“The SEC Lost Big”: Bill Morgan Breaks Down the Sweeping Defeat in Ripple Case
The U.S. Securities and Exchange Commission (SEC) recently lost a motion for an interlocutory appeal in its case against Ripple Labs, the company behind the cryptocurrency XRP. District Judge Analisa Torres denied the SEC’s motion, leading to a considerable stir in the legal and crypto communities.
Australian lawyer Bill Morgan took to Twitter to dissect the court’s decision, emphasizing the comprehensive defeat suffered by the SEC. This article delves into Morgan’s key insights and explores the implications for Ripple and the broader crypto market.
According to him, the SEC failed to meet all three critical elements needed for an interlocutory appeal to proceed, and the court found the following.
- There was no controlling question of law;
- There was no substantial ground for differences of opinion;
- An interlocutory appeal would not materially advance the ultimate termination of the litigation,”
His remarks underscore the thoroughness of the SEC’s defeat, branding it a “complete loss” on all fronts. Morgan further pointed out that the court’s ruling did not conflict with decisions in similar cases, such as LBRY and Terra Labs, thereby quashing any hopes for the SEC to find a silver lining in comparative law.
One of the pivotal elements in crypto-legal battles is the Howey Test, a set of criteria used to determine if a financial instrument qualifies as a security. Judge Torres ruled that the Howey Test was irrelevant to this case, thereby striking down one of the SEC’s main arguments. Morgan concurred, reinforcing that there was no “substantial ground for differences of opinion” concerning the test’s applicability to Ripple’s XRP.
Although this is a setback for the SEC, the battle is far from over. The main trial is set for April 2024, and it promises to resolve lingering questions about the status of XRP as a potential security. As Morgan speculated, this could be an opportunity for Judge Torres to clarify her reasoning further, potentially making the case “appeal-proof.”
Congressman Proposes Bill for Centralized Records of Off-Chain Crypto Transactions
There’s a growing concern about off-chain transactions in the crypto industry. These are trades that occur away from the public eye and remain unrecorded on the publicly accessible blockchain. Recognizing the potential risks involved in these shadow trades, U.S. Representative Don Beyer from Virginia has spearheaded a move towards greater accountability.
The Rise of Off-Chain Transactions
It is a well-known fact that the crypto market thrives on the promise of transparency. The essence of blockchain technology, which forms the backbone of the industry, ensures that transactions are open for public verification. Yet, as large-scale trading platforms came into play, optimizing transaction speeds and reducing costs became a priority.
This push led to a proliferation of off-chain trades, which escape public scrutiny. While many of these platforms maintain their private records, the quality and accuracy of these ledgers can be inconsistent at best. Such gaps can potentially open doors for disputes and even fraudulent activities.
Bringing Accountability to the Shadows
Representative Beyer’s newly proposed Off-Chain Digital Commodity Transaction Reporting Act seeks to cast light on these shadow transactions. The aim is clear: safeguard those engaged in the digital asset market. If passed, trading platforms would need to report all off-chain trades to a repository overseen by the Commodity Futures Trading Commission (CFTC) within a day.
By ensuring that all off-chain digital asset trades are reported promptly, the legislation hopes to mirror the kind of oversight present in securities and swap transactions. In essence, this move is less about stifling the market and more about building a secure environment for both investors and consumers, according to him.
In his words:
“Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation. This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.”
Interlocutory Appeal in Spotlight: Bill Morgan Sheds Light on What’s at Stake in SEC vs. Binance
In the latest twist to the ongoing SEC vs. Binance case, Australian lawyer Bill Morgan took to Twitter, highlighting the importance of the SEC’s recent move to certify an interlocutory appeal.
Responding to public comments on social media, Bill Morgan clarified his view that the SEC may use the interlocutory appeal to “bolster its argument that the issue she [Judge Torres] decided is arising in other matters.” He suggests that the SEC’s motive behind the interlocutory appeal is to emphasize that Judge Torres’ rulings have broader implications that could significantly impact other cases.
Why the Interlocutory Appeal Matters Even More
Morgan’s comments gain added weight when considering Judge Torres’ earlier ruling in the SEC vs. Ripple Labs case. Torres held that ‘blind bid/ask transactions’ do not fall under the definition of “investment contracts.” If Torres’ interpretation carries over into the Binance case, the SEC’s interlocutory appeal would take on even greater significance. This is because it would challenge the Binance ruling and potentially the foundational logic behind the SEC’s approach to crypto regulation.
Also Read – Here’s How SEC vs. Binance Case Could Set New Precedents for Crypto Regulation
Ripple’s Firm Stance Against SEC’s Appeal
Simultaneously, Ripple Labs has strongly opposed the SEC’s latest attempt to certify an interlocutory appeal in its own ongoing legal battle. This dual resistance from both Ripple and Binance adds an intriguing dynamic to how interlocutory appeals could shape individual cases and set new precedents for cryptocurrency regulation.
The stakes of the interlocutory appeal are high. Should Judge Torres grant it, the ripple effect could be far-reaching. Morgan’s reply hints that Torres’ decision may be a key consideration for the SEC, even as they contend with differing opinions from trial court judges across various circuits.
The Crypto Community Waits
Bill Morgan’s insights into the SEC’s push for an interlocutory appeal have spotlighted an often-overlooked but critical aspect of crypto litigation. As both the Binance and Ripple cases progress, the focus is shifting toward how such appeals could influence individual cases and the broader regulatory framework governing cryptocurrencies.
Ripple Case Outcome: Attorney Bill Morgan Counters SEC Chair Gensler’s Hopes
In a recent statement, attorney John Deaton expressed his strong disagreement with remarks made by Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), regarding the cryptocurrency space. Deaton’s response comes after Gensler characterized the crypto industry as rife with “hucksters” and non-compliance.
Gensler’s comments, made during a public address, drew criticism from Deaton, who urged observers to pay close attention to the SEC Chair’s response to a specific question.
Deaton said that when Gensler mentioned “Any Court,” he referred to the highest judicial authority in the United States—the Supreme Court. Deaton’s interpretation suggests that Gensler may be insinuating that the SEC believes it is above the law.
He added, “Let me introduce everyone to a real-life example of a megalomaniac: @GaryGensler.”
Deaton’s remarks shed light on a growing sentiment within the cryptocurrency community, where concerns about regulatory overreach have increased. Additionally, Attorney Bill Morgan has chimed in on Gensler’s remarks.
Morgan shared his thoughts, saying that Gensler’s words appeared to show a strong desire for the SEC to win the ongoing Ripple case. However, Morgan pointed out that Gensler’s wish didn’t come true because Ripple achieved a positive outcome in a significant part of the case.
