The U.S. authorities are at war against crypto, with the Securities and Exchange Commission (SEC) leading the charge. The two leading companies targeted are the Kraken exchange and Paxos. Kraken and Paxos are two crypto companies that are among the oldest and most well-established in the industry and have also met all regulatory requirements. Kraken This is a US-based exchange that has to comply with all manner of regulatory requirements. Kraken aimed to join Coinbase by going public last year but shelved its plans as the crypto market plunged. Kraken meets all the regulatory requirements as it ensures transparency and security. It issued proof of reserves in 2014, submitted to a full audit last year, and it’s also never been successfully hacked. The IRS has just demanded it to hand over data about its users. The Exchange recently reached a settlement with the SEC to pay a 30 million dollar fine and shut down its crypto staking service for U.S. customers. The SEC accused Kraken of failing to list crypto assets as securities. The regulatory body classifies proof of stake cryptos as securities. According to the SEC, Kraken did not disclose the risk they were getting into by staking to the public. Kraken was required to fill out a form that communicated the risks and rewards of staking to the public. Kraken cleared the air by citing that unclear regulatory guidance from the SEC and others has made it impossible for US-based crypto companies to know what they can and can’t do. They were using the enforcement approach that is causing severe damage to the crypto industry in the United States. According to Brian Armstrong, the CEO of Coinbase, enforcement regulation doesn’t work; it forces companies to go offshore, which is what happened with FTX. Paxos Paxos may be less well known than Kraken, but it too has been around for a long time, having been founded in 2012. It has done all regulatory requirements to get licenses, which is why it works with big companies such as Mastercard, Binance, Paypal, and Bank of America. According to their website, their regulatory first approach is non-negotiable. There were rumors that the New York State Department of Financial Services(NYDFS) was planning to hit Paxos, but the SEC had got in there first with a warning that it would take legal action. Paxos now has 30 days to respond and persuade the SEC not to take matters any further. The SEC is pursuing Paxos because of unregistered Securities, in this case, the BUSD stablecoin that Paxos issues on behalf of Binance. The Wall Street Journal classifies the BUSD as an unregistered security. The NYDFS has ordered Paxos to stop issuing BUSD. This may be a move by the SEC to get Binance or a crackdown on stablecoins. If it is the latter, it means that Circle and Tether should brace themselves. Paxos still has a chance to continue with its application with the National Trust banking Charter. The OCC regulates banking entities in the U.S. There are fears that a concerted effort is underway by the current U.S. Administration to exclude the crypto industry from the banking sector. What does that mean for the U.S. and crypto industries? Even though the SEC’s jurisdiction may not stretch beyond U.S. borders, it will be a big blow to any crypto company, given the size and importance of the U.S. market. It got a lot harder for U.S. crypto holders to participate in staking. As much as Coinbase still offers its staking services, there is a chance that the SEC will come after them too. There will also be fewer crypto projects in the U.S. as many companies consider the U.S. crypto-unfriendly. Also Published Here

US Authorities Have the Crypto Industry Under Siege

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