Did anti-crypto attack on stablecoins cause bitcoin rampage?

US government watchdog, the SEC, has served an enforcement against Paxos, deeming its issuance of the BUSD stablecoin a non-registered security. Did this help cause bitcoin’s huge spike in price?

The SEC is trying to bring down crypto

Gary Gensler’s Security and Exchange Commission (SEC) has been doing its utmost to attack crypto in order to bring it down. All the SEC actions since Gensler took the helm look to be aimed at achieving this.

Generally Gensler has been happy to just comment at every opportunity that practically all cryptocurrencies are securities. No guidance on just how staking, farming, other DeFi activities, or stablecoins can become compliant has been offered.

Telling crypto companies to “come in and speak to us” has been proved to be a hollow invitation that would likely just speed up enforcement for any CEO uncertain about how his company might comply with regulations.

Now it appears that the SEC and others are trying to get to crypto where it will really hurt, as in closing down on\off ramps from the banks, and bringing down stablecoins used with cryptocurrency pairs.

Stablecoin furore

However, the furore over the SEC issuing Paxos with a ‘Wells Notice’ (intention to bring enforcement) and Paxos vowing to “vigorously litigate” against it, has started a chain of events that has probably helped bitcoin to hit its recent highs.

With Paxos and its issuance of the BUSD stablecoin under attack by the regulator, all eyes turned to the other stablecoins. Surely the SEC wouldn’t just focus on one of them. Then the rumours of the SEC going after USDC began to surface.

Those nervously holding their USDC must have thought if the SEC can go after a fully regulated and trusted entity such as Paxos, then why not Circle and USDC? 

As soon as this sank in, a sizable chunk of USDC flowed into BTC. According to an article on CoinTelegraph, which quotes data from Lookonchain, $1.6 billion in institutional funds has flowed into the crypto market over the past 6 days, adding to the price pump.

Crypto will not go away

Crypto is not something that can just be shut down with impunity. This huge well of cutting edge tech development and entrepreneurial talent is not going away. 

Intelligent money goes to where it is best treated, and this certainly will not be with the legacy financial system. The most promising startups in the crypto sector are attracting that money, and even if this has to move offshore as the heavy handed and blunt tool of enforcement called the SEC makes life more and more difficult, then so it will be.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.