The measures against stablecoin Binance USD (BUSD) and its issuer Paxos are specific to BUSD and cannot be applied to other stablecoins such as USD Coin (USDC), the investment firm said. Bernstein said in a Feb. 16 research report.
Some industry insiders have voiced concerns that cryptoassets are “actively separated from the banking system, such as stablecoin regulations and custody rules being strengthened.”
Bernstein notes that Circle, the issuer of USDC, said it had not received any notice from the U.S. Securities and Exchange Commission (SEC). A stablecoin is a type of cryptocurrency whose value is pegged to another asset such as the US dollar or gold.
Analysts Gautam Chhugani and Manus Agrawal said changes to the custody rules are currently being proposed and are seen as favorable to the banks, so they should be approved as banks. It says it’s a plus for custodians like Anchorage Digital, which has a custodian, and custodians operating under a state license.
“U.S. regulations appear to be tighter, but Hong Kong regulations are expected to be eased, which seems to be positive on the balance sheet. Until regulatory concerns in the U.S. subside, the cryptocurrency market will continue to lead in Asia. I wouldn’t be surprised if it does,” the report added.
Bernstein says there has been a big rally in cryptocurrencies this week, heading towards a $1.2 trillion market cap. He also said that while sharp price movements are affected by short covering, price increases “force existing crypto investors to increase their exposure.”
Over the past few months, bearish crypto investors have ignored the very healthy on-chain user behavior. According to the report, after the collapse of cryptocurrency exchange FTX, there was a surge in on-chain self-custody wallets wanting to use on-chain exchanges.
“The Layer 2 ecosystem is vibrant, with low transaction costs driving adoption and new apps being rolled out,” Bernstein said.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: Bernstein: SEC Tightening of Crypto Regulations Is not an Existential Threat