He wrote, “He means he wishes the SEC won the part of the Ripple case that matters but they didn’t and he hopes the part Ripple won gets reversed on appeal sooner than later so the SEC can have its own (im)Proper Party in NY.”
Morgan hoped that any favorable ruling for Ripple wouldn’t go uncontested. He suggested that the SEC might try to overturn the decision through an appeal process. In Morgan’s opinion, this would allow the SEC to advance its own interests, particularly in what he called an “improper party” context in New York.
US Lawmaker’s Bill Against Federal Reserve Issuing CBDC Gets Green Light
The push for a digital version of the US dollar met resistance recently as a pivotal bill advanced one step closer to a final decision. The House Financial Services Committee greenlit a proposal aimed at halting the Federal Reserve’s potential venture into launching a US central bank digital currency (CBDC).
The Digital Dollar Dilemma
The man behind this bill, Congressman Tom Emmer, passionately argues that the creation of a CBDC could undermine the values of privacy, personal freedom, and market competition that the US holds dear.
Unlike popular decentralized digital currencies such as Bitcoin that operate beyond government oversight, CBDCs are essentially “programmable money,” giving governments potential power to track and even dictate the financial behaviors of its citizens.
According to Emmer, the essence of a CBDC could threaten the very fabric of American freedoms. The urgency and excitement shown by the current Biden Administration toward CBDCs only reinforce Emmer’s concerns.
He notes that having such digital currencies in the government’s hands might turn them into tools that infringe on the American way of life, much like how China uses its own digital currency in a manner resembling a social credit system.
Broad Support, But Uncertain Future
While countries globally are racing to embrace CBDCs, the US remains torn. There are concerns about it falling behind in this digital currency race. This bill might restrain the US from making crucial advancements, potentially risking the dollar’s dominant position in the world’s economy and limiting advances in payment methods for Americans as the world progresses toward a digital utopia.
Regardless, the US CBDC isn’t without its supporters. With 60 Congress members, including notable names like French Hill, Warren Davidson, and Byron Donalds rallying behind it, its significance is evident.
Bottomline is while the bill has cleared the House Financial Services Committee, its journey is far from over. We can’t say for sure it will gain traction in the Senate, particularly given the Democratic majority which could be hesitant to back a Republican-led initiative.
Ripple News: Bill Morgan Raises the Red Flag on XRP’s Regulatory Hurdles in New York
In a recent Twitter exchange, an Australian lawyer, Bill Morgan, expressed concerns about the New York Department of Financial Services (NYDFS) removing Ripple’s XRP from its greenlist. The extra layer of regulation could hinder XRP’s practical use in the Empire State, adding a cautionary note to the otherwise straightforward regulations laid out by the NYDFS.
This concern came after a detailed thread by Twitter user WrathofKahneman, who broke down what it means for XRP to be off the greenlist. According to the Twitter thread, the greenlist comprises tokens automatically approved for companies holding a NY BitLicense to transact with.
WrathofKahneman clarified that the removal doesn’t necessarily spell doom for XRP in New York but will require companies to undergo additional vetting processes.
“Companies can still use off-list tokens, but it requires further vetting by NYDFS and a separate DFS-approved coin listing policy in place,” WrathofKahneman
What Does It Really Mean?
The extra layer of regulation could significantly impact companies unwilling or unable to face added regulatory scrutiny, effectively alienating them from transacting in XRP. This is a point that WrathofKahneman also raised, stating that large companies, trusts, banks, custody firms, and fintechs would still likely pass the higher level of scrutiny.
Morgan and WrathofKahneman agree that the extra paperwork makes XRP look “risky,” which could harm its adoption rate. With stringent regulations, the implicit trust often associated with tokens on the greenlist is questioned for XRP despite its existing track record.
While companies might perceive the removal from the greenlist as a cautionary flag, it is yet to be seen how this will impact XRP’s standing in the broader cryptocurrency ecosystem.
XRP Lawsuit News: Bill Morgan Warns Delay from Judge Torres Could Spell Trouble for SEC’s Ripple Appeal
Australian lawyer Bill Morgan suggests that time—or a lack thereof—could determine the fate of the SEC’s appeal in the Ripple case. His remarks are catching the eye of the cryptocurrency world at a time when investors are desperately seeking clarity.
Bill Morgan’s tweet highlights the importance of time in legal matters, especially concerning the SEC’s recent appeal request. According to him, if Judge Torres doesn’t act swiftly, it could indicate a rough road ahead for the SEC in obtaining permission to appeal—or even a stay of proceedings during an interlocutory appeal.
A user questioned Morgan’s timing estimate, citing a roughly nine-week decision gap in Judge Torres’ history. Morgan promptly replied, “Not that late, I think,” indicating his belief that the clock is ticking faster than most realize.
SEC’s Controversial Move and the Ripple Case
The SEC’s latest maneuver aims to suspend proceedings until a final judgment. This comes after the court ruled that XRP retail sales do not qualify as an investment contract, casting doubts over the SEC’s case. This contradicts SEC Chairman Gary Gensler’s earlier stance that the crypto industry didn’t require additional regulations.
For a long time, skeptics shrugged off the concerns of the XRP community as conspiracy theories. However, Judge Torres’ recent ruling and the subsequent appeal request by the SEC have vindicated many of these concerns. The XRP community has often felt unfairly targeted by the SEC, especially compared to Ethereum, which has largely escaped such rigorous scrutiny.
Famous crypto influencer Zach Rector suggests Ripple is nearing a favorable settlement with the SEC. Given the court’s prior judgment that distinguishes XRP from securities, Rector believes Ripple has gained significant legal leverage.
Zach Rector speculates that the repercussions of this legal battle could surpass the trillion-dollar mark. This considers the perceived “free pass” given to Ethereum and the heavy financial losses the XRP community has faced during this tumultuous period.
Bill Morgan’s tweet brings more than just an opinion; it serves as a timely reminder of how significant the next steps are for Ripple, the SEC, and the larger cryptocurrency landscape.
UK Passes Bill to Seizure Crypto Assets Linked to Fraud!
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The U.K. is set to pass a new bill giving local authorities the authority to freeze and seize cryptographic assets linked to crime. The Economic Crime and Corporate Transparency Bill clears legal hurdles, allowing quicker asset freezes and potential contributions to public funding. The bill is expected to stop tainted assets from being moved before seizures in criminal cases, combat money laundering and terrorism, and enable the recovery of more digital assets. The provisions in the bill allow seized and recovered crypto linked to criminal activities to be seized under the Proceeds of Crime Act 2002.
