February 4, 2023

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Lawyers see crypto regulation in 2023 as industry needs to rebuild trust • Eureka News Now

Despite an uneven year in crypto markets, many market participants are unfazed by the long-term health of the sector and say regulatory frameworks in 2023 could restore confidence in the industry.

“Crypto will recover,” Katherine Dowling, general counsel member at Bitwise Asset Management, told Eureka News Now. “This is not the death of crypto.”

Given the belief of many that crypto is here to stay, it’s worth looking ahead. Crypto residents certainly are – after the FTX collapse, questions circulated about the future of crypto and what regulators would do next.

“There is no incentive for regulators to scale back their enforcement activities and recent events are likely to encourage them.” Mayer Brown’s Joe Castelluccio

But the disappointment at what FTX’s implosion represents is very hard to overstate, Yesha Yadav, professor of law and director of diversity, equity and community at Vanderbilt University, told Eureka News Now. “The level of disenchantment and disappointment and sense of being betrayed by FTX runs so deep because it has been viewed as one of the most compliance-friendly institutions in the crypto-economy and one that would spearhead the regulatory effort.”

Now FTX is obviously the “poster child for everything that could go wrong,” Yadav said. Its demise has prompted regulators to return to the drawing board. “They may need to do something different, broader and more rigorous, in response to what happened.”

But what can we expect from regulators in 2023?

Regulators will finalize some of the proposals they have brought forward, Alma Angotti, partner and global head of legal and regulatory risk at Guidehouse, told Eureka News Now. “I think there’s a realization that the industry is too big to continue to ‘wait and see’.”