With an expected avalanche of enforcement actions from several US departments, the American regulatory war against crypto is heating up.
The US Securities and Exchange Commission (SEC) recently took action against the Kraken cryptocurrency exchange.
Gary Gensler’s department accused the business of selling unregistered securities via its staking-as-a-service platform on February 9.
As a result, Kraken was fined $30 million and told to discontinue its staking services.
On February 10, IBC Group founder Marion Nawfal predicted a “myriad of enforcement” operations against exchanges, banks, and tokens.
Nonetheless, the SEC is not the only regulatory body cracking down on cryptocurrency. According to reports, the New York Department of Financial Services (NYDFS) is looking into stablecoin issuer Paxos. However, the specifics of the investigation were not disclosed, although a spokeswoman for 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 business behind the creation of Binance USD, the third-largest stablecoin (BUSD).
Furthermore, the Office of the Comptroller of the Currency (OCC), a federal bank regulator, has reportedly asked Paxos to withdraw its application for a national trust bank license. Paxos denied the rumors on February 9.
Financial regulators in the United States have been accused of taking a heavy-handed approach to regulating cryptocurrency through enforcement. Earlier this week, Coinbase’s CEO warned that if this trend continues, the United States will lose talent and innovation. Just before Kraken was attacked, he warned about the SEC’s staking crackdown on Feb. 9.
“We’re hearing speculations that the SEC would like to get away of crypto staking in the U.S. for retail users. I hope that isn’t the case, because I believe it would be a disastrous road for the United States if it were.”
On February 10, SEC Commissioner Hester Pierce publicly chastised her own organization, claiming that “using enforcement actions to inform people what the law is in an emerging industry is not an effective or fair manner of regulating.”
Following the news, cryptocurrency markets plummeted, with total capitalization falling 5.2% on the day. As a result, the whole cryptocurrency market cap has dropped to $1.06 trillion, with many altcoins seeing double-digit losses.
