During a discussion about cryptocurrency regulations, Congressman Warren Davidson recently expressed concerns about the actions of Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC). Davidson, a House Financial Services Committee member, highlighted the need for transparency and accountability within the SEC.
During the conversation with Thinking Crypto, Davidson also discussed possibly issuing a subpoena to Gary Gensler to obtain necessary documents and communications related to the SEC’s activities. He said that patience with Gensler’s leadership had worn thin, and a subpoena might be necessary to ensure transparency and cooperation.
Davidson believed that the SEC’s actions and lack of clear regulations have hindered the cryptocurrency industry’s growth. He cited fraud cases and the need for structural changes within the SEC as significant concerns.
The discussion also touched on the SEC’s previous stance on Ethereum, where a speech by former SEC official Bill Hinman was considered guidance by the industry. However, recent revelations have raised questions about the ethics and transparency of that decision.
He hopes that the recent court criticisms of the SEC’s actions in the Ripple vs. SEC case will make the SEC change its approach to regulating cryptocurrencies. He also believes that the SEC’s current method of using the Howey test as its primary guideline for determining if something is a security is too vague and that there should be clear laws specifically for digital assets. Davidson also said that having real contracts is crucial when the SEC claims something is an investment contract.
Regarding Central Bank Digital Currencies (CBDCs), Davidson argued against their implementation, suggesting that they could be used as tools for government control and coercion. He emphasized the importance of sound and strong money and expressed skepticism about the need for a U.S. CBDC.
The Ripple CLO passed his crucial opinion before the Chair of the SEC, Gary Gensler, is called to present his testimonial later today before the United Nations House of Financial Services.
Fox Business Journalist on Gensler’s Testimony
Fox Business reporter Eleanor Terrett posted a copy of Gensler’s remark on cryptocurrencies on the X platform before the testimony. The post quickly gained traction, sparking a heated debate among cryptocurrency enthusiasts and financial experts. Many were eager to hear Gensler’s stance on the future of digital currencies and how they would be regulated.
Stuart Alderoty on Gensler’s Testimony
Stuart Alderoty, the Chief Legal Officer of Ripple, expects that while Gary Gensler presents his testimonial before the House of Financial Services, any U.S. representative member present in the conference to bring forward the ruling of the U.S. District Judge Analisa Torres’s judgment on the SEC v Ripple ruling.
In a reply to Fox Business Journalist Eleanor Terret’s, Stuart Alderoty took to X and posted a series of comments.
Firstly, he comments that Gensler claiming that there exists something called a “crypto assets securities market” would be a straight lie on the face of Congressmen.
In attachment to this, he wrote a second post where he hopes that at least one of the many US Representative Members present in the testimony will present the judgment of the Court, passed by Judge Analisa Torres, in the Ripple suit dated 13/7/23. Judge Analisa Torres held that “XRP, as a digital token, is not in and of itself “a contract, transaction, or scheme” that embodies the Howey requirements of an investment contract.”
To this post of Alderoty, many verified crypto enthusiasts commented, bringing out their discontent against the US SEC’s Chair Gary Gensler.
SEC Not Abiding by The Court’s Decision
The SEC is not contesting the court’s determination that XRP is not a security but instead focusing on the issue of Ripple’s sales of XRP. The SEC wants to review whether Ripple violated securities laws by conducting these secondary sales. This distinction is crucial as it indicates that the SEC’s case against Ripple is not necessarily about XRP’s classification as a security but rather about Ripple’s alleged illegal activities related to the token.
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.
The post SEC Chair Predicts Approval of Bitcoin ETF is Inevitable! appeared first on Coinpedia Fintech News
US Securities and Exchange Commission (SEC) chairman Jay Clayton has declared that the approval of a spot bitcoin exchange-traded fund (ETF) is only a matter of time. Speaking at the Consensus Invest conference, Clayton stated that it was clear that Bitcoin was not a security. He also noted that retail investors were hungry for access to the cryptocurrency and that some of the most respected financial institutions were keen to offer it to the public. The development could have serious implications for the wider adoption of the cryptocurrency given the potential exposure for investors who may steer clear of it due to the risks associated with unregulated exchanges.
Is crypto entangled in an ego war, what’s happening with SEC’s legal setbacks, the recent cases are a huge cause of worry for investors and big institutions who are afraid to enter the regulatory muddle. At this time, Gary Gensler’s call is larger than expected; the meeting may make key choices.
Get insight by diving in.
