Tag: crypto regulation

Crypto Goes to Washington

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By Molly Ball. October 3, 2022. (TIME).

To the untrained ear, Hester Peirce’s comment sounded anodyne, but everyone in the audience knew what she was doing: selling out her boss. “It’s fairly clear,” the U.S. Securities and Exchange commissioner said from the Washington conference stage, “that we’ve been taking an enforcement-first approach in an area where we should be taking a regulatory-first approach. I think we’ve got the balance wrong right now.”

Peirce was speaking at the D.C. Blockchain Summit in May, to an audience of the cryptocurrency faithful. Outside the auditorium, geeks, lobbyists and investors mingled in a cavernous converted warehouse. “Trust is non-fungible,” read a banner for the accounting firm Deloitte, hung from a balcony where the company was sponsoring a lavish spread of snacks. Most attendees were done up in D.C. drag—conservative suits and dresses, more boardroom than Burning Man.

Read the full article.

Calendar of former official provides insight into SEC regulatory intent, Satoshi stumble

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By Eleanor Terrett , Charlie Gasparino. September 29, 2022. (Fox Business)

The meeting schedule of a former official of the Securities and Exchange Commission provides a detailed roadmap into the agency’s thinking as it began to weigh how best to reign in the burgeoning digital-asset business, but it could also buttress the growing sentiment that Wall Street’s top cop unfairly targeted a leading crypto outfit in its crackdown.

The itinerary of former SEC Director of Corporation Finance William Hinman hasn’t been reported before, and it shows the SEC casting a wide net in seeking advice from key crypto officials, including the person they thought was crypto’s founding father, the elusive Satoshi Nakamoto, FOX Business has learned.

From 2017 through 2020, Hinman was at the center of the agency’s crypto regulation efforts under former SEC chair and Trump appointee Jay Clayton. During those years, the commission began to navigate its regulatory authority over the business, which was growing exponentially and posing problems for government officials worried the anonymous nature of the blockchain would finance illicit activities. 

Read the full article here.

Gensler Says Crypto Treated Just Like The Market; 200 SEC Lawsuits Say Otherwise.

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By Roslyn Layton. August 28, 2022. (Forbes)

By law, regulatory agencies should only regulate that which they have authority to regulate. Deference is allowed to some degree, should the agency’s justification be reasonable and ideally evidenced. Notably Congress promulgated the Administrative Procedure Act (APA) in 1946 to guide agency process to publish notice of rulemaking in the Federal Register and provide opportunity for public comment. This standard process seems to have never have happened for crypto assets at the Security and Exchange Commission (SEC). The SEC website does not include an entry for regulation for crypto, either completed or proposed.

In May 2022, the SEC beefed up its Cyber Unit to the Crypto Assets and Cyber Unit, budgeted for 50 dedicated officers and more than doubling the department’s headcount. The unit counts some 200 lawsuits since its founding in 2017, with fraud being the subject in at least 80 investigations. The agency also reports restoration of $2 billion in monetary relief.

No one denies that crypto assets, like any asset or technology, can be used fraudulently. The very features that make crypto assets desirable can also be exploited, including but not limited to ease of startup and use, anonymization, and lack of intermediaries. Plus, some users can undoubtedly be greedy and gullible. It does not help that some have disguised crypto scams as legitimate services.

Read the full article here.

Gary Gensler’s gross SEC overreach

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By John Deaton. August 21, 2022. (FOX Business).

The Supreme Court may have recently struck down overreach by the Environmental Protection Agency, but at the Securities and Exchange Commission, chairman Gary Gensler remains undeterred in expanding the agency’s power beyond its constitutional boundaries.

For proof, you need no better example than his all-out assault on the cryptocurrency space.

It doesn’t take a constitutional law expert to understand that the SEC has limited jurisdiction over the crypto industry; barring congressional action, front line regulation of digital assets belongs with the Commodity Futures Trading Commission – the main regulator of investments that are not deemed traditional securities.

Read the full article here.

1 big thing: Regulation by enforcement

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By Brady Dale and Crystal Kim. July 25, 2022. (Axios).

The Department of Justice yesterday announced the arrests of three people in relation to insider trading on privileged information that belonged to Coinbase, the leading crypto exchange in the U.S. (No doubt, as a reader of this newsletter, you know this already.)

  • But also: The U.S. Securities and Exchange Commission brought a civil suit against the three for insider trading of unregistered securities.
  • There’s lots of subtext, Brady writes.

Driving the news: Nine cryptocurrencies were named as securities in the SEC’s case, out of 25 that Justice and the SEC said were traded using privileged information.

  • More on each in the next section of this newsletter.

Why it matters: What is or isn’t a security (as opposed to a commodity) has been the central question for cryptocurrency companies aiming to operate in compliance with U.S. law and regulation.

  • Securities have onerous rules around who can own and trade them such that they would be of little use in a startup’s product.
  • Blockchain startups would prefer a way to go to market that didn’t amount to saying “YOLO,” launching and waiting to see if they get sued.

Read the full article here.

Politicians Are Waking Up To The Fact There Are Votes In Crypto

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By Eva Szalay. April 14, 2022. (Financial Times)

Jane Hume, Australia’s minister for financial services, argued in a speech last month that the rapidly growing crypto industry had the potential to create hundreds of thousands of new jobs and boost Australia’s economic growth by more than 50 per cent. But if the country voted for the opposition Labor party at the May 21 national election, she said, none of this would happen. Australia would lose out because the opposition would ban digital assets “out of timidity [and] an obsession with removing all risks and protecting consumers from themselves”. The contrast, she said, could not be more stark with the current government, which wanted Australians to take part in the digital gold rush.

“There is a political reality here. I would love support of the crypto industry to be a bipartisan issue, but it simply isn’t,” she told her audience.

This is the sound of politicians waking up to the voter potential of crypto enthusiasts. Bitcoin and its peers have surged in popularity since the start of the pandemic and millions of people around the world now own digital assets, which are worth more than $2tn in total.

Read the full article here.

Ripple’s Historic Showdown on SEC Cryptocurrency Overreach Heats Up

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By J. Carl Cecere. March 2, 2022. (Bloomberg Law)

This may be the year that the SEC’s enforcement authority over cryptocurrencies is settled in court, and the legal battle between the SEC and Ripple Labs is underway in the Southern District of New York, says attorney J. Carl Cecere. The SEC’s action is misguided, but the suit will test whether the commission has authority to regulate crypto as securities, which could determine the technology’s continued growth in the U.S.

Cryptocurrencies had a breakout year in 2021, which saw total cryptocurrency market cap rise above $3 trillion for the first time. And while crypto values declined since then, little suggests this is anything more than one of the temporary hiccups that have been happening since 2011 during cryptocurrency’s remarkable decade-long rise.

Read the full article here

The Meaning Of “We” At The SEC

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By Roslyn Layton. January 31, 2022. (Forbes)

News broke Thursday that President Biden will issue a sweeping executive order tasking his Administration to develop a regulatory framework for digital assets as a matter of “national security.” This should have been welcome; cryptocurrency innovators have begged for a clear regulatory framework for the better part of a decade.

But the news sent a chill through the crypto space. After years of abuse of crypto investors and innovators, the credibility of the Securities and Exchange Commission (SEC) is in tatters.

Read the full article here

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