XRP Lawsuit News: How Is Bill Hinman’s Speech Helping Ripple Executives Chris Larsen and Brad Garlinghouse?
Pro-XRP lawyer John Deaton recently appeared on The Clinton Donnelly Show and shed light on the significance of Bill Hinman’s speech in June 2018. In this landmark speech, Hinman, who was the director of Corporation Finance at the SEC, declared that Ethereum was not a security. This statement provided much-needed regulatory clarity for Ethereum and the cryptocurrency market as a whole.
Deaton highlighted that while the controversy surrounding Bill Hinman’s Ethereum speech did not directly influence the judge’s decision in the Ripple case, it significantly affected the trial involving Ripple’s executives, Brad Garlinghouse and Chris Larsen.
“It didn’t affect the judge’s decision but it will affect the trial of Brad Garlinghouse and Chris Larsen because the SEC must attempt, which they can’t do, prove that they were reckless in not knowing that XRP is a security. But the judge, she did something very simple, and it’s a very great decision, it’s a really good decision, it’s a sound decision.”
The SEC must demonstrate that the defendants were reckless in not recognizing XRP as a security. The existence of conflicting opinions and potential bias within the SEC, as revealed by the Hinman documents, will likely play a pivotal role in this aspect of the case.
The talk also touched on some big issues in how cryptocurrency rules work. Deaton worried that the rules for who can invest in crypto favor rich people and leave out most others. He said we should make it fairer so more people can join in and grow their wealth with crypto.
Deaton also talked about why the head of the SEC, Gary Gensler, is making these rules. Some people think there might be secret reasons behind it, like trying to stop crypto. But Deaton didn’t go that far. He thinks maybe Gensler is just trying to make sure the big players in traditional finance can join the crypto game slowly.
XRP Price Predictions: Bill Morgan’s Tweet Sparks Humor!
A recent tweet by Australian lawyer Bill Morgan has injected a dose of humor into the digital asset community. His light-hearted take on XRP’s price expectations has sparked a lively debate, shedding light on the speculative nature of crypto enthusiasts.
The Howey Test Meets a Punchline:
Morgan playfully dubbed himself the “quintessential Howey fictitious reasonable investor,” invoking the Howey Test, a legal yardstick for identifying investment contracts. By invoking the Howey Test—a legal benchmark used to determine what qualifies as an investment contract—he’s thrown crypto Twitter into a loop. The tweet begs the question: Are we taking ourselves too seriously in this rollercoaster ride of digital assets?
Interestingly, the market didn’t noticeably react to the tweet, perhaps showing that it, too, has a sense of humor.
Some have noticed that Brad Garlinghouse follows 587 accounts on Twitter, leading to whimsical predictions that XRP’s value will inevitably hit $589. This notion, while entertaining, is a reminder of the importance of conducting thorough analysis when making investment decisions, rather than relying on mundane coincidences.
In contrast to the speculative feeling, crypto influencer Rob Art offers a dose of practicality. He reminds investors to tread with caution and emphasizes the need to secure profits during bullish market phases. His message serves as a timely reminder that successful crypto investing requires a level-headed approach.
In the world of digital assets, comprehensive fundamental and technical analysis should be your guiding light. In a market that can be as unpredictable as it is exciting, wisdom and careful analysis remain the cornerstones of a prosperous investment strategy.
Australian Senate Rejects Proposed Bill for Digital Asset Regulation!
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The Australian Senate has rejected a proposed bill, the “Digital Assets (Market Regulation) Bill 2023” that aimed to create a regulatory framework for digital assets. The Senate Economics Legislation Committee cited a lack of detail and potential conflicts with the government’s existing approach. The bill introduced by Senator Andrew Bragg sought to establish licensing rules and custody requirements for crypto service providers in Australia, but the committee report argued it was incongruent with international standards and could enable regulatory arbitrage. Prime Minister Anthony Albanese had already initiated a separate consultation process on crypto regulations.
South Korea Prepares Bill to Halt North Korea’s Cryptocurrency Assets
In a dynamic landscape where innovation and financial freedom intersect with the rise of cryptocurrencies, there exists a darker side marred by the alarming misuse of cutting-edge technology by nations like North Korea. In a recent development, the South Korean government is gearing up to introduce a comprehensive master plan through a bill designed to expose North Korea’s exploitation of cryptocurrencies and virtual assets to fund illicit weapons programs. This initiative forms a crucial part of South Korea’s overarching cybersecurity strategy, reflecting a notable commitment to combat cybercrime.
So, what does the latest version of this bill entail?
According to local media reports, the updated bill introduces innovative methods to “track and neutralize” cryptocurrencies and digital assets pilfered by North Korea through hacking and other illicit means. Interestingly, the initial proposal of this bill, presented by the National Intelligence Service in November 2022, did not incorporate such provisions.
Moreover, South Korea is set to establish a national cybersecurity committee, operating directly under the purview of the nation’s president, aimed at fortifying defenses against foreign cyber intrusion attempts. This committee will be helmed by the Chief of the National Security Office and will feature the Director of the National Intelligence Service.
North Korea’s Dark Cryptocurrency Hacking Chronicles:
This is far from the first instance of North Korean hackers perpetrating cybercrimes. Over the years, they have been responsible for siphoning substantial sums of digital assets through a range of exploits, resulting in an estimated loss of $2 billion to North Korean cyberattacks since 2018.
In the year 2023 alone, North Korea is suspected of pilfering cryptocurrencies valued at $200 million, constituting a staggering 20% of all illicitly obtained funds this year. Notably, the FBI has been vigilant in tracking state-backed North Korean hackers and has identified six Bitcoin wallets associated with the North Korean hacking collective known as Lazarus, holding approximately 1,580 Bitcoins worth approximately $40 million.
The Lazarus hacker group has been linked to numerous cryptocurrency attacks and breaches, with an estimated $3 billion in stolen funds attributed to North Korea over the past five years. South Korean intelligence reports indicate that a staggering $1.7 billion in cryptocurrencies were purloined in 2022 alone, primarily in Bitcoin and Ethereum. These cyberattacks have coincided with North Korea’s escalated missile testing activities.
The introduction of this bill heralds a potential shift in the system, and it is hoped that other nations will take cues from South Korea’s proactive stance in addressing this pressing issue.
