by Stephen T. Gannon and Madison J. Breshears
From left to right: Stephen T. Gannon and Madison J. Breshears (photos courtesy of Davis Wright Tremaine LLP)
The first quarter of 2023 may go down in history as one the most intensive periods of enforcement activity and related oversight in the history of the SEC and the bank regulatory agencies.[1] While digital assets have never been free of regulatory scrutiny, this most recent escalation could have an existential impact on an industry which has been subject to repeated disruptions since mid-2022.[2] The market has made quick work of separating the wheat from the chaff, sparing not even key, widely-respected players. Such conditions, coupled with increasingly aggressive regulatory action, could result in an increase in the number of firms who choose to seek shelter off-shore, or protection through acquisition by larger, traditional incumbent financial institutions. What follows is a brief summary of this recent regulatory activity, but there is surely more to come. This article will also reflect on the causes and consequences of this regulatory initiative, and what lessons might be learned.