A new report from investment bank Berenberg concluded that stablecoins and the decentralized finance space could be the next likely target of the U.S. Securities and Exchange Commission (SEC). The research report indicated that the securities regulator might target these products as part of its broader crackdown on the crypto industry.
According to the report, the SEC might consider shifting its attention to stablecoins such as Tether USD (USDT) and USC Coin (USDC), as well as decentralized finance protocols. The investment bank indicated that the securities watchdog might take measures to bring these products into regulatory compliance under its jurisdiction.
Reports of the SEC’s impending scrutiny of stablecoins and DeFi came just weeks after the regulator initiated controversial enforcement actions against top crypto exchanges, including Binance and Coinbase. Berenberg’s analysts, led by Mark Palmer, noted that the renewed crackdown campaign could be an attempt by the SEC to reduce the DeFi sector’s engagement with regulated exchanges.
According to the analysts, targeting stablecoins that serve as the backbone of decentralized finance could help limit the potential for unregulated DeFi protocols to serve as alternatives to regulated lenders and exchanges. As per the report, such measures by the SEC could also harm the DeFi ecosystem.
Analysts from Berenberg wrote that any actions against USDC by the country’s regulators would impact Coinbase’s revenue and share price in a significant manner. To support their argument, the analyst cited the fact that interest earned from USDC reserves accounted for 27% of Coinbase’s $199 million net revenue in the first quarter of 2023.
Berenberg’s report noted that Bitcoin could emerge as the ultimate beneficiary of this renewed crackdown campaign by the U.S. SEC. The securities regulator already indicated that the flagship cryptocurrency was a commodity rather than an unregistered security.
