DeFi and offshore trading increase in reaction to regulation: Report | coindesk JAPAN | Coindesk Japan

Cryptocurrencies (virtual The currency market fell, research firm Bernstein said in a research report on Monday.

The charges against Kraken relate to a specific program on the exchange, he said. The main question is whether staking itself is a security or is it just a service provided by Kraken, the report adds.

Analysts Gautam Chhugani and Manus Agrawal said: “The question is whether regulators will pursue all staking programs, even if specific information on yields is not available. , allowing users to actively stake and unstake crypto assets, and may be regulated even if they operate on a pass-through basis in terms of both return and cost.”

Bernstein said banning all staking programs may not be easy and some companies will fight against regulation. The cryptocurrency broker still said, “There is no crypto-specific guidance or regulation. This will continue to hurt even good players. It does not classify as a security under the Howey test.”

The Howey test is prescribed by Supreme Court precedent to determine whether a transaction constitutes an investment contract. Transactions that are considered investment contracts are classified as securities.

Stablecoin Binance USD (BUSD) against Paxos again after US Federal Reserve (Fed) rejected cryptocurrency bank Custodia’s application to join the Federal Reserve After announcing an investigation into its issuance, it reportedly raised concerns that tougher regulatory measures were being prepared to “block the way for cryptocurrencies.”

Bernstein asks if this portends action against other major stablecoins such as USD Coin (USDC) and Tether (USDT), or if it is just BUSD. Bernstein said regulators may be thinking of “regulating BUSD via Paxos” because they see Binance International as out of their jurisdiction.

If such regulation goes too far, it will result in “further movement towards decentralized finance (DeFi) apps built on-chain by anonymous teams,” the report said, without regulators providing a transparent framework. , said it will find it difficult to impose such regulation on thousands of DeFi operators.

The report adds that growth will continue in crypto-friendly regions such as Singapore and Dubai, as well as newer hubs such as Hong Kong and London.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Image: Shutterstock
｜Original: Bernstein Says Regulatory Backlash Will Lead to More DeFi and Offshore Crypto