Gensler to Testify Before Two Congress Panels
Notably, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler is set to appear before two congressional committees in September 2023. Although the official announcement does not say that the cryptocurrency market would be the main topic of discussion, it is likely that it will be the case. This follows the SEC’s recent legal defeats, such as the summary judgment in the XRP action and the success in the Grayscale spot Bitcoin ETF lawsuit.
With the #FireGaryGensler trend growing, the upcoming meeting’s agenda remains uncertain. People are eager to see if it will address crypto and Gensler’s involvement in legal proceedings.
What to Expect in the Meeting?
Gensler’s upcoming hearings will involve the U.S. Senate Banking Committee GOP and the U.S. House Committee on Financial Services Republicans. One key aspect of these hearings is the SEC’s plans regarding the approval of spot Bitcoin ETF applications from companies like BlackRock, Ark Invest, Fidelity, and Bitwise. The meeting is also very crucial as there will be added pressure on the SEC post-Grayscale victory to prove and clarify its stance on these applications. Moreover, Grayscale is aiming to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF.
In this context, Gensler has softened his aggressive take on crypto. Changing his stance from positive to neutral in an interview following the Ripple vs. SEC lawsuit summary judgment. He indicated that the SEC commissioners would make the decision to appeal the court’s ruling collectively, signaling a shift from his previous outspoken approach against crypto businesses.
The crypto wants him to resign only then a fair and transparent regulatory framework can be prevailed.
Impact on Crypto Market
Meanwhile, such events are directly related to crypto movements as they decide the fate of the trending tokens. The price of XRP could potentially rise to $1, building on the recovery that followed Grayscale Investments’ successful appeal against the SEC. The cross-border money remittance token has experienced a 2.8% increase to $0.53, with substantial trading volume and market capitalization. The king crypto BTC also surged to $28k after Grayscale’s SEC victory, but it might dip to $25k again.
After going after the entire crypto industry as the US Securities and Exchange Commission Chair and filing lawsuits against major crypto companies to establish regulations, Gary Gensler has now opted to redirect his attention. He is now determined to concentrate the agency’s attention on regulating artificial intelligence instead of cryptocurrencies. But why this shift? Let’s find out.
Gary Gensler’s Expresses Concerns Over AI’s Impact on Financial Markets
SEC Chair to Shift Focus from Crypto to AI
In a recent speech at the National Press Club in Washington. The Chairman of the Securities and Exchange Commission, Gary Gensler expressed his concerns regarding artificial intelligence in the financial domain. He expressed concerns that if major tech companies monopolize its development for financial market applications, it could potentially destabilize the global economy.
Gensler further emphasized during his speech that “AI may heighten financial fragility.” He highlighted that the technology might lead to herding behavior, where individual actors make similar decisions due to receiving identical signals from a base model or data aggregator.
Gensler mentioned that he has requested the agency’s staff to propose potential regulations that address how AI could be optimized to benefit intermediaries, potentially at the expense of investors.
AI Poses More Risk Than Crypto: Gensler
Gary Gensler points out that despite the crypto space being troubled by scams, hacks, and money laundering, AI poses even more substantial financial risks to US residents. During his discussion, Gensler highlighted various risks associated with the ongoing AI boom, including mass automation, which could affect trillions of dollars worth of assets traded on SEC-monitored markets.
Gensler further explains that while AI-generated investment recommendations have the potential to enhance the customer experience for financial institutions, this emerging technology can also be exploited to obscure accountability in case of errors or failures.
The U.S. Securities and Exchange Commission Chairman Gary Gensler has chosen to maintain the suspense, avoiding revealing whether an appeal is forthcoming against the court’s decision favoring Ripple.
Gary Gensler Refuses to Provide a Clear Answer
During a recent interview, Gensler was questioned by Bloomberg’s Kailey Leinz regarding the SEC’s intention to appeal the judgment given by Judge Torres in the Ripple case. This query came in response to Gensler’s expressed disappointment last week regarding the court’s ruling favoring retail investors.
This ruling has determined that Ripple’s XRP cryptocurrency can only be considered security when sold to institutional investors, not retail ones. Leinz sought to clarify if the SEC’s statements of seeking review meant that an appeal was in the pipeline.
The Undecided Next Step
Gensler responded in an uncommitted manner, stating that he was just one among the five commissioners, implying his inability to single-handedly make the decision of an appeal. He continued to explain that any staff recommendations would be discussed among the commissioners before any final action is determined.
“The commissioners have not acted on that [deliberate on whether the SEC should appeal]. If the staff makes a recommendation, we will have a discussion of it, and we’ll take it up there. I don’t have anything more on that.”
