The American regulatory war on crypto is heating up with an expected avalanche of enforcement actions from various U.S. departments.
The latest enforcement action by the U.S. Securities and Exchange Commission (SEC) targeted the Kraken crypto exchange.
On Feb. 9, Gary Gensler’s agency accused the company of selling unregistered securities through its staking-as-a-service product.
As a result, Kraken was hit with a $30 million fine and ordered to shut down its staking services.
On Feb. 10, IBC Group founder Marion Nawfal speculated that a ‘myriad of enforcement’ actions targeting exchanges, banks, and tokens was coming.
??JUST IN: The SEC, the NYDFS and the OCC will be bringing a 'myriad of enforcement' targeting exchanges, banks and tokens.
Gary Gensler is leading the charge and moving fast.
Expect significant announcements in the coming days and weeks.
— Mario Nawfal (@MarioNawfal) February 9, 2023
Crushing Crypto by Enforcement
Nevertheless, the SEC is not the only agency cracking down on crypto. The New York Department of Financial Services (NYDFS) is reportedly investigating stablecoin issuer Paxos. However, details of the probe were not clear, but a spokesperson from the financial regulator told Bloomberg
“The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing,”
Paxos is the company behind the issuance of the third-largest stablecoin,
Furthermore, there have been reports of the Office of the Comptroller of the Currency (OCC), a federal bank regulator, asking Paxos to withdraw its application for a national trust bank charter. On Feb. 9, Paxos refuted the rumors.
To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.
— Paxos (@PaxosGlobal) February 8, 2023
financial regulators have been accused of a heavy-handed approach and regulating crypto by enforcement. Earlier this week, Coinbase’s CEO cautioned that there would be an EXODUS of talent and innovation from the United States if this continues. On Feb. 9, he about the SEC’s staking crackdown just before Kraken was hit.
“We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.”
SEC Commissioner Rebukes SEC
On Feb. 10, SEC commissioner Hester Pierce publicly scolded her own agency stating, “using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.”
My thoughts on today's Kraken settlement: https://t.co/mijt3MNN4U
— Hester Peirce (@HesterPeirce) February 9, 2023
Crypto markets have slumped following the news, with total capitalization shedding 5.2% on the day. As a result, the total crypto market cap had fallen to $1.06 trillion, and many altcoins were seeing double-digit losses.