Australia Shoots Down ‘Digital Assets Bill 2023,’ Slows Crypto Regulation According To Critics
In the context of international governments’ careful and regulatory stance on crypto, Australian regulators have turned down the crypto bill. The committee has instead recommended that the government “continue to consult with industry on the development of fit-for-purpose digital assets regulation in Australia.”
Australia Is Bearish On Crypto’s Future
Australia’s Senate Economics Legislation Committee has made a cold decision to reject “The Digital Assets (Market Regulation) Bill 2023,” a much-discussed proposal introduced by opposition Senator Andrew Bragg.
Instead of backing the bill, the committee has recommended that the Australian government “continue to consult with industry on the development of fit-for-purpose digital assets regulation.” The recommendation has thrown the future of Australia’s crypto industry into a state of uncertainty and a slow lane.
Senator Andrew Bragg, representing New South Wales, left no words in criticizing the committee’s decision, accusing the ruling Labor government of “putting regulating crypto in the slow lane.”
Going beyond the usual party theory, the committee spotted specific concerns with the proposed legislation. They found the bill lacked the level of detail and certainty that would be required for a clear regulatory framework.
Moreover, the committee pointed out that Bragg’s bill was “not congruent with international regimes.” Such incongruence “causes genuine concern for regulatory arbitrage and adverse outcomes to the industry,” said the committee’s report.
As nations around the world begin to formulate and implement digital asset regulations, any misalignment between Australia’s approach and global norms could put the country at a disadvantage. Experts argue that such regulatory incongruence could deter international fintech firms from entering the Australian market, thereby hampering the country’s ability to become a global hub for crypto innovation.
Last week, Indian Prime Minister Narendra Modi pointed out the need for international cooperation on cryptocurrency regulations at the annual G20 summit. As the current G20 president, India is pushing for a unified global framework for cryptocurrency governance. Modi argued in a local interview that emerging technologies like blockchain and cryptocurrency have global implications and should not be regulated solely by individual nations or regional blocs.
Albanese’s Token Mapping Consultation Stalls
Prime Minister Anthony Albanese’s office has yet to make good on its earlier promise to introduce a consultation paper detailing a licensing and custody framework for crypto asset service providers.
Initially announced in February, this consultation paper was expected to build upon a prior token mapping consultation released through the Treasury. Although slated for a mid-2023 release, the anticipated paper has yet to materialize.
Michael Bacina, Blockchain Australia Chair, said,
“The Senate Committee was expected to report on this Bill over a month ago and the industry has been eagerly awaiting Treasury consultation on crypto-custody and licensing. That consultation should be able to build on the industry submissions published as part of the Senate Committee’s review of this Bill.”
Is ALGO a Security? Lawyer Bill Morgan Weighs In
Australian Lawyer and Digital Asset enthusiast, Bill Morgan, sparked conversations around Algorand (ALGO) by pointing out its potential problem with the U.S. Securities and Exchange Commission (SEC). Labelling ALGO as a digital asset security, he warned that the more Algorand markets itself, the more entangled it could become with regulatory concerns.
This statement not only shed light on Algorand’s regulatory positioning but also paved the way for a broader discussion on Algorand’s impressive portfolio and understated marketing strategies.
Algorand: The Silent Powerhouse
While it might not enjoy the limelight like Bitcoin or Ethereum, Algorand is quietly shaping the future of blockchain technology, powering some of the most remarkable projects.
From ISDA’s massive derivative market to Bank of Italy’s sureties bond project, Algorand’s influence is sprawling across sectors that are at the core of the global financial system.
Also Read – Crypto News: Volatility Shares Targets Historic Ether Futures ETF Launch on October 12
Algorand’s collaboration with giants like FIFA, LimeWire, and Napster shows its diversified approach, engaging not just in financial services but entertainment and sports as well.
With Agrotoken, American Red Cross, and HesapPay utilizing Algorand’s blockchain, the innovation is spreading across various fields, making ALGO an integral part of the future digital landscape.
The ‘Tame’ Marketing Strategy: A Double-Edged Sword?
Crypto influencer Eldar criticized Algorand’s marketing strategy, expressing concerns that it’s holding back Algorand from the recognition it deserves. While this ‘tame’ approach might be seen as a drawback by some, others might appreciate the substance-over-hype attitude that Algorand maintains.
Quietly but surely, Algorand is carving a niche for itself, and it may soon be impossible to overlook its impact.
Ripple Lawsuit Update: Bill Morgan Breaks Down SEC’s Appeal and Its Potential Ripple Effects on XRP
In a court filing on Wednesday, the Securities and Exchange Commission has filed an “interlocutory appeal” against the judge’s ruling regarding Ripple’s programmatic sales of XRP. The SEC is requesting permission to appeal a specific portion of the decision within the Ripple lawsuit, while the remaining aspects of the SEC’s case move forward to trial.
Ever since the announcement of the interlocutory appeal, the XRP community has been abuzz with speculation on the potential implications for the future of XRP. Lawyer and crypto influencer Bill Morgan has provided clarification on this matter.
Morgan’s Analysis of the SEC’s Appeal and Judge Torres’ Ruling
On Twitter, Lawyer Bill Morgan discussed the growing concerns about the potential impact of a successful SEC interlocutory appeal against Judge Torres’ ruling on XRP’s programmatic sales not being considered investment contracts. The focus is on how this could influence the Judge’s determination that XRP itself is not a security.
Morgan explains that he doesn’t think there’s any real chance the Judge’s view that XRP isn’t a security will be changed. This opinion by Judge Torres, which was more of an additional comment, won’t be the focus of the appeal, regardless of how much critics of Judge Torres might hope for it.
Morgan further pointed out that the legal analysis found on pages 14-15 of Judge Torres’ decision, which resulted in the determination that XRP itself isn’t a security, isn’t a mandatory component of the legal reasoning behind concluding that Ripple’s programmatic sales of XRP weren’t investment contracts.
Although the judge determined that XRP isn’t a security, her subsequent rulings on various sales categories identified by the SEC were flexible. She could have declared all categories as investment contracts, none as investment contracts, or, as it occurred, a mix of both. These options align with her initial conclusion about XRP’s security status. In essence, her decision on XRP’s nature wasn’t tied to a specific outcome regarding the sales categories.
Morgan’s Insights on Aspects Unlikely to Be Reconsidered in Appeal
Morgan points out that excluding Part A from pages 14-15 wouldn’t affect the decision’s coherence. He suggests the Judge could have started directly with Part B, as Part A seems like a digression.
Importantly, the reasoning on pages 14-15, considered obiter by Morgan, wasn’t vital to the conclusions on institutional and non-institutional sales being investment contracts or not. Thus, it’s not a key part of the necessary legal rationale for those conclusions.
