As regulatory scrutiny continues to mount, the crypto industry has expressed concern. In today’s news, South Korean financial authorities revealed plans to inspect cryptocurrency staking services in the region. The implementation of the regulations comes shortly after cryptocurrency exchange Kraken filed a lawsuit with the U.S. Securities and Exchange Commission (SEC), according to which U.S. regulators cracked down on the company’s staking scheme, accusing the exchange of violating securities laws.
The latest move by South Korean regulators to inspect staking services appears to be the result of last week’s U.S. Securities and Exchange Commission crackdown on digital assets. According to the SEC, these services and products are considered unregistered securities.
Meanwhile, South Korean regulators have yet to provide more details on the timetable and method of staking service inspections. However, the move is said to affect some legislative decisions. Unlike the SEC, which targeted specific cryptocurrency exchanges issuing staking services, South Korean regulators are more focused on national staking services.
Over the past week, the U.S. Securities and Exchange Commission has been lashing out at large digital asset industry players. Last week, regulators slammed U.S. cryptocurrency exchange Kraken, accusing two subsidiaries, Payward Ventures Inc and Payward Trading Ltd, of failing to register its staking-as-a-service program.
Kraken has since agreed to immediately cease operations of the staking scheme and settle with the SEC with a $30 million penalty in disgorgement, prejudgment interest, and civil penalties. A week later, the SEC took aim at BUSD, the industry’s second-largest stablecoin, the Binance Brand Asset.
On Monday, the SEC issued a Paxos-BUSD issuer-Wells Notice for the sale and listing of unregistered securities, and regulators BUSD and other assets fit the concept. This led to stablecoin issuers having to suspend BUSD issuance in the early hours of Monday morning and depeg the stablecoin for a period of time.
The news sent shockwaves through the stablecoin market, especially in the U.S. dollar-backed space, as investors sought a new alternative to reduce exposure to the volatile cryptocurrency market. According to Binance’s CEO, the industry may see the emergence of other assets and even algorithmically backed stablecoins. Market reaction to the news was muted, even as the SEC continued to clamp down on various companies and services in the industry. The global cryptocurrency market capitalization has remained above the trillion-dollar mark for the past few days.
