SEC Could Set Sights on Stablecoins and DeFi in Latest U.S. Crypto Crackdown: Berenberg Analysis – Coinpedia Fintech News

Stablecoins and decentralized finance (DeFi) could potentially face increased scrutiny in the U.S. Securities and Exchange Commission’s (SEC) ongoing efforts to regulate the cryptocurrency industry, according to a research report by Berenberg. The investment bank suggests that the SEC might aim to bring stablecoins like tether (USDT) and USD Coin (USDC), as well as DeFi protocols, into compliance with regulatory standards.

The SEC recently filed lawsuits against two major cryptocurrency exchanges, Binance and Coinbase, alleging violations of federal securities laws. Berenberg’s analysts, led by Mark Palmer, speculate that by focusing on stablecoins, the SEC may aim to limit the potential of unregulated DeFi protocols to compete with regulated lenders and exchanges. However, such a move could also weaken the overall DeFi ecosystem, as the report highlights.

Coinbase could be affected if SEC targets USDC

The report further suggests that if U.S. regulators target USDC, it could significantly impact the revenue of Coinbase, as the exchange earned approximately $199 million in net revenue in the first quarter of 2023, with about 27% of that derived from interest income earned on USDC reserves.

Interestingly, Berenberg notes that Bitcoin, which the SEC has classified as a commodity rather than an unregistered security, could potentially benefit from the regulatory crackdown. The report speculates that the focus on stablecoins and DeFi may result in a U.S. crypto industry that is more heavily oriented towards Bitcoin. As a result, Berenberg suggests that shares of MicroStrategy, a company focused on acquiring and holding bitcoins, could be well-positioned for outperformance.

It is important to note that these observations and predictions are based on the analysis provided by Berenberg and should be interpreted as such. The regulatory landscape for cryptocurrencies and the actions of the SEC can evolve over time, leading to different outcomes and consequences.

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