SEC Blocks Crypto All-Out without Fear of Collapse

It appears that the Securities and Exchange Commission (SEC) will be taking a new step. The position of the government on cryptocurrency regulation seems to have clarified after several years of study. Crypto advocates are not happy about this news. Some of the most important companies in the sector have been banned in less than a week. The main concern is not the concepts and technologies associated with cryptocurrencies themselves, but rather the arguments for stopping them.

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I bid farewell to Kraken's 'staking' with a sentencing against him. A fine of 30 million dollars has been agreed to by the SEC with the exchange, and the 'staking' service has been closed. Kraken is the only company affected by this decision, but it marks a shift in the stance on what was once considered the successor to cryptocurrency mining.

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Users validate transactions based on their participation in the 'staking' system, promoted from Ethereum 2.0. In a similar way to dividends, the 'staking' system applies to cryptocurrencies. According to the SEC, "users lost control" under this mechanism, investors had "very little protection" and were not provided with all the necessary information.

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Is the practice of 'staking' totally banned? We may only be seeing the tip of the iceberg with the Kraken move. SEC officials have openly discussed the possibility of prohibiting staking altogether since then.

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In a video, SEC chairman Garry Gensler explains why his agency opposes incentives, whether they call them taxes, APIs, loans or rewards. Lastly, he cautions: "remember the same amount of pie remains if you cut a slice into three pieces."

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SEC experts believe that stakes are a way to make users investors in the platform. As the FTX platform has shown, this can be exciting for many, but it poses a risk if the platform goes under.

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It will take teeth and claws to defeat Coinbase. A Coinbase official statement is expected soon, according to CEO Brian Armstrong.

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The Coinbase team defends the 'staking' based crypto products that are available. With its Coinbase Earn program, Coinbase offers it and warns the United States that if that does occur, it will "be a terrible path for the United States," but they will "defend their position in court." Coinbase's latest profit data shows that just over 10% of the company's profits are derived from 'staking'.

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Smith argues that Congress should determine the appropriate legislation for this new technology, not regulators, and today's agreement is no law.

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Another key concept: stablecoins, is also the subject of the SEC's suit against Paxos. Paxos Trust, the issuer of stablecoins, has also been sued by the SEC, according to the Trade Algo. In particular, Binance USD is offered, which has not yet been registered by the Securities and Exchange Commission.

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Binance does not issue the stablecoin directly, but it is backed by dollars at 1-to-1 and is marketed as a safe haven. Currently, there are more than 6.2 million investors and $16.1 billion in capitalization behind the world's third biggest stablecoin.

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SEC's position on Paxos has not yet been formally announced, but it revolves around the requirement that they be registered, rather than the concept of stablecoins themselves. It is the new position of the SEC that all cryptocurrency projects should approach the regulator and register, notes Jason Gottlieb, an expert in cryptocurrencies. However, dozens of projects find this difficult because, according to him, “when they approach the regulator, they only get a no.”

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It shouldn't be surprising if cryptos go to zero. The SEC is not the only organization involved in this campaign. A governor of the Federal Reserve (FED), Christopher Wallet, has warned investors that they shouldn't expect the government to cover their losses. In addition, he compares cryptocurrencies to baseball cards, which he characterizes as speculative.

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As FTX, Luna, and UST have already experienced, it is not surprising if cryptocurrencies could go to zero at some point. A number of scams and corrupt platforms have already been detected by the US banking agency in the crypto sector, and its fears are similar to those of the European Central Bank.

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According to what is being seen, the SEC appears to be interested in taking action. As compared to the upcoming spring, crypto winter can be very warm.