On Feb. 9, Gary Gensler and his SEC took aim at Kraken and its staking-as-a-service products. The regulator claims that the U.S. crypto exchange is offering unregistered securities through its staking services.
Consequently, Kraken suspended staking-as-a-service, and crypto markets have slumped.
On Feb. 10, popular analyst and trader Alex Krüger put a positive spin on the latest regulatory crackdown by Uncle Sam.
He said that a ban on staking, which the SEC is angling for, could push staking off-chain or overseas. This would decentralize Ethereum even further as would no longer be under the hammer of U.S. regulators.
Positive narrative spin for later: banning US exchanges/custodians from offering staking services pushes staking offchain or abroad => ETH is no longer centralized and under the grasp of US regulators.
Decentralized ETH is better ETH.
— Alex Krüger (@krugermacro) February 9, 2023
Ethereum Can Escape Clutches of US Regulators
Krüger went on to predict that the narrative could turn positive just as it did after China banned Bitcoin and the miner exodus further decentralized the network further.
“See this spin kicking in in a few weeks … similar to how it happened when China banned bitcoin (the last time!) and narrative spinners turned it into ‘this is good for Bitcoin as now mining will be concentrated in the US instead of in China’.”
Investors are not going to stop staking or buying Ethereum because ill-informed U.S. regulators want to ban it. The net result will be a crypto exodus from America to friendlier jurisdictions.
On Feb. 8, Coinbase CEO Brian Armstrong warned that continued heavy-handedness by the SEC would push companies offshore which is exactly what happened with FTX. Gary Gensler’s crypto warpath will ultimately do more harm than good, further hurting those investors he is trying to protect.
Ripple CEO Brad Garlinghouse highlighted positive moves by financial regulators in other regions such as Dubai, Australia, the United Kingdom, South Korea, and Brazil. The United States is being left behind, and this appears to be one of the SEC’s goals where crypto is concerned.
Stepping back for a moment from what’s happening in the US – just in the last few weeks, the number of positive (or at least headed in the direction of CLARITY) global regulatory developments is energizing!
— Brad Garlinghouse (@bgarlinghouse) February 9, 2023
Crypto Markets Tank
Crypto markets have reacted badly to the latest regulatory crackdown. Total market capitalization has tanked 5.3% over the past 24 hours, with $60 billion leaving the space.
Bitcoin has dropped 5% in a fall to $21,843, while Ethereum dumped 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 their largest daily dump of the year.
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Martin Young
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