Morgan underlines that this won’t need reconsideration in an appeal against the Judge’s findings on programmatic sales and other non-institutional sales.
Amidst the Ripple lawsuit turbulence, Bill Morgan’s insights bring clarity to the SEC’s appeal impact. As the interlocutory appeal unfolds, the ripple effect on XRP’s future remains a topic of intense discussion within the community.
US Democrats Challenge Crypto Bill, Signal Potential Consensus On Stablecoin Rules
In a significant development in the US crypto landscape, senior Democrats in the House of Representatives have voiced their opposition to a comprehensive overhaul of financial laws pertaining to crypto assets. However, they have also indicated that a deal on the regulation of stablecoins could be within reach.
The Proposed Bill Failed To Meet Expectations
The crypto industry has been waiting with bated breath for a clear regulatory framework, especially as digital currencies continue to gain traction among mainstream investors and businesses.
However, the proposed bill, which aims to redefine how crypto assets are treated under financial laws, has met with resistance today from several Democrats on the committee considering the legislation. They argue that the bill is too lenient towards the crypto industry, potentially opening the door for financial instability and fraud.
Rep. Maxine Waters, the leading Democrat on the House Financial Services Committee, participated in the bill’s discussion on Wednesday. She said:
“I am disappointed that Republicans have made the decision to move forward with a massive market structure bill to rewrite our nation’s investor protection acts.”
Rep. Maxine Waters and Committee Chair Patrick McHenry are hopeful for a stablecoin legislation agreement. However, Democratic opposition and President Biden’s potential reluctance to sign a bill his party opposes complicates the market bill’s path to law.
Waters advocates for more input from SEC Chair Gary Gensler, while House Republicans seek more engagement from him. The bill also faces resistance due to concerns related to Sam Bankman-Fried’s push for more CFTC crypto regulation and the FTX collapse.
A Crucial Week For The US Crypto Law
House Republicans proposed an additional $120 million for the Commodity Futures Trading Commission (CFTC) in a bid to secure more Democratic support for the crypto market bill. This funding, aimed at enhancing oversight of digital asset spot markets like Bitcoin, is redirected from the SEC, a move some Democrats oppose.
McHenry suggested increasing the funding to $150 million over three years to facilitate the bill’s passage. The bill could shift more digital asset market responsibility to the CFTC, providing clearer guidelines for when a network token transitions from being treated as a security to a commodity.
McHenry said, “As other jurisdictions like the UK, the [European Union], Singapore and Australia have moved forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind. We intend to change that today.”
As the debate continues, the crypto industry, investors, and observers will be watching closely this week. The decisions made now will shape the future of crypto laws and its market in the US, influencing not only the domestic market but also the global crypto landscape.
Crusade Against Corruption: John Deaton Backs New Bill to Ban Stock Trading for Government Officials
Just imagine a world where politicians in Washington can’t dip their fingers in the stock market cookie jar while serving the nation. Well, Senators Kirsten Gillibrand [D-NY] and Josh Hawley [R-MO] have proposed the “Ban Stock Trading for Government Officials Act.” But, it’s not just their voices echoing in the political chambers. John Deaton, founder of CryptoLawUS, has jumped into this debate with a fresh, blistering perspective.
Deaton backs the Bill
For Deaton, it’s more than just trading stocks. He’s taken aim at the famed ‘revolving door’ culture—a phenomenon where regulators leave public service to warm the chairs in the same private companies they once oversaw. According to Deaton, this move would be a significant step in ‘draining the swamp.’
Deaton had this to say, “If you work for the @SECGov, you don’t get to resign and immediately get to go work at @jpmorgan or @GoldmanSachs. We need to stop the revolving 🚪 at these agencies and prosecute those who break financial conflict laws.”
What is the ‘Ban Stock Trading for Government Officials Act’?
The proposed bill endorsed by Senators Gillibrand and Hawley aims to prohibit stock trading by government officials, including members of Congress, the president, vice president, senior executive branch officials, and even their families.
But the bill’s reach isn’t confined to just trading prohibitions. It also introduces penalties for unregulated stock trading by executive branch officials and mandates them to report federal benefits they receive, barring salary compensations or tax refunds. This unprecedented transparency is aimed at increasing accountability and eliminating potential conflicts of interest.
Stricter Penalties: The Way Forward?
The proposed legislation plans to pack a punch by increasing penalties for failing to file transaction reports under the existing STOCK Act. Fines could jump from $200 to $500, with extra civil penalties for cases involving “substantial monetary value” or those considered “extraordinary in nature.”
While the future of this proposed legislation remains uncertain, a recent Morning Consult/Politico poll reveals a promising picture: At least 63% of Americans support the prohibition of stock trading for government officials and their families.
This call for stricter financial conflict laws, coupled with the proposed legislation, may just be the dawn of a new era in government ethics—an era where regulators and the regulated maintain an arm’s length distance, ensuring a more equitable and less conflicted marketplace for all.
US financial institutions’ trade associations object to Stablecoin Regulatory Framework in the House bill.
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US financial trade associations and state banking groups have expressed concerns over the stablecoin bill currently under review in the House of Representatives. The American Bankers Association, the Credit Union National Association, and the Consumer Bankers Association all raised issues over the current state charter option and called for increased federal oversight in addition to regulatory obligations. The trade groups want more information on limitations surrounding commercial companies’ involvement in payment stablecoin issuers to avoid increased arbitrage and systemic risk.
Russia approves digital ruble bill, with a pilot set for August 2023!
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Russia has officially approved the digital ruble bill, with the law set to take effect in August 2023. The legislation enables the central bank to launch the first central bank digital currency (CBDC) pilot with real consumers in August. The digital ruble is developed to serve as a payment and money transfer method and will act as the third form of money alongside cash and non-cash rubles. Russian citizens will not be forced to use the CBDC, and it will be a voluntary choice left up to individuals to decide. The digital ruble is not expected to see widespread use in Russia until 2025-2027.
U.S. House Introduces Updated Crypto Oversight Bill, Reflecting Changes Made Since June Draft
In an exciting move, U.S. House Republicans introduced a new bill yesterday aimed at regulating the crypto sector and protecting investors. The “Financial Innovation and Technology for the 21st Century Act” is a big step towards establishing a much-needed framework for digital assets.
New Bill Aims to Safeguard Investors
So why is this bill important? Well, with the growing popularity of cryptocurrencies and digital assets, there’s been a lot of confusion and uncertainty around how to regulate them. Notably, this lack of clarity has caused some established crypto businesses to think about leaving the U.S. and has made it difficult for startups to form in the country.
