The crypto industry last week witnessed another crackdown by the US Securities and Exchange Commission (SEC) on Kraken and Paxos. However, the issuer of USDC stablecoins, Circle, is rumored to be the next target from the regulator, which the firm all but refutes.
A False Narrative
Following several unfounded claims from Crypto Twitter that Circle has been issued Wells a notice by the US securities watchdog (the SEC), the digital asset space was thrown into another round of speculations. A Wells notice signifies a threat of legal action issued to firms to give them time to articulate a response.
In the case of Circle, the firm, through its Chief Strategy Officer, Dante Disparte, debunked the news, calling it an unfounded rumor. Disparte tweeted in response to a Fox News journalist who stated that the company had been issued the notice by the SEC.
The journalist, however, apologized for the inaccurate statement. But before his apology, the floodgate of fear, uncertainty, and doubt (FUD) had already opened.
Over the past few weeks, the SEC has up its war on cryptocurrency with its claim that staking services and stablecoins are securities, a move that has shaken the digital asset industry.
Experts believe that the claim that staking is securities is questionable. Industry observers argue that the view held by the SEC over stablecoins is to drive the implementation of the regulation by force.
Also read:According to a DeFi enthusiast and an NFT creator @0xfoobar, the “Reverse Wells Notice” issued to Circle by the SEC chair, Gary Gensler, is a notification to the regulators that no violations have occurred. He added that the SEC is expected to cease all investigations until the court case concludes.
This week, the crypto space was on its edge after the financial watchdog issued a Wells notice to Paxos over its minting and supply of BUSD. As a result, millions of dollars in BUSD were converted into other assets or redeemed by holders of stablecoins.
Thus, the market capitalization for BUSD shrunk by nearly $900 million in the past few days.
Crypto And Challenges In The US
Jake Chervinsky, the chief policy officer at the Blockchain Association, also echoed his opinion on the recent regulatory crackdown conducted by the Gensler-led SEC. According to him, the flurry of activities in recent times targeted at the crypto industry is unpleasant but did not come as a surprise to him.
He added that the move in no way spells doom for the crypto industry in the United States. Reflecting on what happened in 2022, Chervinsky explained that last year was the worst period in the history of the crypto market.
He added that the collapse of FTX has tarnished the already battered reputation of the sector. Chervinsky believes that the US Congress would have made the difference in the regulatory issue of the crypto industry, not the agencies like SEC.
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