— Gary Gensler
Ripple’s Response and Expectations
In a related development, Ripple’s chief counsel, Stuart Alderoty, has been vocal about the impact of the SEC’s lawsuit ruling, highlighting its positive influence on the larger cryptocurrency market. According to Alderoty, the ruling rejected the necessity for crypto exchanges trading digital tokens, such as XRP, to register as national security exchanges.
Alderoty also speculated about the SEC’s possible next move and Ripple’s preparedness for it. He noted that signs indicate the SEC is not satisfied with the ruling and may recommend an appeal.
However, Ripple is not deterred by this prospect, believing that the judge’s decision was legally sound, and confident that any appeal would result in affirmation or possible amplification of the ruling.
The cryptocurrency industry in the United States has been facing challenges due to the lack of clear regulatory guidelines governing digital assets. The U.S. Securities and Exchange Commission (SEC) has taken an aggressive approach, filing lawsuits against numerous digital currency firms, with one of the most prominent cases being the Ripple vs. SEC lawsuit. The SEC claimed XRP is a security, but the judge ruled it is not. This ruling brings clarity and sets a precedent for similar cases.
The SEC Chairman, Gary Gensler, has been heavily criticized by the industry for his handling of digital assets and his stance on XRP. Another individual involved in the Ripple lawsuit has also faced scrutiny, adding to the ongoing regulatory debates in the US crypto industry.
Ripple Lawsuit Puts Former SEC Chairman Jay Clayton Under Scrutiny
Tony Edward, the Founder & Host of the Thinking Crypto Podcast, recently tweeted about Chairman Jay Clayton, who has come under scrutiny for his involvement in the Ripple lawsuit. He has been dubbed as “Coward Clayton” for filing the lawsuit against Ripple, which reportedly affected XRP holders significantly. However, Clayton resigned from his position at the SEC shortly after the lawsuit was initiated.
Despite being a top CNBC contributor on cryptocurrencies, Clayton has not appeared with notable anchors like Melissa Lee, Joe Kernen, Becky Quick, and Andrew Ross Sorkin. His absence from public commentary has sparked criticism from several XRP investors and the cryptocurrency community at large.
Jay Clayton’s Lack of Clarity in SEC’s Communication Added Uncertainty
Last month, an XRP community member named Ashley Prosper shared an internal SEC email, labeled Exhibit 276 in the SEC vs. Ripple lawsuit. According to Prosper, the document reveals that Jay Clayton had no interest in providing Ripple with any clarity on XRP.
In response, Pro-XRP Attorney John Deaton pointed out that both Clayton and Hinman had received an XRP Memo analyzing XRP under Howey’s Test. Deaton argued that if the memo had concluded that XRP was a security, Clayton and Hinman would have informed Ripple executives during their meeting. However, Clayton never did, which further added to the uncertainty and confusion.
The Bitcoin market recently witnessed a solid development as former Securities and Exchange Commission (SEC) Chair Jay Clayton has voiced his support for the approval of Bitcoin Exchange-Traded Funds (ETFs). This endorsement could potentially signal a bullish wave for Bitcoin and guide others on the importance of BTC integration into mainstream financial markets.
SEC Should Greenlight Bitcoin ETFs
In a recent conversation with CNBC, Jay Clayton, the former chair of the SEC, expressed that the approval of a Bitcoin ETF would be “difficult to ignore.” Furthermore, Clayton offered his insights on the significant progress of the digital asset industry and explained why establishing a regulatory framework would make such an approval advantageous.
Reflecting on the early days of Bitcoin, Clayton described it as a distant, retail-oriented market that bore little resemblance to the heart of financial systems. He admitted his initial skepticism towards the Bitcoin market, attributing it to concerns about questionable practices such as wash trading and potential market manipulation.
Jay Clayton, who served as the SEC Chair from May 2017 until December 2020, has been known for his cautious approach towards cryptocurrencies during his tenure. His recent statement advocating for Bitcoin ETFs marks a significant shift in his stance, sparking widespread discussion within the crypto community and financial sectors.
Yet, Clayton recognized the remarkable progress the industry has achieved, especially in the area of institutional investment. The fact that well-established companies are now adopting Bitcoin signifies a rising trust in the regulatory safeguards and trading potential of the cryptocurrency sector.
Does Bitcoin Actually Hold A Bullish Future?
The surge in Spot Bitcoin ETF proposals this year has been a notable development, marking a shift in viewpoint from conventional financial institutions. Major players like BlackRock and Fidelity, despite initial rejections, have demonstrated their commitment and optimism by reapplying for Bitcoin ETFs. However, the fate of these proposals ultimately hinges on the US Securities and Exchange Commission (SEC) and its decision to approve or deny their establishment.
