On February 9, Gary Gensler and his SEC targeted Kraken and its products deemed a service. The regulator claims that the US-based cryptocurrency exchange is offering unregistered securities through its staking services.
As a result, Kraken stopped staking-as-a-service, and the cryptocurrency markets plunged.
On February 10, noted analyst and trader Alex Krüger put a positive spin on Uncle Sam’s latest regulatory campaign.
He said a ban on betting, which the SEC is targeting, could push risk off-chain or offshore. This will decentralize Ethereum as it is no longer under the hammer of US regulators.
Positive narrative spin later: Banning US exchanges/custodians from offering staking services drives participation off-chain or offshore => ETH is no longer centralized and under the control of US regulators.
Decentralized ETH is the best ETH.
– Alex Kruger (@krugermacro) February 9, 2023
Ethereum may avoid contacts from US regulators
Krueger went on to predict that the story could turn out to be just as positive as it did after China banned bitcoin and an exodus of miners further decentralized the network.
“Watch this spin begin in a few weeks… similar to when China banned bitcoin (last time!) and spinners made it the narrative “This is good for bitcoin because mining will now be concentrated in the US instead of China.”
Investors will not stop betting on or buying Ethereum because uninformed US regulators want to ban it. The end result will be an outflow of cryptocurrencies from America to friendlier jurisdictions.
On February 8th, Coinbase CEO Brian Armstrong warned that continued ruthlessness on the part of the SEC will drive companies out, which is exactly what happened with FTX. Gary Gensler’s crypto path will ultimately do more harm than good, hurting the investors he’s trying to protect.
Ripple CEO Brad Garlinghouse highlighted positive moves by financial regulators in other regions such as Dubai, Australia, UK, South Korea and Brazil. The United States is behind, and this seems to be one of the goals of the SEC when it comes to cryptocurrency.
Stepping back for a moment on what’s happening in the US – in the last few weeks alone, the number of positive (or at least heading towards CLARITY) global regulatory developments has been STRIKING!
– Brad Garlinghouse (@bgarlinghouse) February 9, 2023
Crypto market tank
Cryptocurrency markets have responded poorly to the latest crackdown. The total market cap is down 5.3% over the last 24 hours, and $60 billion is out of the space.
Bitcoin is down 5% on the decline to $21,843, while Ethereum is down 6.3% to trade at $1,550 at the time of writing, according to CoinGecko.
The rest of the board was a sea of red, with many altcoins facing double digit losses in the biggest daily dump of the year.
Staking Crackdown Post-SEC Could Be Positive for Decentralized Ethereum: Analyst Appears First on CryptoPotato.