SEC enforcement action creates a silver lining for GMX, Lido (LDO) and Maker (MKR) price
The United States Securities and Exchange Commission (SEC) has started ramping up its crackdown on the crypto industry and recent enforcement actions had a negative impact on crypto prices last week and at the start of this week.
The SEC is focusing on stablecoin issuers. The most recent SEC stablecoin crackdown was on Feb. 13 through the issuance of a Wells Notice to Paxos Trust Company, the issuer of Binance USD (BUSD). While Paxos denies that BUSD is a security, which would place it outside the SEC’s jurisdiction, some lawyers say the answer is not so simple, which creates fear that other top stablecoin issuers like Circle’s USD Coin (USDC) could be next.
The SEC is also putting crosshairs on centralized exchanges (CEX) by questioning how they can use customer funds as qualified custodians. On Feb. 15, a five-member SEC panel will vote on whether to make it more difficult for crypto firms to hold digital assets.
Centralized staking platforms have also come under the SEC’s microscope and because staking programs provide investors with yield, the SEC believes these offerings are securities. On Feb. 9 the SEC began its assault on these programs by reaching a $30 million settlement over Kraken’s earn program.
Interestingly, traders have not adopted a fully risk-off position to the recent SEC activity, and certain decentralized solutions like GMX (GMX), Lido (LDO) and Maker (MKR) are soaring.
Let’s take a closer look at what’s with decentralized service providers.
After the Wells Notice was sent to Paxos by the SEC, BUSD redemptions surged to $342 million in 24-hours. Redemptions from BUSD to Paxos, burn the outstanding debt token. So while Binance said they continue to support BUSD, its market cap will decrease over time
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