“The fact that we have these institutions that know markets better than anybody and saying we’re going to put our reputation behind it, I find that pretty remarkable. What the institutions are arguing is that those distinctions have gone away, and now the spot product is less drag, more efficient for the investors.”
Talking about Bitcoin’s future potential and adoption, Standard Chartered suggested today that Bitcoin could potentially hit $50,000 this year and escalate to $120,000 by the end of 2024. They anticipate that the recent surge in Bitcoin’s price could incentivize “miners” to accumulate more of the supply.
Earlier in April, Standard Chartered projected a $100,000 value for Bitcoin by the end of 2024, signaling the end of the so-called “crypto winter.” However, Geoff Kendrick, one of the bank’s leading FX analysts, now believes that there’s a 20% “upside” to that previous estimate.
The post Congress Introduces New Act To Remove SEC Chair Gensler appeared first on Coinpedia Fintech News
On Monday, attorneys in the US House of Representatives introduced a new measure with the goal of removing Gary Gensler from the position of SEC Chair and restructuring the financial regulator’s system. The legislation, known as the “Stabilization Act,” was passed by US lawmakers as a direct response to Gensler’s actions. Congressman Warren Davidson took to Twitter to explain his sudden introduction of the bill. He aims to address the ongoing misuse of authority and ensure long-term market protection through a new legislative proposal.
CFTC Chair Stands Firm Before Congress: ‘Unsustainable’ Crypto Regulation By Enforcement Must Change
In a bold and decisive move, the Chair of the Commodity Futures Trading Commission (CFTC), addressed Congress, stating unequivocally that the current practice of ‘Regulation by Enforcement’ is unsustainable. This statement marks a significant shift in the conversation surrounding regulatory practices in the crypto sector.
Does The SEC Have Total Control Over Digital Assets?
Following the legal actions initiated by the SEC against both Binance and Coinbase, the House Agriculture Committee convened on Tuesday morning. The meeting, featuring two panel discussions, was held to deliberate on the regulation of the cryptocurrency spot market.
Initially, lawmakers directed their inquiries to Rostin Behnam, the Chair of the Commodity Futures Trading Commission, before shifting their attention to a panel of five witnesses, which included industry experts and former CFTC executives.
Behnam’s comments were primarily centered on the classification of crypto tokens, the prevailing trend of regulation through enforcement, and the pressing need for regulatory clarity. Notably, the SEC classified over 10 tokens as securities in its lawsuits against Binance and Coinbase this week.
Dusty Johnson, a Republican from South Dakota, voiced skepticism during his questioning period with Behnam, stating, “There are some who argue ‘the SEC’s got this.’”
However, Johnson posed a critical question: Should the SEC indeed have absolute authority over digital assets?
“This is not a zero-sum game. For anything that the CFTC might get in legislative or legal authority, I’m not taking it from someone else. There is a regulatory vacuum, there is a gap in regulation over digital commodity assets.”
Regulation By Enforcement Is Not Appropriate
Behnam asserted that the SEC should indeed have jurisdiction over assets identified as securities. However, he emphasized that “the largest token, Bitcoin, is a commodity as determined by a US court, and under US law, it is unregulated.”
Behnam noted that most exchanges feature a limited number of crypto assets that have been officially recognized as commodities. As the Chair of the CFTC, he stressed the urgent need to extend regulatory power over the crypto commodity sector.
A number of lawmakers expressed their worries about the apparent trend of regulation through enforcement in the US.
Committee Chair Glenn Thompson, R-Penn., said: “Regulation by enforcement is not an appropriate way to govern a market, adequately protect customers or promote innovation.”
According to the CFTC Chair, the issue isn’t about the CFTC and SEC refraining from prosecuting entities that violate existing laws. Instead, Behnam believes it’s about the need for increased congressional authority to address risks associated with cryptocurrencies and to establish clear policies.
The hearing on Tuesday commenced just hours after the SEC announced charges against cryptocurrency exchange Coinbase for alleged violations of securities laws. This complaint was lodged a day after the SEC filed similar charges against Binance, the world’s largest exchange.
Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), has faced considerable criticism for his regulatory actions in the United States, particularly in relation to digital assets. His classification of all digital assets, except for Bitcoin, as securities have sparked controversy within the crypto space. This has also led to the SEC getting involved in numerous lawsuits.
However, there has been a recent development where Gensler seems to have gained a supporter who agrees with his stance on digital assets. An advisor on Bitcoin to the President of El Salvador has expressed agreement with Gensler’s declaration that XRP, a prominent cryptocurrency, should be classified as a security.
