- Marcus Sotiriou, a market analyst at U.K.-listed digital asset firm GlobalBlock, said the SEC has just started cracking down on cryptocurrencies.
- Analysts said this in a note to clients on Monday following regulatory moves against crypto firm Paxos and stablecoin BUSD.
- Sotiriou said cryptocurrencies want clarity, but the SEC has so far failed to provide the necessary guidance.
Paxos news undoubtedly impacted the market on Monday as the cryptocurrency fell sharply. Other market factors may have been at work, but one of the negative triggers was the reaction to news about Paxos and the stablecoin BUSD.
Bitcoin retreats to test support at $21,500, Ethereum drops to a low of $1,470, and Binance’s BNB falls below $300, hitting a one-month low. The drop in crypto market capitalization, which he slid more than 2.5%, came as U.S. regulators appeared to shift to a different gear in their “crackdown” on crypto companies.
GlobalBlock Analyst Talks SEC Crypto Wars: It’s ‘Just Begun’
Marcus Sotiriou, Market Analyst at Digital Asset Broker global blocksays orders against Paxos from the New York Department of Financial Services (NYDFS) and the U.S. Securities and Exchange Commission (SEC) suggest the regulator’s war on the crypto sector is just beginning.
Analyst comments in Monday’s memo to clients over NYDFS order halted Paxos from issuing new BUSD and claims BUSD is an “unregistered security” as an indicator of future potential , pointing to the SEC’s reported lawsuit against the same company.
As for the regulator’s recent actions, Sotiriou said the accusations were not only “missing the mark” but embarrassing.
“The SEC’s actions seem off the mark.They call BUSD a security, but a hard-pegged stablecoin has no profit expectations and a fixed price like a gift card of value.” wrote the analyst.
The SEC’s reported lawsuit against Paxos follows last week’s announcement that crypto exchange Kraken has reached a $30 million settlement with its agency, with the platform agreeing to halt its staking-as-a-service product.
“People are desperately trying to find a way to legally offer their products without any guidance.‘, the analyst noted.
In his opinion, US regulators have so far failed to clarify regulation of the crypto sector. Instead, the SEC is increasingly adopting the “regulation by enforcement” route, as evidenced by the 42% surge in cryptocurrency-related litigation in 2022.
Analysts say the growing number of lawsuits against cryptocurrency companies in the US suggests the SEC’s war on the sector is just beginning. But this risks pushing cryptocurrency innovation offshore, he added.
In fact, Binance CEO Changpeng Zhao said that this could apply to exchanges if BUSD were declared a security.
“Given the ongoing regulatory uncertainty in certain markets, we will review other projects in these jurisdictions to ensure users are protected from undue harm.‘ said Binance Chief murmured on monday.