Investment Bank Berenberg: Stablecoins and DeFi Likely to Face SEC's Crypto Crackdown Next
The U.S. Securities and Exchange Commission (SEC) is likely to extend its enforcement crackdown to both decentralized finance (DeFi) and stablecoins, wrote Berenberg in a research report published on Tuesday.
As read by CoinDesk, the investment bank said that two of the SEC’s next targets may include the two largest stablecoins by market cap: Tether (USDT) and USD Coin USDC. Collectively, both assets account for $110 billion in value.
Stablecoins are blockchain tokens value-pegged to relatively price-stable assets, such as fiat currency. The most popular stablecoins track U.S. dollars, and are backed by a combination of cash and short-term U.S. Treasury bills.
For the SEC, targeting USDC and USDT would mean targeting “the stablecoins that serve as the lifeblood of decentralized finance,” wrote Berenberg analysts led by Mark Palmer. By their analysis, this may be a priority if the SEC intends to weaken DeFi’s potential to serve as an effective alternative to regulated, exchanges and lenders.
In early April, the US Treasury Department published a report outlining various ways that DeFi presents risks to national security, as the industry fails to implement appropriate sanctions and money laundering controls.
Some noted threats included “ransomware actors, thieves, scammers, and drug traffickers, using DeFi services to transfer and launder their illicit proceeds.”
Later that month, the SEC reopened a comment period on a proposal to modify the definition of “exchange” under existing exchange laws, so that DeFi can be governed under the traditional finance ruleset. “Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets,” wrote SEC chairman Gary
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