The chairman of the U.S. SEC predicts that cryptocurrency exchanges will face more direct supervision this year. This prediction caused huge waves in the market, with investors and practitioners speculating on future developments. How will increased regulation affect the development of digital currency exchanges? Let’s dig into it.

Over the past few years, digital currency exchanges have sprung up, each playing a key role in the world of digital finance. However, as regulations become increasingly strict, these exchanges are facing an unprecedented test.

First, let’s review the rise of digital currency exchanges. From the earliest Mt. Gox to today's Binance and Coinbase, these platforms provide users with convenient digital asset trading services and promote the prosperity of the cryptocurrency market. However, the lack of supervision has also provided opportunities for some criminals to take advantage of it, leading to a series of security incidents and market chaos.

The SEC chairman’s statement undoubtedly gave the market a warning: supervision will be more direct and there will be zero tolerance for violations. This also means that those exchanges that operate in a standardized and compliant manner will usher in new opportunities, while those platforms that manipulate the market and are full of illegal activities will be severely cracked down.

For investors, the strengthening of supervision is undoubtedly good news. In a standardized and transparent market environment, investors' rights and interests will be better protected and investment risks will be greatly reduced. This will attract more traditional financial institutions and large investors into the digital currency field, injecting more vitality into the market.

However, increased regulation has also brought a series of challenges to digital currency exchanges. The first to bear the brunt is the increase in compliance costs. In order to comply with regulatory requirements, exchanges need to invest a lot of resources in technology upgrades and personnel training, which will undoubtedly increase operating costs and may be unaffordable for some small exchanges.

In addition, the strengthening of supervision may also lead to a reshuffling of the market competition landscape. Those exchanges that do not do enough in terms of compliance and security will face the risk of being eliminated, while those platforms that can quickly adapt to regulatory requirements will stand out and become the market leader.

In this era of change, digital currency exchanges need to continue to innovate and enhance their core competitiveness. In addition to strengthening compliance construction, we must also focus on user experience and technological innovation, and continuously launch new products and services that meet market demand. Only in this way can the exchange remain invincible in the fierce market competition.

In general, although the strengthening of supervision has brought certain pressure to digital currency exchanges, it has also paved the way for the healthy development of the industry. As practitioners, we should cherish this development opportunity, constantly improve our own quality, and adapt to market changes. Only in this way can we remain invincible in the future digital financial world. May we witness the take-off of digital currency exchanges together!

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler
Gensler said at a video press conference on the 19th that he will face more supervision from the SEC. This move shows that cryptocurrency exchanges are bound to become the focus of the SEC’s rectification of the cryptocurrency field in 2022.

Gensler expressed the hope that trading platforms can take steps in the coming months to accept more direct supervision from Washington’s financial regulators. He also added that it is important for cryptocurrency investors to strengthen supervision because such Only then can they receive the same protection as investors in stocks or other assets.

Gensler said: I have asked the following to study various methods to bring these trading platforms into the scope of investor protection. If the trading platforms are not included in the scope of supervision, the public will face risks for another year.

Gensler, who took office last year, alarmed the cryptocurrency industry by saying that most cryptocurrencies are similar to securities and should be protected by the SEC's strict regulations, because many cryptocurrency enthusiasts believe that cryptocurrencies should not be subject to the long-standing coverage of stocks. , bound by the same standards for bond transactions.

 Called trading platforms to register with SEC

In fact, Gensler has repeatedly called for stronger supervision of cryptocurrency exchanges. According to previous reports, Gensler met with former SEC Chairman Jay Clayton on December 1 last year.
Clayton, during a conversation at a summit, urged cryptocurrency exchanges and lending platforms to come in and work together to provide better protection for investors.

Gensler emphasized at the time that whether they are trading platforms or lending platforms, whether they label themselves as centralized or decentralized, these platforms are important areas for public policy and investor protection; he also warned that when the SEC and trading When a platform cannot reach a consensus, the SEC will use enforcement tools to prosecute entities that are not registered with the SEC. It is recommended that these platforms best strive to register within the scope of the law.

Gensler just announced the appointment of Sherrod, the former Senate Banking Committee chairman who focuses on cryptocurrency business, at the end of last year.
Brown's assistant became a senior adviser to the SEC. This move is in line with Gensler's previous declaration of establishing a regulatory framework for cryptocurrencies, indicating that the SEC may increase its supervision of cryptocurrencies in 2022.

According to previous reports by Coindesk, sources familiar with the Senate Banking Committee pointed out that Corey Frayer is the leader of Sherrod Brown’s cryptocurrency policy. Corey Frayer
Frayer has been outspoken about the risks that cryptocurrencies may pose to investors. At a hearing last July, he criticized blockchain as an online illegal distribution network filled with unsourced funds.

 20 enforcement actions were taken last year

It is worth noting that U.S.-based litigation consulting firm Cornerstone Research
Research) released the SEC Cryptocurrency Enforcement Actions: 2021 Update Report on the 19th, stating that the SEC took a total of 20 enforcement actions against digital asset market participants last year, highlighting that the SEC continued to play a role in cryptocurrency after the Biden administration came to power. The role of the main regulators in the field.

According to Cornerstone Research statistics, in 2021, the SEC filed a total of 14 judicial lawsuits and 6 administrative lawsuits in U.S. federal courts. Of the 20 enforcement actions, 70% were related to ICOs (initial coin offerings). The SEC also issued 4 An order to declare negligence was filed, two follow-up actions were filed, and a motion was filed seeking compliance with the issuance of investigative subpoenas this year.

Simona, report author and senior manager of Cornerstone Research
Mola concluded via a press release: Since taking office in April 2021, SEC Chairman Gensler has viewed cryptocurrency enforcement as a critical mission. From the end of May to mid-September last year, the SEC's enforcement efforts in this area increased significantly. The SEC took some unprecedented actions against a cryptocurrency lending platform, an unregistered digital asset exchange, and a DeFi lending platform. This is also one of the largest fines we have ever seen in an ICO-related enforcement action since Telegram.

Since its first enforcement action against cryptocurrency-related fields in 2013, the SEC has so far filed a total of 58 judicial proceedings and 39 administrative proceedings against digital asset market participants. During this period, the SEC has imposed a total fine of approximately US$2.35 billion. .

Regarding the SEC’s next regulatory direction, Abe Chernin, vice president of Cornerstone Research and co-head of the financial technology business unit, expects that under the leadership of the Biden administration, the SEC will continue to act in accordance with Howey
Test inspection methods and take enforcement actions against ICO-related areas; in addition, 2022 may also see further supervision of certain cryptocurrency market participants such as DeFi platforms.