SEC fight against cryptocurrencies is enraging

In the last days Wall Street Journal says that Securities and Exchange Commissions wants to sue the Paxos Trust Co. for violating laws upon investors protection. Here the article

The expected faults from Paxos are the non legitimate emission of BUSD, being it a non-registered security. In USA, Securities are investment contracts and to be offered to customers they have to be registered at SEC.


So far, the SEC used the Howey test to establish if a contract could be assimilated to a Security. And the basic definition of the Howey test has always been “if a customer buys a contract, can he expect an automatic income from it, without taking any kind of action?”. If the answer to it was “YES” then the product was easily assimilable to a Security. If the answer was a clear “NO”, then the product was not so likely to become a Security.

Anyway, the time and the evolution of the cryptocurrency space highlighted all the limitations of the Howey test as a check for Security or not since Staking tokens (the native one, from PoS blockchains) could be actually assimilable to Securities as well, while there are no financial results from a Proof of Stake blockchain, just an incentive for good-faith validators.

So, why is SEC attacking Paxos?

I see three possible scenarios that of course, are just my humble opinions.

The first one is to mine the dominancy of Binance, that is showing huge strength and resilience, giving to many people the chance to enter easily into the cryptocurrency space. More people into the crypto-space, more difficult to control them. So, attacking Paxos as the issuer of BUSD to attack Binance and potentially create a conflict between Paxos and Binance.

The second one is something more subtle. Paxos is the issuer of Pax Gold, a token we are going to dig deeper in the next weeks with the evolution of Gold idea. PAXG makes gold accessible to everybody through cryptocurrencies, creating some grey areas where people can transform their cryptos into Gold or viceversa, making Gold (and also cryptocurrencies) even less traceable as well.

The third scenario, is that Binance went openly against FTX speeding up its process of bankruptcy and we know that many people from USA government had more or less direct interests into FTX. So, this action can even be a form of revenge of USA institutions against Binance.
Anyway, it’s worth saying that Binance just speeded up a process that was almost inevitable due to the conditions that FTX was into.

SEC is trying to limit at 360° a lot of cryptocurrency services, like ETH staking, Kraken staking.

Across all of this, Coinbase CEO has already stated that he will defend Coinbase even in Court to demonstrate that Coinbase Staking is not a Security.

Decentralized solutions are the best to be used and the best to keep power on our money, to avoid any form of forced withdrawal or blockages from Central Authorities, where we do not know what the real, deep intents are.


Add-ON: the funny thing is that this article was prepared last Tuesday (4 days ago) and in the meanwhile, many things luckily went as expected. Here are some updates:

Bitcoin not going to be regulated/put under investigation. Good for Bitcoiners

The answer from Paxos Corporations to the SEC telling shortly: How the heck can a stable coin be considered a Security?"