Berenberg, in a Tuesday research report, said that stablecoins and Decentralized Finance (DeFi), are likely to be the next targets of the U.S. Securities and Exchange Commission’s (SEC) crackdown on crypto.

The investment bank stated that the SEC could now focus on bringing decentralized financial protocols and stablecoins into regulatory compliance, including the two biggest by market capital, tether(USDT)and USD Coin (USDC).

The SEC announced earlier this month that they were suing Binance, its founding Changpeng “CZ” Zhao, and the operating company of Binance.US over allegations of violations federal securities laws. The SEC sued , a rival exchange Coinbase on similar grounds a day later.

Analysts led by Mark Palmer have written that if the SEC wants to limit the possibility of unregulated DeFi protocols serving as viable alternatives to regulated exchanges and lenders, they can “target stablecoins which serve as the heartbeat of decentralized financing”.

The report stated that by targeting these stablecoins the SEC could also weaken DeFi’s ecosystem.

Berenberg states that if USDC were to be targeted by U.S. regulatory agencies, it could have a significant impact on Coinbase’s revenue. The exchange, Berenberg notes, generated $199,000,000 in net revenue in the first quarter of 2023 – or 27% of its total revenue – from interest earned on USDC reserve.

The note stated that Bitcoin (BTC), whose status as a commodity has been confirmed by the SEC and not as an unregistered investment, will likely be the ultimate winner of the crackdown.

The report said that MicroStrategy’s (MSTR), shares were well-positioned to outperform due to the company’s focus on holding and acquiring bitcoins. Furthermore, regulatory restrictions will likely lead to an industry in the U.S. dominated by bitcoin as opposed to recent years.

Read more: Crypto market regulatory uncertainty overshadows blockchain development: Bank of America

Sheldon Reback is the editor.