The crypto industry has expressed concern as regulatory scrutiny continues to increase. In today’s news, South Korea’s financial authorities announced plans to review cryptocurrency staking services in the region.
South Korea Complies With SEC’s Crypto Staking Regulations
The implementation of this regulation comes shortly after the crypto exchange Kraken’s case with the US Securities Exchange Commission (SEC), where US regulators cracked down on the company’s staking program accusing the exchange of violating securities laws.
The latest move by South Korean regulators to review staking services appears to be the result of last week’s SEC crackdown on digital assets. According to the SEC, these services and products are considered unregistered securities.
Meanwhile, Korean regulators have yet to provide more details on the timeline and inspection methods of staking services. However, the move will affect some legislative decisions.
Unlike the SEC, which targets certain cryptocurrency exchanges that issue staking services, Korean regulators are more focused on national staking services.
SEC Crackdown During the Last Week
Over the past week, the SEC has been rampaging against the big digital asset industry players. Last week, the regulator listed on the US cryptocurrency exchange Kraken charged its two subsidiaries, Payward Ventures Inc and Payward Trading Ltd, with failing to register for a staking-as-a-service program.
Following this, Kraken agreed to cease operating its direct staking program and settle with the SEC a $30 million fine for disgorgement, prejudgment interest, and civil penalties. A week after, the SEC targeted the industry’s second largest stablecoin, BUSD, Binance’s branded asset.
On Monday, the SEC issued Paxos – the publisher of BUSD – a Wells notice to sell and record unregistered security, that the BUSD regulator and other assets fit this concept. This resulted in stablecoin issuers having to halt distribution of BUSD and depeged stablecoins for some time in the early hours of Monday.
This news has sent shockwaves through the stablecoin market, particularly in the dollar-backed sector, as investors seek new alternatives given their lack of visibility in the volatile cryptocurrency market. According to the CEO of Binance, the industry could see the emergence of other assets and even stablecoins powered by algorithms.
In a Twitter Space Q&A on Tuesday, CZ said:
The amount of pressure on stablecoins is quite significant. Many agencies apply pressure there. That will shrink the USD stablecoin market, so the industry explores these options.
As the SEC continues to crack down on various companies and services in the industry, markets have shown little reaction to the news. In the past few days, the global cryptocurrency market capitalization is still above $1 trillion.
At the time of writing, the global cryptocurrency market cap is worth $1.106 trillion, up 2.7% in the last 24 hours.
Option image from UnSplah, Chart from TradingView.