Cathie Wood Foresees a Bright Future for Decentralization Amid US Crypto Crackdown

The crypto space has always been known for its decentralized nature, a feature that has made it attractive to investors, entrepreneurs, and traders alike. However, in recent times, financial regulators in the US have stepped up their scrutiny of the crypto sector, generating a debate among stakeholders in the space.

The latest development was the enforcement action by the US Securities and Exchange Commission (SEC) against Kraken, a popular crypto exchange. It resulted in the termination of its staking program for US residents and a $30 million fine.

Crypto and SEC Crackdown on Staking

The CEO and founder of Ark Invest, Cathie Wood, believes that the recent regulatory pressures in the US would be good for decentralization. But the new laws could affect the country’s competitiveness in the crypto space. She maintains the increased regulatory scrutiny would drive residents to use “offshore exchanges or self-custody,” which is good for decentralization.

Still, Cathie Wood noted:

“US exchanges lose to foreign exchanges, not so good for US competitiveness in the crypto revolution.”

Ark Invest’s director of research, Frank Downing, likened the SEC action against Kraken to China’s ban on Bitcoin mining. He stated that the enforcement could have the same impact on proof-of-stake networks.

Many members of the crypto community echoed this view. Some believe that regulators must strike a balance between protecting consumers and supporting innovation.

However, not everyone agrees with this view. Crypto investor Nic Carter believes that crypto protocols would benefit from the situation, as exchanges becoming dominant nodes is the main failure of proof-of-stake.

While this may sound great in theory, an adjunct professor at Columbia Business School, Omid Malekan, has a different view. In his opinion, Carter’s view would only hold in a better world, but he also notes:

“It’s only a matter of time until regulators go after liquid staking protocols. Eventually, only whales and institutions (accredited investors) will be able to stake legally, which is even worse for decentralization.”

Others in the crypto space share the concerns raised by Malekan. Market participants note that the ban would force people to use centralized staking pools, and self-staking is even scarier than self-custody, and not everyone has the means.

In a statement, the SEC Chair, Gary Gensler, emphasized the need for crypto intermediaries to provide the proper disclosures and safeguards required by securities laws when offering investment contracts in exchange for investors’ tokens.

“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws,” said Gensler.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

Bookmark (0)

Related Posts

Ex-Coinbase CTO Claims US Dollar is No Longer Too Big to Fail, Touts Bitcoin

Coinbase former CTO Balaji Srinivasan said the US Dollar (USD) is not too big to fail.
Srinivasan expects Bitcoin (BTC) to replace it as the global reserve currency.
The US Dollar Index is down 8.9% in the last 6 months and has lost 1.34% of its value in the past year.

Bookmark (0)

Federal Reserve Slams Custodia Bank, Says it Endangers Crypto Industry and Itself

The Federal Reserves has detailed why it rejected Custodia’s bank application.
Custodia countered that its model prevents the kind of bank run that recently bedeviled the banking industry.
The bank further claimed the Feds statement showed its general bias against digital assets.

Bookmark (0)

Decentralized digital identities and credentials are key to mass Web3 adoption

As the world of Web3 emerges, decentralized digital identities present a promising alternative to the current.

Bookmark (0)

The Cayman Islands: A Safe Haven for Blockchain Companies?

Cayman Islands vs. Bahamas: How the FTX scandal impacted both jurisdictions.
The regulatory landscape and tax benefits of the Cayman Islands.
Importance of transparency and reputation in offshore financial services.

Bookmark (0)

What is fiscal policy, and why does it matter?

Fiscal policy shapes economies through government spending, taxation and borrowing.

Bookmark (0)

Litecoin (LTC) Retains Whale Interest Despite Recent Price Retracement, but Can It Reclaim $100?

Litecoin cleared $100 for the first time in 10 months before its recent correction.
Savvy whales have bought $280 million worth of tokens in the past month.
LTC average transaction size increased sevenfold in March.

Bookmark (0)

Leave a Reply

Your email address will not be published. Required fields are marked *