The U.S. Securities and Exchange Commission (SEC) recently charged Kraken for offering its staking as a service program as an unregistered security.

This has prompted concerns among market analysts and experts about the possibility of a multipronged regulatory crackdown on the cryptocurrency industry.

In a recent research report, Bernstein stated that the allegations against Kraken are related to the exchange's specific program, Coindesk reported.

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The main question that arises from this development is whether staking itself is a security or if it was specific to the way in which Kraken offered and marketed the program.

The report suggests that the regulator may go after all staking programs, even those that provide specific disclosures around yield, and operate on a pass-through basis, both on returns and costs, which would have a significant impact on the cryptocurrency industry.

The report's authors, Gautam Chhugani and Manas Agrawal, also noted that the regulatory decision to prohibit all staking programs might not be straightforward, and some firms could choose to fight against the regulatory stance.

They also argued that the cryptocurrency industry still believes that the "absence of crypto-specific guidance or regulation will continue hurting even the good players who choose to offer transparent staking services, which by itself would not classify as a security, under the Howey test."

The Howey Test is a legal test that the US Supreme Court uses to determine whether a transaction qualifies as an investment contract.

If a transaction is deemed to be an investment contract, it is classified as a security.

There are mounting concerns in the market that more severe regulatory action aimed at "choking the fiat on-ramps to crypto" is in the pipeline, following the Fed's recent denial of Custodia Bank's application to join the Federal Reserve System.

Additionally, the SEC's decision to issue a Wells notice to Paxos on its issuance of stablecoin Binance USD (CRYPTO: BUSD) has raised questions about the regulatory future of other major stablecoins, such as USD Coin (CRYPTO: USDC) and Tether (CRYPTO: USDT).

According to Bernstein, the regulator sees Binance International as outside of its control and therefore prefers to "rein in BUSD, via Paxos."

This move towards greater regulatory scrutiny of the cryptocurrency industry may lead to a further shift towards decentralized finance (DeFi) apps built on-chain by anonymous teams, which will make it even more challenging for regulators to enforce "regulation by enforcement" without providing a transparent framework.

Despite these concerns, the report suggests that growth in the cryptocurrency industry will continue in more crypto-friendly jurisdictions such as Singapore and Dubai, and new potential centers such as Hong Kong and London.