The Securities and Exchange Commission (SEC) has declared war on the crypto industry, and analysts mark this as just the beginning. In recent years, the SEC has taken a hard-line stance against crypto firms and digital assets, cracking down on initial coin offerings (ICOs) and calling out cryptocurrencies that it believes are operating as unregistered securities.
The reason behind doing all these is to protect investors, as cryptocurrency’s decentralized and unregulated nature makes it a lucrative investment opportunity, leaving room for fraud and scams. Hence, the SEC is tasked with ensuring that investors are protected and that financial markets are fair as they visualize the crypto market as a potential threat to those goals.
GlobalBlock Analyst Says “It’s Just Starting”
After a whopping fine of $30 million on Kraken’s crypto staking, SEC is now stretching its regulatory attention to Binance’s BUSD stablecoin issuer Paxos. Today, the SEC issued a well-notice to Paxos with allegations of unregistered securities, creating uncertainty among investors.
Though global regulators have declared an all-out war on crypto, Marcus Sotiriou, an analyst at digital asset broker GlobalBlock marks this as just the tip of the iceberg. The recent notices against Paxos from the New York Department of Financial Services (NYDFS) and the US Securities and Exchange Commission (SEC) have sent bearish sentiments through the cryptocurrency sector.
Crypto Prefers Clarity Rather Than Regulation By Enforcement
Global regulators have taken a drastic step in bringing the crypto space under strict regulation. However, the latest actions come without proper global regulation, leaving many crypto firms in confusion about expanding their operations.
The analyst said, “The actions of the SEC appear to be way off the mark. They have labeled BUSD security, yet hard pegged stablecoins have no expectation of profit and have a fixed price, like stored value Gift Cards.”
The analyst further noted that US regulators have failed to provide a transparent guidebook on the industry, which it desperately needs. Instead of offering guidance, the SEC has taken the “regulation by enforcement” path, which made a staggering 42% jump in crypto-related lawsuits in 2022.
Marcus noted, “People are desperately trying to figure out how to offer a product legally whilst getting zero guidance.”
The cryptocurrency industry has been under the microscope of US regulators for some time, but the situation is quickly escalating. The analyst said that the growing number of lawsuits against crypto firms hinted at SEC’s war on the sector, which is just starting.
However, the cost of these legal actions may be hefty as the crypto innovation in the US will gradually fade. As the regulatory environment becomes more influential, many companies may choose to continue their operations offshore, where they can operate with greater freedom and certainty.