Interestingly, the new bill wants to change all that! It proposes a clear regulatory path for crypto exchanges to register with the U.S. Securities and Exchange Commission (SEC). This means that these exchanges would be able to trade digital securities, commodities, and stablecoins, all in one place. It’s a win-win for both investors and the crypto industry, as it brings much-needed clarity and security to the table.
Will it Impact DeFi Market?
So here you can fairly imagine that the revised bill, as compared to the earlier draft, excludes certain traditional securities from the “digital asset” category. This has raised some concerns in the DeFi (Decentralized Finance) market. DeFi platforms, like Compound and Liquid Collective, might face stricter regulations under this new provision, even if they aren’t currently subject to such scrutiny.
While responding to the recent bill debate, Gabriel Shapiro, general counsel of Delphi Labs, pointed out this crucial change on Twitter, warning that this could reintroduce ambiguity and potential issues with the Securities and Exchange Commission. It means that some DeFi assets, known as cTokens or Liquid Staking Tokens, might be subject to more stringent regulation than before.
“The SEC can still go on the warpath…all they have to do is argue that a token is a “transferable share” “a profit interest” etc.”
In a nutshell, the bill is a significant step forward in bringing regulation to the crypto world, protecting investors, and fostering innovation. But there’s still lingering concern about how certain DeFi assets might be affected by these new rules.
The debate is on, and all eyes are on the U.S. House as they continue their efforts to strike the right balance between regulation and innovation in the exciting world of cryptocurrencies!
New US Senate Bill Proposes Stringent Anti-money Laundering Rules for Defi Protocols
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The US Senate is drafting the Crypto-Asset National Security Enhancement Act of 2023, requiring DeFi protocols to adopt bank-like regulations. The bill aims to curb cryptocurrency-related crimes and money laundering by imposing AML conditions on controlling entities of DeFi apps. These entities must gather and verify user information, establish anti-money laundering measures, report suspicious activity, and block sanctioned individuals. The Treasury Department’s authority would expand to oversee money laundering in unconventional financial domains, including cryptocurrency.
DeFi Protocols Face Potential Regulation Similar To Banks: New US Senate Bill Unveils Plans! Is Crypto Regulation Inevitable For DeFi?
In a groundbreaking development that could blow the minds of DeFi investors, a new bill proposed in the US Senate suggests that DeFi protocols could soon face regulations similar to those imposed on traditional banking institutions. This raises the question: Is regulatory oversight of the crypto sector, particularly DeFi, becoming inevitable?
DeFi Protocols Need To Follow AML Laws
The U.S. Senate is gearing up for another attempt at regulating the cryptocurrency sector with a fresh bill that proposes rigorous anti-money laundering (AML) regulations for decentralized finance (DeFi) protocols. The proposed legislation, known as the Crypto-Asset National Security Enhancement Act of 2023, mandates DeFi platforms to implement controls akin to those used by traditional banking institutions on their users.
The purpose of the bill is to tackle the increase in criminal activities enabled by cryptocurrencies. It also aims to eliminate potential loopholes that could be used to evade crucial measures against money laundering and sanctions, which are vital for national security.
The proposed legislation mandates that any individual or entity “controlling” a DeFi protocol must implement anti-money laundering programs and comply with know-your-customer (KYC) policies. These controllers would also be accountable for reporting any suspicious activities and ensuring that the protocol is not being used by anyone subject to sanctions.
In cases where a clear controller of the protocol cannot be identified, the bill stipulates that any party investing over $25 million in the protocol’s development would be held liable.
The proposed bill suggests that “virtual currency kiosks,” including bitcoin ATMs, should be legally obligated to comply with KYC regulations under federal law.
The legislation stipulates that operators of these machines must, at the very least, verify and document the consumer’s name and physical address. This process should involve reviewing an official document that confirms the consumer’s nationality or residence and includes a photograph of the consumer.
Is It Really Possible To Regulate DeFi?
DeFi protocols, financial applications enabling crypto wallet holders to borrow, lend, and trade cryptocurrencies via smart contracts, are challenging to regulate due to their operation on permissionless blockchains, unlike centralized companies like Coinbase.
The proposed bill aims to navigate these challenges by imposing requirements on anyone ‘controlling’ a DeFi protocol or providing an application to use the protocol. This likely refers to entities that create user-friendly interfaces for complex smart contracts, similar to Uniswap Labs’ role for Ethereum’s leading decentralized exchange.
However, critics of the bill argue that such regulations could stifle innovation in the DeFi space. They believe that the decentralized nature of DeFi, which is one of its main attractions, could be undermined by such regulations.
Furthermore, they argue that the application of traditional banking regulations to DeFi could be impractical due to the fundamental differences between the two.
Russia’s Lower House of Parliament Passes a Bill for “Digital Rouble”!
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Russia’s digital currency project has moved closer to becoming a reality as the lower chamber of parliament, Gosduma, passed the “digital rouble” bill in its third reading. The document now awaits confirmation from the upper chamber and President Vladimir Putin. The Central Bank of Russia will serve as the primary operator of the CBDC infrastructure, ensuring a secure payment and transfer system. A pilot regime will test the CBDC between 2023 and 2024 before it is made available to all Russian citizens by 2025-27.
Relist XRP: Bill Morgan Questions Coinbase’s Inconsistent Approach in XRP Listings
Paul Grewal, Chief Legal Officer (CLO) at Coinbase, recently took to Twitter to voice his thoughts on the Major Questions Doctrine holding in Nebraska. In a series of tweets, Grewal emphasized that the Securities and Exchange Commission’s (SEC) interpretation of the “investment contract” in relation to digital assets goes against the law.
He argued that the SEC’s assertion of authority over all digital assets, except Bitcoin (BTC), is not just staggering but disconnected from the requirement of enforceable rights between enterprises and purchasers.
Bill Morgan Spotlights Coinbase’s XRP Trading Halt
Digital asset enthusiast and lawyer, Bill Morgan, promptly responded to Grewal’s tweets, questioning Coinbase’s decision to continue halting XRP trading on its exchange while allowing the trading of other coins and its own staking service, which the SEC deems security. Morgan expressed frustration with the inconsistency and called for Coinbase to relist XRP if no unlawful actions had been committed.
