The SEC vs. crypto: No to staking and stablecoin The SEC vs. crypto: No to staking and stablecoin The SEC vs. crypto: No to staking and stablecoin

The SEC vs. crypto: No to staking and stablecoin

Mads Eberhardt

Cryptocurrency Analyst

Summary:  The Securities and Exchange Commission (SEC) in the US has initiated what can best be described as a frontal attack on crypto, as crypto exchange Kraken has been forced to end its staking service to US clients and stablecoin issuer Paxos has been told not to mint more of its Binance-branded stablecoin. Market participants should prepare for further regulatory scrutiny, as regulators may target other intermediaries and crypto services following countless collapses last year.

If one was in doubt, the Securities and Exchange Commission (SEC) in the US is not pleased by crypto companies, further stressed by the past week. On Thursday last week, crypto exchange Kraken agreed to pay $30mn to settle an SEC allegation that Kraken’s staking service was an illegal sale of securities and end its staking service to US clients. Following the settlement, SEC chair Gary Gensler went on CNBC’s Squawk Box to state that Kraken failed to show full disclosures and register with the SEC. In a response to the interview, Kraken co-founder and CEO Jesse Powell went to Twitter to ironically write: “Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? Wish I'd seen this video before paying a $30m fine and agreeing to permanently shut down the service in the US. How dumb do I look.” Powell is presumably referring to the fact that crypto companies cannot easily register with the SEC if being able to register at all.

Similar to Kraken, Coinbase is likewise a large custodial staker. For instance, the latter controls 11.38% of all staked Ether on the Ethereum network. Although Coinbase is US-regulated similar to Kraken, Coinbase has stated that its staking service is yet available to US clients, and it appears that Coinbase is willing to challenge the SEC in court in case the agency is to target their staking service next.

On Sunday, the Wall Street Journal reported that the SEC plans a lawsuit against crypto intermediary Paxos alleging that the firm issues an unregistered security due to the firm’s Binance-branded stablecoin known as Binance USD or BUSD for short. Although it is branded by the name of Binance, it is fully issued by Paxos, with the latter regulated in the US namely in New York. With a supply equal to $16.1bn, BUSD is the third-largest stablecoin. Not even a day after the report by WSJ, Paxos announced this morning that it ceases the minting of BUSD and ends its relationship with Binance. In other words, holders may only redeem BUSD but cannot issue new ones.

As Paxos is not ceasing its own branded stablecoin known as Pax Dollar, it appears that US regulators were particularly not pleased by a US-regulated entity issuing a stablecoin bearing the name of a non-US-regulated entity namely Binance. If this is the case, it is not as negative as it otherwise could have been for the industry in the event US regulators target every single stablecoin. Stablecoins are a key cornerstone for the crypto industry, so the targeting of stablecoins as a whole would be severely destructive for crypto.

More regulatory scrutiny

It is obvious that the SEC and perchance other US agencies are watching the crypto market much closer than they used to. This comes after they arguably failed to oversee the industry last year upon the collapses of Terra and FTX among many others. In our 2023 crypto outlook, we wrote about potential overreach and downright damaging regulatory crypto frameworks, as various governmental agencies may want to show the crypto market who is in charge following the collapses last year. Based on the events in the last week, it appears that this is true, as regulators seem to remedy their lack of oversight last year by now overextending their reach by largely targeting already highly regulated US-based entities such as Kraken and Paxos, instead of approaching companies and services not already regulated. This may have a greatly negative impact on the adoption and innovation of crypto.

To be realistic, it likely not ends with Kraken and Paxos and crypto services such as staking and stablecoins but will extend to other intermediaries and services, so market participants should be prepared for further potential imminent hostile regulation and oversight along with the imaginable consequences it may bring.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.