Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
So far, US-based court cases have littered this cycle, and the number of cases continues to grow. Previously, we saw Greyscale’s success in court enable the Bitcoin spot ETFs and fuel crypto’s move to new all-time highs. Currently, there is an ongoing feud between the SEC and exchanges Coinbase and Kraken. Recently, the regulator also picked a new nemesis in DeFi, suing decentralised exchange Uniswap.
Now, motivated to shut down DeFi, the US government has targeted wallets. Last week, the US Department of Justice indicted Samourai Wallet for money laundering charges. Following this, Wasabi Wallet and Phoenix Wallet have also now stopped offering their services to US-based consumers. Last Thursday, the FBI sent out a warning to US crypto users to avoid using “money transmitting services that are not registered as Money Services Businesses (MSB).” This pointed to all DeFi applications. It seems the message is now very clear from the US government – DeFi is the enemy.
However, DeFi is fighting back. Last week, Ethereum developer, Consensys, filed a lawsuit against the SEC citing the regulator’s overreach. The developer suggested the SEC’s actions are “jeopardising the future of countless new innovations, products and U.S. jobs” and risk destroying the ecosystem entirely. This move by Consensys is a preemptive strike after they received a Wells notice from the SEC earlier this month. The SEC sends a Wells notice as a letter to a potential regulatory victim before filing any charges. This one claimed Consensys’s decentralised wallet, MetaMask, is operating as an unlicensed broker-dealer. The SEC argues the wallet’s staking and swap services are the reasons for their claims.
Consensys founder and Ethereum co-founder, Joe Lubin, heavily criticised the SEC for trying “to arbitrarily expand its jurisdiction” by deeming Ethereum a security. The developer aims to combat the SEC’s tyranny by confirming Ethereum’s definition as a commodity, with the hopes of a federal court affirming this. Consensys winning this ruling would protect the Ethereum ecosystem from the SEC as it would not be within its jurisdiction. The suit will likely take several years to reach a final ruling. However, it places further pressure on regulators to affirm Ethereum’s status as a commodity and the SEC to enable the Ethereum spot ETFs.
It’s becoming increasingly apparent crypto is in the “then they fight you stage” of its battle for adoption. Let’s hope it is followed by “then you win.”