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SEC vs. Crypto: Two consecutive victories for the cryptocurrency ecosystem
Everyone knows about the SEC vs. Crypto conflict. For years, the SEC has been targeting various crypto organizations and their tokens. One such case, almost forgotten by the community, is SEC vs. Blockstack, a blockchain software development company. Sound familiar?
Well, you might be celebrating very soon! Read on.
A surprise victory for cryptocurrencies!
On July 12, the SEC concluded a three-year investigation into Hiro Systems, formerly known as Blockstack, deciding not to take any enforcement action. The announcement came just one day after the SEC concluded its investigation into stablecoin issuer Paxos, marking a significant victory for the cryptocurrency community as it is the second investigation the SEC has dropped in two consecutive days.
Hiro Systems raised $70 million in token sales between 2017 and 2019 and launched the Stacks mainnet in January 2021. Stacks is a layer 2 blockchain that powers Bitcoin, allowing developers to build decentralized applicationsDespite initial scrutiny from the SEC, Hiro said the network became fully decentralized in 2021 with the introduction of a new consensus mechanism called proof-of-transfer.
As a result, the company stopped treating Stacks tokens as securities, a decision that has been a source of contention with the SEC.
…And the cryptocurrency community exploded!
In a tweet on Friday, Muneeb Ali, creator of the Stacks protocol and current CEO of Trust Machines, confirmed that the SEC’s investigation was focused on the Stacks protocol, not just Hiro Systems.
This conclusion came as a relief to Hiro, which had been under regulatory pressure since September 2021. In a public statement, Hiro expressed optimism about this development, highlighting it as the best possible outcome given the current regulatory climate in the United States.
Impact on STX token
The news of the SEC dropping its investigation has had a positive impact on the Stacks (STX) token. Following the announcement, the price of STX jumped from $1.50 to over $1.70, reflecting a 5% increase in 24 hours. This boost indicates renewed investor confidence in the token and the broader Stacks ecosystem.
Source: TradingView
In other news…SEC Closes Paxos Investigation
As previously mentioned, the SEC’s investigation into Hiro Systems comes just a day after a similar finding was announced for Paxos. The investigation into the U.S.-based cryptocurrency firm was related to Binance USD (BUSD), a Binance-branded stablecoin issued by Paxos. Binance stopped supporting BUSD in August 2023 during the SEC investigation.
On Thursday, July 11, 2024, the SEC announced that it had concluded its investigation and would not take any enforcement action.
“We have concluded our investigation into Paxos Trust Company, LLC. Based on the information available to us at this time, we do not intend to recommend enforcement action by the Commission against Paxos,”
A new era in the making
These consecutive decisions by the SEC to abandon the investigations into Hiro Systems and Paxos are seen as significant victories for the cryptocurrency industry. They suggest a possible shift in the SEC’s approach to cryptocurrency regulation and enforcement. As the regulatory environment remains a crucial factor for the cryptocurrency market, these developments are likely to bolster investor sentiment and confidence in the future of the industry.
In the SEC vs. Crypto series, it seems like cryptocurrencies are gaining a clear advantage. To be honest, we couldn’t be happier!
Read also: SEC Loosens Cryptocurrency Reporting Rules for Banks, Brokers: What It Means