Seeking Clarity and Exposing Hypocrisy
Morgan emphasized that Coinbase’s alleged inconsistency in handling XRP trading raises concerns about undisclosed motives. He highlighted the fact that Coinbase had no trouble allowing trading of other coins that the SEC alleges are securities, despite Coinbase’s own court documents asserting they are not. Morgan further criticized Coinbase for failing to explain this inconsistency, indicating a disregard for shareholder concerns.
“There would either be pauses in trading of other alleged digital asset securities like ADA and Solana or Coinbase would resume secondary market XRP trading,” Bill Morgan pointed out the hypocrisy in Coinbase’s actions.
A Clash of Perspectives
The disagreement between Grewal and Morgan centers on Coinbase’s handling of XRP trading and the broader implications of the SEC’s interpretation of securities in the digital asset space. Grewal asserts that the SEC’s position violates the law, while Morgan contends that Coinbase’s actions are inconsistent and raises questions about their motivations.
Morgan wraps up his discourse by calling out Paul Grewal, Chief Legal Officer of Coinbase, who, according to Morgan, has yet to offer a comprehensive explanation for the platform’s inconsistent stance. It is good to know that enthusiasts like Morgan will keep the key players accountable, ensuring that actions aren’t just compliant, but also consistent and fair.
Voyager Creditors Face a $5.1M Bill from Law Firm for Services Provided
The committee of unsecured creditors for Voyager has received an invoice from the legal team McDermott Will & Emery for $5.1 million for services provided between March and May. The group has been charged a total of $16.4 million in compensation, above the projected amount of $11.2 million established during the restructuring process. Creditors have so far contributed $8.9 million toward the invoiced compensation.
During this time, McDermott lawyers billed $1 million for 970.9 hours of labor connected to the plan and disclosure settlement, which stands out among their notable billings. Meetings with prospective buyers, conversations with the Debtors about possible sale possibilities, and responses to concerns expressed by other stakeholders are all part of this effort.
A lot of work was put into a failed agreement regarding the sale of the company’s assets to FTX prior to the exchange’s insolvency during earlier fee periods. Additionally, the debtor, Voyager, has already paid Kirkland & Ellis $1.1 million for its representation of the exchange in the court case.
2022 Was a Year of Bankruptcies and Collapses
After experiencing significant losses as a result of the collapse of the Terra ecosystem and the general decline in the cryptocurrency market, Voyager filed for bankruptcy protection in July 2022. One of many prominent crypto collapses that occurred in 2022, including the bankruptcy of Voyager, intensified governmental scrutiny of the sector.
Seven American states sent cease-and-desist letters to Voyager in March 2022 over the company’s interest-bearing cryptocurrency accounts, which the governments said were unregistered securities.
Bankruptcies increased as a result of the 2022 market slump, which was profitable for law firms. According to reports, companies like FTX and Celsius paid over $200 million and $50 million, respectively, in legal expenses.
However, detractors contend that because a sizeable amount is used for legal fees, the money available to creditors is reduced as a result of these high costs and protracted legal proceedings.
South Korea Prioritizes Crypto Users: New Bill Ensures Enhanced Protection
South Korea’s National Assembly has approved the Virtual Asset User Protection Act, representing a significant step in establishing a legal framework for virtual assets within the country. The legislation, composed of 19 proposals from lawmakers, aims to define digital assets and address unfair transactions by implementing penalties. The act also requires service providers to segregate user assets, maintain insurance, hold reserves in cold wallets, and maintain transaction records.
With the passage of this bill, the Financial Services Commission will be granted the authority to oversee and inspect service providers, while the Bank of Korea will have the right to request data from these entities. The move comes amid increased scrutiny of virtual assets in South Korea, spurred by investigations into a domestic lawmaker’s crypto holdings and the previous year’s collapse of Terraform Labs. The new law is set to take effect in the coming year.
South Korea to focus on customer protection
According to reports from local media, the Virtual Asset User Protection Act in South Korea primarily focuses on the application of the Capital Market Act to virtual assets with securities-like characteristics. The Virtual Asset User Protection Act, recently passed in South Korea, seeks to establish a framework that enables the imposition of penalties and liability for damages arising from unfair cryptocurrency trading practices.
As part of efforts to protect investors, virtual asset service providers (VASPs) are now mandated to take responsibility for safeguarding users’ deposits and providing insurance coverage. These measures are aimed at enhancing investor protection and mitigating risks associated with the use of virtual assets. These measures are designed to protect users against risks such as hacks and computer failures.
According to SBS Biz, violations of the new regulations may result in fixed-term imprisonment for at least one year or substantial fines. For instance, the Financial Services Commission has the authority to impose penalties equivalent to double the profits obtained from unfair trading.
This news follows the recent sentencing of Do Kwon, the founder of Terraform Labs, to four months in prison by a Montenegrin court for using a false passport. Additionally, there is an outstanding arrest warrant for Kwon in South Korea, where he is accused of violating the country’s capital markets law.
United Kingdom Legalizes Crypto as FSM Bill Finally Transforms into Law
In an historic move set to transform the financial landscape of the United Kingdom, the highly anticipated cryptocurrency bill has officially become law. In a digital age where the lines between traditional and decentralized finance are blurring, the UK is the latest in a line of nations to acknowledge the impending shift. After a rigorous legislative journey, the crypto bill has been granted the royal assent, marking a new dawn for blockchain technology in the country.
King Charles Approves The Crypto And Stablecoin Bill
King Charles of the U.K. affirmed a landmark bill on Thursday, providing regulators with the authority to oversee cryptocurrency and stablecoins, signaling the final stage of the bill’s transformation into law. The ceremonial act of royal assent, following the consent of lawmakers, officially elevates the Financial Services and Markets Bill into an Act of Law.
This includes provisions to incorporate cryptocurrency under the umbrella of regulatory scrutiny. The upper chamber of Parliament had greenlit the bill just last week.
In a statement, Financial Services Minister Andrew Griffith expressed that the Act grants them autonomy over their financial services rulebook, a consequence of the U.K.’s departure from the EU. He added that this enables them to regulate crypto assets, promoting their safe integration into the U.K. financial system.
The cryptocurrency bill, initially brought to the attention of lawmakers in 2022, includes an array of regulations aimed at the burgeoning field of decentralized finance, from Bitcoin to Ethereum, stablecoins to NFTs.
This broad-spectrum bill is designed to provide a much-needed legal framework for crypto transactions, offering protection and clarity to both individuals and businesses in the UK.
While the content of the bill has been a topic of much debate amongst lawmakers and crypto enthusiasts, it has always had one clear objective: to create an enabling environment that fosters growth and innovation in the crypto space, while offering robust protections against fraud and financial crimes.
