Kraken has suffered, Paxos rumored to be under investigation, what other regulatory rumors are there?
On 2/9, rumors circulated on Crypto Twitter about the U.S. planning a large-scale regulatory action aimed at marginalizing the cryptocurrency industry. The following day, Kraken was forced to shut down its U.S.-based staking services, and stablecoin issuer Paxos was reportedly under investigation.
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Stablecoins
CoinDesk reported that the New York Department of Financial Services (NYDFS) is investigating stablecoin issuer Paxos.
The scope of the investigation is currently unclear, but stablecoins under Paxos include Pax dollar (USDP) and Binance USD (BUSD).
A spokesperson for NYDFS declined to comment on the current investigation, and a spokesperson for Paxos did not respond to CoinDesk.
Decentralization of the Crypto Industry?
X3 founder Andrew sparked significant attention with regulatory rumors shared on Twitter.
He claimed that the Federal Reserve and the Office of the Comptroller of the Currency (OCC) are conducting a large-scale decentralization of the crypto industry, even going as far as to investigate crypto-friendly Wyoming.
He noted that the OCC has indicated that crypto industry applicants must voluntarily withdraw their banking licenses, otherwise all applications will be rejected this week.
However, Paxos refuted claims of being under investigation on the morning of 2/9:
Paxos has not been asked to withdraw its national trust bank charter application from the OCC, nor has it been denied. Paxos will continue to work constructively with the OCC.
To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.
— Paxos (@PaxosGlobal) February 8, 2023
Crypto Industry's Version of Operation Choke Point
The U.S. Department of Justice previously launched Operation Choke Point in 2013 to investigate illicit cash transactions, including money laundering. Nic Carter, co-founder of data firm CoinMetrics, pointed out that similar actions are now targeting the crypto industry.
Carter stated that since the beginning of the year, this initiative has been attempting to sever ties between the crypto industry and banks, further marginalizing the crypto industry. He believes this will benefit offshore entities like Tether and jurisdictions more supportive of cryptocurrencies.
In summary, the regulatory FUD on 2/9 consists of three main points:
The U.S. will ban retail token pledging
Regulation of stablecoins
Decentralization of the industry
The following day, Kraken took the first hit and announced the closure of its token pledging services within the U.S. Will the other two regulatory actions become reality?
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