The Voyager Rebuff Highlights the Urgent Need for Regulatory Oversight
The regulatory environment for cryptocurrencies is a fluid one. Regulators may reduce the risk to financial stability even as cryptocurrencies continue to be linked to the equity markets.

The suspension of trading, deposits, withdrawals, and loyalty awards was announced by Voyager Digital on July 1. The corporation blamed the 3AC default and claimed market unrest as the cause.
The market reacted to concerns of a potential 3AC debt default in late June with the news. Voyager Digital (VOYG), which is listed on the TSX, fell by 52.5 percent. VOYG's year-to-date performance is down 97% as a result of the June sell-off.
There was little sign of regulatory intervention despite the decline in the price of VOYG stock and reports that Voyager Digital had suspended trading, deposits, withdrawals, and loyalty awards.
The lack of collaboration among regulators to address the problem should be concerning for investors and the cryptocurrency sector.
Where the SEC's resources are located is another issue brought up by the lack of cooperation. Some people might think that dealing with the aftermath from the crypto winter is more important than going after crypto businesses for allegedly selling securities unlawfully.
Investors are exposed due to a lack of a regulatory framework for cryptocurrencies.
Now that the crypto winter is expected to last until August, a regulatory framework is more crucial than ever.
Crypto investors are helpless and at the mercy of companies to fix liquidity concerns, which are probably connected to problems with other exchanges, as the number of cryptocurrency platforms limiting withdrawals keeps growing.
Financial institutions don't have it so easy; they must report events and are subject to regulatory oversight to make sure they don't happen again after the global financial crisis of 2008.
For a cryptocurrency business to continue operating, there are no requirements. The oversight necessary to safeguard investor assets is lacking.
The regulatory focus appears to be primarily on categorizing assets as commodities, securities, or "other."
The fundamentals should be discussed if the CFTC and SEC decide to jointly regulate the digital asset industry. If not, someone should have the power to impose the essential procedures for creating the right organization.
Progressiveness varies among legislators. It might impede the development of an effective regulatory environment that fosters innovation and safeguards investors.
Lawmakers Lummis and Gillibrand Bill to be tabled until 2023
The Lummis and Gillibrand Bill, which seeks to give the CFTC regulatory authority, was covered by FX Empire in June.
Regulators were unprepared for the fall of TerraUSD (USDT) and TerraLuna (LUNA), which occurred as the SEC v. Ripple lawsuit dragged on indefinitely with no end in sight.
Since then, efforts have been made by the G7, the White House, the US Treasury, and others to advance toward a worldwide regulatory framework.
The slowness of the pace is emphasized by the lawmakers' lack of interest in discussing the Lummis and Gillibrand Bill.
On July 19, Senator Cynthia Lummis spoke with Gillibrand in a joint, pre-recorded interview for Bloomberg.
It's a broad subject that is in-depth, and many US senators are still learning about it.
Added Lummis,
"The legislation's broad scope may make it challenging for lawmakers to immediately understand."
The crypto sector has endorsed a bipartisan plan that could provide the optimal balance of innovation and consumer safety.
Although knowledgeable politicians are aware of the need for innovation and regulation, the CFTC is more popular in the crypto business than the SEC.
The CFTC and SEC need lawmakers to make a decision.
FX Empire examined the potential conflict between the CFTC and the SEC over control of the digital asset market in June.
The Lummis and Gillibrand Bill seeks to hand off authority to the CFTC, but the SEC is still on the prowl. Investors and policymakers are focused on the pending SEC v. Ripple case.
The Lummis & Gillibrand Bill's postponement until 2023 might even overlap with the resolution of the SEC action against Ripple.
Legislators have called attention to one issue, namely the SEC's targeting of cryptocurrency startups. The SEC has handed out some harsh fines that may have driven cryptocurrency businesses to other countries. The SEC Chair may have replied when lawmakers questioned the SEC's strategies earlier this year and approached Gensler.
SEC Chair Gensler changed his stance by requesting cooperation from the CFTC to regulate the digital asset market. After calling for a cooperation, Gensler even mentioned loosening SEC rules for cryptocurrency startups.
A change in perspective could be advantageous for the crypto industry. It will all come down to the puzzle's solution in the end. What really constitutes a security?
Bitcoin (BTC) and Ethereum (ETH), according to the former SEC Director of the Division of Corporation Finance, are not securities.
Regulatory Uncertainty Does Not Encourage Cryptocurrency Innovation
Any asset class suffers from uncertainty, and the cryptocurrency industry is no exception. The notion of increasing regulatory control has had a negative impact on investor mood since late December 2021.
The situation has altered since proposals for a worldwide regulatory framework. But a regulatory framework is still necessary. Investors and businesses involved in the cryptocurrency industry will search for legislation that promotes innovation and safeguards consumers once the market situation improves.
Cryptocurrencies and the world's financial markets both depend on finding the right balance.
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