The fact is that, however unbanked we feel or how we feel about crypto, US law and the SEC (The US Securities and Exchange Commission) in particular dominate crypto regulation and the primary reason for this is because the U.S. is home many of the major exchanges, investors, and dollar-denominated markets. Its enforcement actions set global precedents, and since most crypto trading pairs are against the U.S. dollar, American rules ripple internationally.

Let’s start with the dominance of the USD. Most crypto assets are traded against the U.S. dollar and even if exchanges like Coinbase offer local currency (for example mine is in GBP) the USD is still the bottom line with any crypto prices set against the dollar before it is equated with any other currency. This makes U.S. financial rules disproportionately influential, as liquidity flows through dollar-based markets.

Furthermore, with the U.S. hosting some of the largest exchanges, custodians, and institutional investors they come directly under the purview of the SEC and so when it acts against a platform, it affects global liquidity and confidence. This is further reinforced by SEC's application of the Howey Test to determine whether tokens are securities. Because many projects want access to U.S. capital markets, they must comply, even if they’re based abroad.

In principle this is very similar to the reach of the EU’s GDPR. It is fundamentally an internal regulation for EU Member Countries but if you have dealings with the EU you are required to comply with the same GDPR.

One other factor is the long reach of US regulators concerning enforcement. They often pursue cases against foreign firms if they serve American customers. This extraterritorial enforcement pushes global platforms to align with U.S. standards and frankly it is something that I find to be an overreach.

We see this same overreach being illustrated in American TV programmes. Precedented by Criminal Minds: Beyond Borders (2016-17) and now followed by the similarly themed FBI: International (2021-Present) we see an overbearing American law enforcement agency that comes across as arrogant and out of touch with local law enforcement principles. Criminal Minds: Beyond Borders reflects the worst of everything American as Gary Sinise proclaims time and time again that he has the full backing of the US, the most powerful country in the world. FBI International take another approach but the net sum is the same. However, they do it by frequently making the local police look completely incompetent or correct because the good old US of f**king A is King of the World (Trump would love that!) does everything right and the rest of the word doesn’t have a clue.

Getting back to the point the SEC, all too frequently label non-US projects as “illegal securities” by the SEC which effectively cuts them off from American investors and this only consolidates US domination of the market by creating effectively good lists and bad lists.

The SEC have created a strongly sceptical narrative when it comes to crypto because they believe that it is risky and volatile and this therefore justifies strict oversight and this principle guides their every action.

So, while crypto may be international, it the U.S. dollar’s dominance, the SEC’s aggressive enforcement, and America’s central role in global finance that makes U.S. law disproportionately influential. This situation is likely to remain the case (rightly or wrongly) until the day comes (if ever) that crypto decouples from dollar liquidity even if other regions such as the EU and Asia are building clearer frameworks.

And that is the bottom line as to why the US and the SEC dominate Cryptoland

As always stay safe and well my friends.