On May 24, 2024, veteran trader Peter Brandt, known for his accurate prediction of the 2018 Bitcoin crash, warned that the biggest disaster to hit the cryptocurrency industry will involve staking.
Brandt’s cautionary remarks come in the wake of the U.S. SEC’s approval of Ethereum spot ETF documents, which notably excluded staking.
As staking mechanisms are crucial to many cryptocurrencies, including Ethereum and Solana, monitoring future U.S. policies on staking is essential.
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“The Biggest Disaster Will Hit Staking,” Warns Peter Brandt
Peter Brandt, renowned for accurately predicting the 2018 Bitcoin crash, issued a warning on May 24, 2024, stating, “The biggest disaster to hit the cryptocurrency industry will involve staking.”
He prefaced his remarks by acknowledging that this view might not be well received by enthusiasts of Ethereum (ETH) and Solana (SOL). Brandt cautioned that those involved in cryptocurrency staking could face significant financial losses in the future.
Prediction of the End of Staking Due to Increased Regulations
Brandt’s prediction is based on the possibility that central banks and regulatory authorities will strengthen regulations around staking in the future.
He foresees that as government and central bank interventions intensify, managing assets through staking will become increasingly difficult, potentially leading to the eventual demise of staking.
Does the U.S. Government Oppose Cryptocurrency Staking?
This warning came after the U.S. Securities and Exchange Commission (SEC) approved the 19b-4 application documents for an Ethereum spot ETF.
The timing suggests that Brandt’s comments consider the SEC’s actions. The SEC approved the Ethereum spot ETF documents but had previously demanded that the filing companies update their submission documents, which notably included the removal of any mention of staking and added a clear statement that the fund’s ETH cannot be staked.
The SEC has consistently maintained a stringent stance on cryptocurrency staking. In February 2023, the SEC pointed out that Kraken’s staking services violated securities laws, requiring the involved businesses to register.
Even if spot ETFs are approved, staking could become a strictly regulated activity, preventing unregistered staking services. This would potentially impact many cryptocurrencies that utilize Proof-of-Stake (PoS) mechanisms.
Given that staking mechanisms are integral to many cryptocurrencies, including Ethereum and Solana, it is crucial to keep an eye on future U.S. government policies concerning staking.
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