Lido (LDO) a token that manages tokenized ethereum staking (stETH) rose by more than 5% at some point today to its highest level since August.
That follows a surprising statement by Brian Armstrong, Coinbase’s co-founder, of rumors the US Securities and Exchanges Commission (SEC) wants to ban staking.
“We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen,” Armstrong said.
He did not further clarify just what sort of rumors and by who, but called crypto a “matter of national security” for US and stated any such move would drive innovation away.
A ban of staking is a bit like banning bitcoin miners and would effectively declare ethereum illegal.
SEC however has no such authority. Only Congress can ban staking or indeed eth within US. SEC can however require registration, which would allow them to decide whether to give permission or not for a certain activity, but that’s only for centralized entities like Coinbase.
As a decentralized smart contracts based framework, Lido wouldn’t easily fall within SEC’s jurisdiction, with any SEC move to restrict staking so potentially increasing demand for LDO.
Interestingly Armstrong specifies SEC is looking to restrict only retail staking, that basically being the public, while presumably continuing to allow legal staking by the circa top 5% who earn $200,000 or more a year, the rich basically.
That’s such a blatant discrimination against the middle class, let alone the poor, and so in the open that one has to be astonished at this explicit one law for the rich, and another for the rest.
But in crypto all are equal before the law of code, so in some ways there would be plenty who cheer such move, though sad it would still be for the politically inactive lazy Americans that continue to allow such open discrimination.
Chiefly, Europeans would be the biggest gainers of bankers controlled US willingly taking themselves out of competition.
Both UK, France and Germany have a very accommodative framework for cryptos, with Germany standing out as the keeper of the nodes.
They in fact even surpassed US in the number of bitcoin nodes, probably because Germany has an underground hacking scene of untold proportions.
There’s likely zero chance Europe would in any way follow US in such a move, and so Europeans would have a reason to cheer for getting a higher yield if America dumbs.
Americans themself however are very unlikely to in any way follow any diktat by SEC. They’ll twist and not-shout, but they’ll basically use everything except Coinbase.
Such decision by SEC however would be highly political and it may reflect on the US president Joe Biden himself as he is ultimately in charge of SEC because he appointed and appoints the SEC chair, who happens to be from Goldman Sachs.
Biden for now is in a sound position as it may well be Americans think he deserves a second term considering the fact he has shown significant wit on foreign policy, but extreme hostility from SEC may start changing calculations that may well reverberate to the wider public.
Ron DeSantis in particular, but also other Republicans, have a delicate continuous decision to make considering the Trump problem as they may well see it.
For now, it is probably safer for them to wait and see Trump get defeated for a second time after the atrocious mid-terms, and then have a clear run in 2028, in part perhaps because independents might not think there’s any real need to take on Biden, and therefore give these candidates the significant support in the face of Trump.
But that can change, especially as most think on the Ukrainian matter there is consensus, and on the economy we need to start thinking on how to get it working, especially with an upcoming potentially deep recession.
So SEC is playing with fire, but the failure here is more that of Congress. Unfortunately we have seen the real theory of checks and balances validated since 2018 where the US judiciary is concerned.
In theory, the executive (government), the legislative (Congress) and the judiciary are all meant to be fiercely independent. In practice however in UK the executive and the legislative are effectively merged, while the judiciary is fiercely independent.
In US, the executive and the judiciary are effectively merged, because the president appoints judges, and Congress is fiercely independent.
So the US judiciary has not been helpful to this space to the point we can even call them SEC’s lapdogs.
That’s a terrible state for the United States, but Congress has many crypto friendly representatives. Unfortunately though Congress is a mess and has a full plate.
While UK therefore is looking at passing a crypto friendly law, Congress is letting unelected Goldman Sachs men make laws from the backdoor.
The wider global strategy for the crypto industry therefore should be to make Europe its base because although US is not lost, not anywhere near it, first old bankers have too much sway and second changing US from a global perspective is a lot more difficult than just going to a friendly jurisdiction.
That’s different for Americans who have to live with the consequences, and therefore need to get a lot more politically involved, but the crypto industry is far bigger than US and this space can’t wait for anybody.
So go ahead SEC, make the people angry. Let’s see how much they’ll take of your open discrimination.
