February 1, 2023

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KYC to stake your ETH? It’s probably coming to the US

2 min read
KYC to stake your ETH? It's probably coming to the US

Over the last few years, the cryptocurrency industry has been a primary target for regulators in the United States. 

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Furthermore, the SEC’s statement that all Ether falls under U.S. jurisdiction is, to put it mildly, untrue. (If it were, it would be convenient for the agency.) The SEC’s logic here is that the Ethereum blockchain’s node network is more densely clustered in the U.S. than anywhere else, so all ETH transactions worldwide could be viewed as if they were of American origin.

But, according to Etherscan, the U.S. is presently home to a little more than 46% of all Ethereum nodes — not even a simple majority. Based on the SEC’s statement, one could argue that only the European Union should regulate Bitcoin (BTC). Of course, the latter argument is just as absurd as the agency’s claim.

I believe these statements result from the SEC lawyers’ very rough understanding of cryptocurrencies. But, we cannot rule out the previous tendencies of the SEC to regulate through enforcement.

Regulatory compliance will come with a big sacrifice for Ethereum

U.S. regulators are increasingly expressing concerns about the huge sums circulating in DeFi without any control. As the Ethereum blockchain serves as the primary chain for most tokens, its recent shift from PoW to PoS may be used as an argument for their attempts to influence (at least a part of) the decentralized market.

If the SEC and other U.S. regulators succeed in the latter, it could restructure DeFi such that another evolutionary blockchain becomes the leader. But, what is certain in the case of full Ethereum regulation is that traditional banks and investment funds will boost ETH’s usage as an asset for investments and payment means.

Considering all this, providing any timeline is challenging as such statements from the SEC are quite recent and raw at the moment. Let’s wait and see what further actions U.S. regulators will take in the near future and whether they will impact the KYC and AML procedures of the crypto space as well.

Slava Demchuk is the CEO and co-founder of AMLBot, a company that monitors a global database of cryptocurrency addresses to assist businesses and private users with compliance requirements.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.