Regulators Gain Control Over Crypto
The law encompasses provisions for anti-money laundering (AML) procedures, know your customer (KYC) protocols, and regulations on the issuance and operation of stablecoins and other digital assets. It also includes regulatory sandboxes, which will enable innovative fintech companies to test their products and services in a controlled environment.
The power to initiate and enforce regulations governing the crypto sector will soon be within the grasp of the U.K.’s Treasury, Financial Conduct Authority, Bank of England, and the Payments Systems Regulator.
Since February, the Treasury has been actively seeking feedback on its proposed guidelines for the industry, a move aligned with the Conservative Government’s ambition to transform the nation into a global crypto hub. According to an interview with CNBC in April, Economic Secretary Andrew Griffith anticipates that detailed regulations specific to the crypto sector could be in place within the forthcoming 12 months.
North Carolina House Approves Bill to Initiate Study on Bitcoin Implementation
The North Carolina Department of State Treasurer has taken steps to deepen its understanding of Bitcoin. The lower house of the General Assembly has passed a bill to commission a comprehensive study on the feasibility and benefits of North Carolina holding Bitcoin, along with gold bullion.
Amid the ongoing crypto crisis in the United States, the North Carolina House of Representatives has taken a proactive stance to delve into the intricacies of the situation. On June 28, a bill was passed, allocating $50,000 to conduct a detailed analysis of “acquiring, securely storing, insuring, and liquidating” both gold bullion and virtual currencies such as Bitcoin.
The study aims to evaluate the potential impact of holding gold and cryptocurrency on North Carolina’s financial position. It will explore whether such investments could serve as a hedge against inflation and “system credit risks,” ultimately reducing volatility in the crypto market and increasing the state’s portfolio returns.
Implications of the Bill
If the bill is enacted into law, it could pave the way for the establishment of a state-administered depository for cryptocurrencies, making North Carolina the custodian of its digital currency holdings. The study will also analyze the costs and benefits associated with using a privately managed depository or opting for another state’s depository.
The bill received substantial support in the 120-membered House of Representatives, with 73 members voting in favor. It will now proceed to the Senate for consideration before being signed into law by Governor Roy Cooper.
This latest move follows another notable development in North Carolina’s approach to digital currencies. On May 3, the state’s House passed a bill that prohibits payments to the state using central bank digital currency (CBDC). Furthermore, the bill seeks to prevent the US Federal Reserve from conducting any future pilot CBDC tests in North Carolina.
With these progressive steps, North Carolina is positioning itself at the forefront of embracing digital currencies. These efforts to understand and explore the potential of cryptocurrencies could pave the way for a more stable and prosperous future in the crypto sector.
Stablecoin Bill Unveiled by US House to Provide Guidance and Strengthen Fed Oversight
The US House Financial Services Committee has recently unveiled a draft stablecoin bill, demonstrating a bipartisan effort between House Republicans and Democrats. The primary objective of the bill is to provide “clarity” in terms of the market structure of digital assets and the regulatory framework surrounding stablecoins.
The bill will be further discussed and explored during the upcoming full Financial Services Committee hearing.
Will the US get much-needed clarity on digital assets?
The US House Financial Services Committee has scheduled a full committee hearing titled “The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem” on June 13.
A third draft stablecoin bill has been released by the Financial Services Committee, which combines concepts from both the Republicans’ and Democrats’ financial services committees. The primary objective of this draft bill is to regulate the payment with stablecoins and address other related matters.
The bill defines the primary federal payment stablecoin regulators as the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration.
Key provisions in the bill include regulations on payment stablecoin issuance and requirements, supervision and enforcement measures, qualifications for state-qualified payment stablecoin issuers, and interoperability considerations.
If the bill is enacted, it will impose a two-year moratorium, making it illegal to issue, create, or originate an endogenously collateralized stablecoin that does not exist on the date the Act is enacted.
An amendment to the Investment Advisers Act of 1940 will clarify that payment stablecoins are not considered “securities.” Additionally, federal agencies will have more authority and oversight over stablecoins compared to state regulators.
Chairman Patrick McHenry views this bill as an initial step towards regulating cryptocurrencies in the US. However, the stance of Democrats on the bill remains unclear. For the bill to become stablecoin regulation, it must pass both the US House and the US Senate.
US Treasury Bill Auctions and Crypto Markets: Navigating the Impact of T-Bills on Cryptocurrencies
On Wednesday, the U.S. House of Representatives managed to secure the backing of both Democrats and Republicans and successfully passed a bill that seeks to temporarily suspend the $31.4 trillion debt ceiling. Right after this, the U.S. Treasury Department didn’t wait long to start offering Treasury bills immediately.
On June 5, the U.S. Treasury is prepared to hold an auction for $173 billion worth of short-term Treasury bills as part of its efforts to replenish its diminished cash reserves. It anticipates reaching a total of $1 trillion in Treasury bills by the conclusion of the third quarter.
US Treasury Bill Auction and Decline in Cash Reserves
According to the auction schedule released by the U.S. Treasury Department, there will be a Treasury bill auction on June 5. The auction will include three different types of treasury bills: a 13-week bill worth $65 billion, a 26-week bill worth $58 billion, and a 44-day bill worth $50 billion.
The cash reserves in the US Treasury General Account experienced a significant decline, dropping from $635.99 billion in March to $22.89 billion on June 1. This decrease indicates a substantial reduction in available funds. Risky assets, including cryptocurrencies like Bitcoin, may face increased volatility and potentially lower returns due to the rise in Treasury yields and the strength of the US dollar.
Impact On The Financial Markets
By the end of the third quarter, it is anticipated that the US Treasury will release approximately $1 trillion in T-bills. This influx of Treasury bills is likely to have an impact on the financial market by reducing the availability of US dollar liquidity. Consequently, this development raises concerns about an increased risk of a recession occurring.
The yields on US Treasury bonds are currently on the rise, and today the US Dollar Index (DXY) reached a high of 104.35, surpassing the 104 mark. At the same time, the futures market for US stocks suggests a relatively stable opening on Monday. However, there has been a notable upward movement in the prices of oil and natural gas, which have experienced an increase of over 2%.
The price of BTC dropped 2% during the last day and is now trading at $26,761. Bitcoin has a 24-hour low of $26,712 and a 24-hour high of $27,407, respectively. Also, after surging beyond $1900 last week, the price of ETH has fallen to the prior support level. The price is currently $1870, down 2% from the previous day.
The market now depends on the Federal Reserve and its decision on federal rate hikes. Predictions suggest a huge possibility of skipping rate hikes this month.