SEC sues Binance and Coinbase: is Web3 Gaming under threat?
The Securities and Exchange Commission (SEC) has tightened regulation over cryptocurrencies, with Web3 gaming being a prominent target.
Things aren’t looking good for Crypto in the United States
Binance and Coinbase, two of the world’s largest cryptocurrency exchanges, have recently been targeted with a lawsuit from the SEC. In both cases, the legal action targets three specific gaming and metaverse tokens that the SEC contends are securities: Axie Infinity (AXS), The Sandbox Game (SAND), and Decentraland (MANA).
This sudden regulatory shift has provoked a response from the Web3 gaming community, as this may be the start of a broader crackdown. Many more gaming and metaverse tokens could find themselves under the SEC’s microscope.
Can play-to-own replace play-to-earn?
Some in the crypto community are suggesting that Web3 gaming could still flourish without crypto tokens, pointing to tradable NFTs as distinct offerings, with the recent digital asset ventures between EA and Nike being a great example.
The play-to-own gaming model also defends the theory of only incorporating NFTs into games and excluding actual crypto tokens. This model offers a financial incentive to players while keeping things simple, meaning that tokenomics and other complex in-game economy decisions are left outside the table.
Blockchain gaming and metaverse projects who still decide to go the play-to-earn route, creating in-game utility tokens, will probably need to face regulation in the not-so-distant future.
The Sandbox, Decentraland, and Axie Infinity banned
The SEC’s activities will probably stifle cryptocurrency growth in the United States. Both Axie Infinity, The Sandbox, and Decentraland are now temporarily banned from operating on US soil until further regulatory clarity is provided.
We will have to wait and see the impact of SEC’s persecution in the web3 gaming industry. Additionally, it will be interesting to see how US investors will react to the ban. Already we are witnessing increased activity and volume in DeFi protocols like Uniswap and Curve.
