JPMorgan’s Report Highlights SEC’s Prominence in Crypto Regulation Among US Regulators

In a recent research paper, JPMorgan said that the Securities and Exchange Commission (SEC) is leading efforts to regulate the world of digital assets. The SEC’s actions indicate that, with the exception of bitcoin, it considers the majority of cryptocurrencies to be securities that need to be governed by current securities rules. This indicates that companies that provide staking services may need to register with the SEC as a securities platform.

The SEC will likely take additional enforcement action against stablecoin issuers, custody, the protection of investors’ digital assets, and the unbundling of broker/trader/lending/clearing/custody activities, according to JPMorgan.

Additionally, it anticipates that all significant crypto companies would be required to disclose, report, and audit reserves, assets, and liabilities on a regular basis. Over time, the crypto ecosystem may begin to converge with the established financial system as a result of these restrictions.

The report suggests that staking services should shift more towards direct staking for institutional investors and decentralized alternatives for retail investors, known as DeFi. The report also predicts that Ether (ETH) may experience additional selling pressure following the forthcoming Shanghai upgrade, as Kraken, a cryptocurrency exchange, has 1.2 million ETH staked on the network, a significant amount of which is owned by its U.S. clients. Adding the 1 million ether from staking rewards that could be withdrawn immediately after the upgrade, the downside risk to Ether becomes even more significant.