Learn Concept: Regulatory Compliance in the Crypto Industry

By: Eliza Bennet

Adherence to regulatory requirements is crucial for the survival and success of any entity in the finance sector, and this includes the crypto industry. A shift from traditional finance to decentralized finance has in no way absolved the industry from regulatory compliance. The significance of this is highlighted in a recent event where decentralized finance (DeFi) platform, BarnBridge DAO agreed to a $1.7M settlement with the SEC over the sale and offering of its structured crypto asset securities, known as SMART Yield bonds, without security registration requirements.

The marketing campaign used by BarnBridge DAO for these crypto bonds extensively used social media platforms and clearly violated securities regulation compliance standards. The United States Securities and Exchange Commission (SEC) has been particularly strict with its regulations towards the crypto industry, with many entities in the community calling for new regulations for emerging financial models like Decentralized Autonomous Organizations (DAO) and DeFi protocols.

But despite the calls for new regulations, it is important for entities within the crypto industry to maintain strict compliance with current regulations to avoid ramifications such as the heavy fine experienced by BarnBridge DAO. This calls for entities to understand and stay up-to-date with the evolving crypto regulations, international laws and regulations, as well as other best practices for maintaining operational compliance.