Institutions like SEC’s ‘regulation by enforcement,’ survey finds

The SEC’s regulatory actions might be on the right track, according to certain investors.

Nickel Digital Asset Management published results of a survey on Tuesday showing that 92% of institutional investors and wealth managers agree that the agency’s “regulation by enforcement” approach is the most optimal route for the industry’s progression.

Moreover, about 90% of respondents believe that the SEC’s recent actions against Coinbase and Binance will eventually contribute positively to the growth of the digital assets industry.

“Improved regulatory oversight is vital if the digital assets sector is to continue its recent strong performance and become the investment mainstream,” Anatoly Crachilov, CEO of Nickel Digital, said in a statement.

The study, commissioned by Nickel Digital and conducted by market research firm Pureprofile in July 2023, is based on opinions from 200 institutional investors and wealth managers across the US, UK, Germany, Singapore, Switzerland, Brazil and the UAE.

In early June, the SEC initiated legal proceedings against both companies, accusing them of functioning as unregistered exchanges that offer securities. The agency alleged that Coinbase and its holding company breached five regulations, while Binance is being charged with 13 alleged violations.

The SEC’s moves have been scrutinized by entities in the crypto space and criticized as anti-innovation. 

This has spurred some to reconsider maintaining their operations in the area. For instance, Revolut decided to shut down its crypto services in the US starting September, due to the challenging regulatory environment.

Meanwhile, former SEC chair Jay Clayton has expressed strong dissent regarding the method chosen by the US government to implement regulatory changes.

The study further revealed that most respondents expect the US to spearhead the establishment of solid regulations for the industry, with the UK and European Union expected to closely follow in second and third place. 

At the same time, 26% of respondents selected Asia as a region likely to formulate strong regulations, while 21% chose the Middle East.

“Regardless of which country ultimately leads the way, the intensifying competition between various jurisdictions to create a crypto-friendly environment will ultimately boost adoption of this asset class,” Crachilov said.

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