warnings, announced investigations or otherwise cautioned investors about Binance.

When central authorities wake up and start regulating, you know the industry is going mainstream and, after Signature Bank, FTX, Terra-LUNA and more in the crypto space, the regulators have definitely woken up.

The aim? To make the crypto industry respectable.

This is why the SEC has also just announced they are suing Kraken, one of the largest cryptocurrency exchanges.

US SEC sues Kraken crypto exchange over failure to register | Reuters

The SEC claims that Kraken had been illegally operating as a securities exchange without first registering with the regulator, which brings us back to that thorny question: are cryptocurrencies securities?

Brian Armstrong, CEO and co-founder of another major exchange, Coinbase, argues they are not. Specifically he has countered the SEC view stating that Coinbase doesn’t list securities and that cryptocurrencies aren’t classified as securities by the SEC.

In light of this regulatory ambiguity, Coinbase has implemented its own rigorous process to assess listed currencies and digital assets. Brian’s statement aims to counter the SEC’s accusation that Coinbase listed securities without proper registration and asserts the company’s commitment to compliance, as they are also in the regulator’s crosshair.

Meanwhile, on an alternative front, I am looking at some crypto activities where exchanges and companies are working with the regulators. For example, following investigations by Tether, OKX, and the U.S. Department of Justice, Tether voluntarily has frozen $225 million in stolen USDT linked to an international crime syndicate. Bear in mind that Tether’s USDT is a stablecoin pegged to the US dollar, I guess that’s why.

Regardless, it is interesting how the SEC, Department of Justice and more are all wading into the crypto space, along with banks, shows that this is the year that we are seeing cryptocurrencies becoming a serious marketplace that is competing with others … such as Central Bank Digital Currencies (CBDCs).

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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