Welp turns out the SEC is an old dog that is not able to learn new tricks. To be honest for a while I had a small sliver of hope that maybe just maybe they would not do anything psychotic. I was wrong and that is what yesterday's news has told us now.
Launching an investigation is one thing but preparing to go after a company is a whole other game. You would have thought the SEC would have learned with the Ripple Labs' ongoing lawsuit. Unless there is a crazy smoking gun that the New York State regulators missed which is highly unlikely given their stringent rules and regulations to be able to operate in the state the SEC is in for another long and drawn-out battle that ultimately neither side is going to win.
While Paxos itself is not the biggest baddest crypto player in the space they make up for that with a mixture of high-profile partnerships and business/governmental allies. See what makes this move by the SEC even more stunning is that the SEC had partnered with Paxos previously to test out different blockchain applications and even trust out digitally backed assets like their stablecoin PAX and PAXG a token that tracks the price of gold and is gold-backed. Not to mention the SEC gave them permission to test out settling stock trading on the blockchain just a few years ago as well.
The main target of the SEC I think is pretty clear and that is BINANCE and so the SEC has decided to go after a partner but honestly at great expense to the SEC. Not only is this going to just be a bogged-down lawsuit like with Ripple but this was a company that worked with the SEC and tested out new ideas/utilities of not just crypto but blockchain technology in general. The SEC has decided to really make a big bold move when it is going to do nothing but blow up in their face. There is a possibility that this could erode any sort of lead the US was building or had in blockchain technology. If companies cannot trust US regulators then why are they going to want to work here?
This could result in more off-shoring as we have seen with FTX and that does not end well for anyone. Companies are going to continue to innovate and if the US wants to freeze this out then they will be left behind. We have seen the EU move forward with blockchain tech along with several state starting to store data on their as well. However, this move by the SEC runs counter to innovation and since we have seen this exact thing play out previously with Ripple Labs it stuns me to have to say here we are once again.
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