The Global Implication of the US’s Clamp-Down on Crypto Regulation

Byline: Hannah Parker

In recent years, cryptocurrency has gained popularity among millions of individuals who invest in digital assets such as Bitcoin, Ethereum, and Dogecoin. However, as cryptocurrencies have become more mainstream, governments worldwide have grown increasingly concerned about their potential use for illegal activities such as money laundering and terrorism financing. This concern has led to a rise in crypto legislation in the United States as authorities work to improve market monitoring.

The impact of this enhanced regulation is not limited to the United States but extends to other countries. As the world’s largest economy and financial market, any changes to US crypto regulation will likely significantly influence global cryptocurrency markets. This article will explore the worldwide ramifications of the current escalation of crypto legislation in the United States.

Background of US Crypto Regulation

The US has a complex system when it comes to regulating cryptocurrencies. Initially, US officials ignored cryptocurrencies, but as their use increased, they became more involved in regulating the market. In 2013, the Financial Crimes Enforcement Network (FinCEN) issued guidelines on the applicability of the Bank Secrecy Act (BSA) to virtual currencies — the first significant regulatory action in the US. Under these guidelines, virtual currency exchanges are considered money transmitters and are thus subject to the same KYC and AML laws as traditional financial institutions.

Since then, the US regulatory landscape has continued to evolve. Initial coin offerings (ICOs), a popular way for businesses to raise funds using cryptocurrencies, came under greater scrutiny from the Securities and Exchange Commission (SEC) in 2018. The SEC has since prosecuted several companies for conducting unauthorised ICOs.

In 2019, Facebook announced plans to launch a new cryptocurrency called Libra, which drew intense regulatory scrutiny from the US. Eventually, the project was cancelled due to heavy regulatory pressure.

The US government recently enacted new laws to strengthen market monitoring, including extending the SEC’s regulatory jurisdiction over the market and requiring cryptocurrency exchanges to report certain transactions to the Internal Revenue Service (IRS).

Impacts of US Crypto Regulation on Global Markets

The recent tightening of US crypto regulations has significantly impacted global cryptocurrency markets, particularly cryptocurrency prices. Whenever new regulatory actions or suggestions are announced, the market often experiences a sell-off due to investors’ uncertainty about the market’s future.

In a recent interview, executives at Bitai Method Official commented that tighter regulations in the US have also affected the global acceptance of cryptocurrencies. As the world’s largest economy and financial market, the US significantly influences international financial markets. Regulatory actions against cryptocurrencies in the US may discourage uptake in other countries.

The enhanced regulation in the US is also expected to impact global financial institutions. As cryptocurrencies become more widely used, traditional financial institutions are increasingly trying to enter the market. However, increased regulation may make it harder for these institutions to enter the market or increase compliance costs.

Recently, the US Senate Committee on Banking, Housing, and Urban Affairs questioned Securities and Exchange Commission (SEC) Chairman Gary Gensler on the SEC’s cryptocurrency procedures. Gensler emphasised the need for further regulatory monitoring of the cryptocurrency industry, stating that “the crypto Wild West is being tamed.” This testimony is expected to significantly influence how crypto is regulated in the US in the future and its impact on markets worldwide.

Impacts of US Crypto Regulation on Individual Countries

Different nations will be affected differently by US crypto laws, depending on how each country approaches regulation. Some nations have adopted crypto regulatory policies similar to the US, while others have adopted a more laissez-faire policy.

Canada, which has established comparable AML and KYC laws for cryptocurrency exchanges, and Japan, which has one of the most thorough regulatory frameworks for cryptocurrencies in the world, are two nations that have followed the US example in crypto regulation.

Other nations, such as Malta and Switzerland, have adopted a more liberal approach to cryptocurrency regulation to attract cryptocurrency businesses and investors.

However, the effects of US crypto legislation may be particularly detrimental to nations that rely on remittances from the US. Remittances from relatives in the US are a significant source of income for many individuals in countries like Mexico and the Philippines, and tighter regulations may make transmitting money via cryptocurrency more difficult or expensive.

According to a recent report from, the US government may be considering new legislation requiring cryptocurrency exchanges to record transactions worth $10,000 or more to the IRS. This proposal is likely to increase compliance costs for cryptocurrency exchanges and make it more challenging for people to transmit money using cryptocurrencies, which will significantly impact the usage of cryptocurrencies for remittances.

Schonberger alleges that Gary Gensler, the Chair of the United States Securities and Exchange Commission (SEC), stated that most cryptocurrencies are securities and did not mention that the present securities regulations do not apply to the crypto markets. He claims that this is “the law, not a choice.” Using the label “decentralised finance (DeFi) platform” as an excuse to break securities regulations is unacceptable.

The recent growth in US crypto legislation has significantly impacted global cryptocurrency markets and certain nations. As the world’s largest economy and financial market, the US significantly influences how cryptocurrencies are adopted and regulated worldwide. While some nations have followed the US example in crypto regulation, others have adopted a more laissez-faire attitude. The effects of US crypto legislation are complex and far-reaching, ranging from cryptocurrency pricing to major international financial institutions. It remains to be seen how crypto legislation will evolve, and its long-term impact on the global cryptocurrency industry as the regulatory landscape in the US continues to change. This raises questions about whether it is possible to achieve regulation without adversely affecting other nations or the entire crypto industry.

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