Three things happened this month.

1. US SEC cracked down on staking-as-a-service.

2. US SEC cracked down on BUSD.

3. The Indian Finance Minister gave us some insight into WHY they want TDS on crypto.

What does this mean to you? Let’s deep-dive into key issues of the above.

Staking as a Service (the new SaaS? :P)

Staking as a service is required for blockchains to function and grow. While the US SEC is adamant on not letting crypto related products to mass retail clients, the moot point is about how ignorant governments really are.

Governments (including India) agree blockchain technology is the way-forward but conveniently ignore that many top blockchains that exist today and will exist in future are built as Proof-of-Stake (PoS). Unless a cryptocurrency (or crypto asset as our FM calls it) is staked for validation, transactions will not be processed on them.

These moves will not affect global crypto space for the long term but — decentralized validators are going proliferate. And US SEC will not be able to stop them.

This is why blockchain exists — to be the proponent of decentralization.

Stablecoins have become the backbone of crypto investors — governments want it broken

Stablecoins are essentially used to park investments that would otherwise be in the traditional finance world. USD-denominated stablecoins currently have a market cap of $135 billion — more than 13% of entire crypto ecosystem. Naturally, governments are miffed — a product that is an extension of their own sovereign currency is being used to grow cryptocurrencies.

We anticipate more stablecoins to be affected leading to short-term FUD (fear, uncertainty and doubt) in the market. Of course, CBDCs will be promoted as the alternative by the governments but tracking (as our FM explained) will be a key issue for many investors.

Given the above context, we enlist some takeaways for the investor in you:

Use/Invest in decentralized platforms

Decentralized platforms will grow if the current regulatory uncertainty continues to play out and investing in them can become a good hedge in case of any radical move. As soon as the US SEC Kraken settlement news came about, investors started migrating assets to Lido, a decentralized Ethereum staking platform, on which the SEC has no oversight on.

Ability to use DEXs are also a key learning required by investors to identify trends in the market before they become trendy.

Minimize your stablecoin assets

This is obvious — a stablecoin is loved by all as long as it remain stable. We saw what happened with Terra (LUNA) when a stablecoin lost its peg. While the BUSD issue seems to have not had much of an impact in the market, any future issue with Tether (USDT) or Circle’s USDC will have a strong reaction globally.

Majority on Bitcoin

We say this often — Bitcoin is classified as a commodity in the US, the only cryptocurrency to be explicitly called out as such. If the commodity v/s security debate eventuates, Bitcoin will be the safety net you would want in the short term. Keep your portfolio BTC heavy in 2023.