A regulatory crackdown on crypto appears to be on the horizon as the SEC wades into the waters of crypto, and tries to flex their muscles in their pursuit of enhancing investor protections.

However, there are many in the industry who are concerned that such regulations have the potential to be far too overreaching, and could possibly be counterproductive in the long term.

The SEC cracks down on ETH staking providers

The SEC has recently decided to crack down on ETH staking providers, and this has forced parties such as Kraken to cease operations for US customers.

Some have hailed this as an added incentive for for self custody and decentralisation of staking networks. Moreover, there is a very real risk that centralised staking providers could lose a lot of their users’ funds if they are slashed being their validators go offline.

Whilst some have hailed the SEC’s clarity on this as a huge win for the industry, there are a lot of Ethereans who aren’t so concerned about the merits of decentralisation that view this as a drawback, since it means that they will have to become a little more technically savvy to earn yield on their ETH than they would have done otherwise.

Is regulation going in the right direction?

It is only possible with hindsight to judge the success of such regulations, but the argument between open and unregulated free markets are

Certainly, it is possible that the US’ heavy handed approach may make the pace of innovation somewhat slower, but it is unlikely to completely destroy innovation – the crypto space will persist regardless of what the US regulators choose to do to protect their own interests.

Investors ought not be worried about a regulatory crackdown; rather, they should welcome the heightened degree of clarity.

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