Critical Warning from Investment Bank Berenberg: ‘These Sectors Might Be SEC’s Next Target!’

investment bank Berenberg In a research report released Tuesday, stablecoins and decentralized finance (DeFi) U.S. Securities and Exchange Commission’s (SEC) He said it could become the next target in their crackdown on the crypto industry.

Stablecoins And DeFi Could Possibly Be SEC’s Next Targets

In the report, if USD Coin is targeted by regulators, coinbase The impact on income could be significant.

The investment bank is now the SEC’s two largest by market capitalization. Tether (USDT) and USD Coin (USDC), he said he could focus on making stablecoins and decentralized finance protocols compliant.

Earlier this month, the SEC sued crypto exchange Binance, its founder Changpeng “CZ” Zhao, and the operating company of Binance.US for alleged violations of federal securities laws. A day later, he sued rival exchange Coinbase (COIN) on similar charges.

Analysts led by Mark Palmer wrote that if the SEC wants to reduce the potential for unregulated DeFi protocols to serve as viable alternatives to regulated lenders and exchanges, it could “target stablecoins that serve as the lifeblood of decentralized finance.”

The report stated that the SEC could also weaken the DeFi ecosystem by targeting these stablecoins.

Berenberg says the impact on Coinbase’s revenues could be significant if USDC is targeted by US regulators, noting that in the first quarter of 2023 the exchange generated a net income of $199 million from interest income from USDC reserves.

The note stated that Bitcoin (BTC), which the SEC has approved as a commodity rather than a unregistered security, is likely to be the ultimate beneficiary of the crackdown.

The report noted that MicroStrategy (MSTR) shares are well positioned to outperform the company’s focus on acquiring and holding Bitcoin, as regulatory restraint will likely lead to a more Bitcoin-focused U.S. crypto industry than it has in recent years.

*Not investment advice.