The week began with the news that the US Securities and Exchange Commission (SEC) is ramping up its regulatory game in the cryptocurrency sector.
SEC and crypto exchange Kraken reached a $30m settlement, in which the latter agreed to suspend its crypto staking service for retail customers in the US.
The move was immediately criticized by Ripple Labs chief executive Brad Garlinghouse who said that the course of action taken by SEC was counter-intuitive, lacked clarity, and would ultimately impede the sector.
Meanwhile, Ripple Labs is still caught in a similar case against SEC which it seems to be winning in courts in the US. SEC is also moving on other crypto firms, launching one case after the other.
One of those is an enforcement action against Paxos, the company that issues stablecoins such as Binance (BUSD) – not owned by Binance – and Pa dollar (USDP). The SEC investigation is following up on an investigation launched by the New York Department of Financial Services.
At a time when crypto firms are facing a lot of regulatory pressure, there still seems to be sustained interest in launching new ventures.
The latest such undertaking comes from Three Arrows Capital Ltd founders who have established a $25m crypto exchange that allows users to “trade bankruptcy claims from insolvent platforms and funds, including their own”.
Meanwhile, the European Union has published a new draft law that will apply to banks and states what maximum possible risk they can weigh on crypto assets.
All banks will have to disclose their direct and indirect exposure to cryptocurrency assets and investment companies should the new bill come into law.
Speaking of regulation, there was a lot of ongoing chatter throughout the week about the events involving SEC. Several former and current regulator insiders spoke out against the recent spate of crackdown on crypto companies.
For SEC commissioner Hester Peirce the regulatory action made little sense as it lacked clarity as to why certain enforcement action was undertaken in the first place.
Her words more or less reflected the words of former SEC chief counsel TuongVy Le, who said that every regulatory move should both help close an existing misunderstanding in regulation as well as clarify the framework.
Both Le and Peirce found that SEC is attempting to regulate aspects of the industry that it may not fully have authority over.
This week also saw Binance and Huobi manage to freeze $1.4m in crypto funds linked to the Harmony’s Horizon bridge hack, allegedly the handiwork of North Korean cyber criminals. Meanwhile, Twitter “got a new CEO” when Elon Musk, the incumbent, posted a picture of his dog, Floki, in the executive chair that ended up driving the price of Dogecoin up by 5.4%.