With the crypto market being in a uniquely the precarious situation, various companies are starting to feel the heat. 2022 saw a number of big companies in the crypto space resigning, In fact, the resignation of these different crypto firms has led to increased regulatory pressures throughout the market.
Europe was quick to bring up crypto regulation through its MiCA bill that is set to become part of law sometime during the next year. Even the US, which has otherwise been very lax with crypto regulation, is looking to mimic something similar due to mounting pressure.
Given the unique situation that the market is in, many companies need to make certain types of decisions. More specifically, a firm like FTX, will no longer be supporting certain types of digital assets, since they could stir up regulatory problems for them.
According to official statements from the CEO, the US has yet to develop the necessary legal framework to really define a crypto asset. Therefore, to avoid any serious legal troubles FTX will be choosing its assets more wisely.
Bringing in the Howey Test
The first thing that the FTX team will do before bringing in a new asset is first have their legal team screen it using the Howey Test. They will also be using other forms of case law to determine if the asset in question is a security.
One of the reasons why the company is jumping through so many hoops is because the legal framework for the entire market is still developing. Therefore, they need to be extra careful when deciding on which assets they keep, since they might be asked to remove them later.
Looking Forward to the Changes
FTX CEO is not necessarily happy about the regulation that is happening in the market or the number of steps that he needs to take to be safe. However, he is still looking at situation the developing of the legal framework of digital assets like crypto with cautious optimism.
He is hoping that the market will be able to reach a point where the securities of cryptocurrencies are clearly defined. These rules will allow companies to continue innovating their products or services for the industry, while keeping audiences safe. It is a win-win situation.
Another Reason for Being Careful
Another reason why FTX is being especially careful when bringing on its securities is because of recent allegations. According to various reports, the state government is under the impression that the firm allegedly sold unregistered securities.
So with the company now working with the enforcement division of the Texas State Securities Board, it has also become a proponent of crypto regulation.