The Rationale Behind Keiser’s Statements
Max Keiser, an advisor on Bitcoin to the government of El Salvador, agrees with SEC Chairman Gary Gensler’s categorization of most cryptocurrencies, including XRP, as securities. Keiser is a staunch supporter of Bitcoin and boasts that El Salvador has already implemented laws acknowledging Bitcoin as a non-security. Additionally, he asserts that all cryptocurrencies, except for Bitcoin, should be classified as securities, including well-known ones like XRP and Ether (ETH).
In addition, Keiser extended an invitation to Gary Gensler, the chairman of the United States Securities and Exchange Commission, urging him to visit El Salvador and witness firsthand how it has emerged as the world’s foremost Bitcoin nation.
Gary Gensler: Crypto Market Is Based On A “False Narrative” Of Decentralization.
Keiser expressed his views in response to Gensler’s recent statement on cryptocurrency regulations. During a recent question-and-answer session involving the SEC, Gary Gensler voiced his concerns regarding crypto companies failing to adhere to existing securities regulations. He further added that the crypto market is based on a “false narrative” of decentralization.
Gensler restates that cryptocurrencies, except Bitcoin, are considered securities. However, he ignores the demands of crypto stakeholders who want clear rules from the commission. Gensler believes existing securities laws are enough for the crypto industry and doesn’t see the need for new guidelines.
XRP Community Reacts to Max Keiser
This controversial statement by Max Keiser has gained a lot of attention in the crypto industry, especially amidst the XRP community which has an ongoing lawsuit with the same point of contention. According to the CEO of Chainstone Labs and others, criticisms have been raised regarding the excessively restrictive nature of the law.
Mr. Huber, a well-known crypto influencer, humorously responded to the situation with a video and questioned whether Keiser had bribed Gensler.
Several others have also disagreed with Keiser and have tried to explain the technicalities of why XRP is not a security.
Is SEC Chair Gary Gensler Dragging the Ripple lawsuit? Gensler’s Rulemaking Process Might Take 10-20 Years
While the cryptocurrency sector awaits a resolution in the prolonged Ripple lawsuit, Venture Capitalist Adam Cochran recently expressed his concerns on Twitter regarding the Securities and Exchange Commission (SEC) ongoing delay in formal rulemaking for digital asset transactions. He said that the current pace at which the SEC is embarrassing to the United States.
He also brought to light how the SEC Chair Gary Gensler has referred to past cases to support the notion that rulemaking processes lasting 10 to 20 years are considered acceptable.
His tweet suggested that at present, there is growing concern that innovation in America is facing significant challenges. Curiously, while these innovative sectors face regulatory pressures, there have been instances of OCC regulated banks experiencing failures that have resulted in the potential loss of user deposits. This situation raises doubts about the stability and reliability of the traditional banking system.
“One can appreciate that new technology can be challenging to understand the implications of and merits time to study. Which is why despite crypto being created in 2010, it took other US regulators time to respond – but, respond they did.”
While other departments have been able to clarify their positions, the SEC Chair has been reluctant to provide clear guidance on digital asset transactions. This lack of guidance from the SEC has raised concerns and frustrations within the industry. This projection suggests that the United States may lose its competitive edge in the digital asset space if regulatory clarity is not provided in a timely manner.
The legal dispute between Ripple and the SEC, which commenced in December 2020, revolves around the SEC’s assertion that Ripple did not register approximately $1.4 billion worth of XRP as securities. The outcome of this lawsuit carries significant implications for the broader cryptocurrency industry.
The United States’ stance on cryptocurrency regulation has left many in the industry frustrated, with criticism focused on the lack of clear guidelines and the Securities and Exchange Commission’s (SEC) actions against digital currency firms. While other countries have adopted comprehensive frameworks, the US has yet to follow suit, with SEC Chair Gary Gensler drawing particular scrutiny.
Gensler’s recent tweet sparked a response from Pro XRP Attorney John Deaton, whose rebuttal has caused a stir in the crypto community. Read on to discover more about this ongoing controversy and its potential impact on the future of crypto in the US.
Deaton Tells Chairman Gensler to Stop ‘Protecting’ the American Public
Renowned cryptocurrency lawyer John Deaton recently took to Twitter to address SEC Chairman Gary Gensler, requesting that he cease protecting the American public on their behalf. The lawyer’s comments came in response to Gensler’s expression of gratitude to agency staff for their efforts in advancing the SEC’s mission.
This is in light of the various damaging regulatory measures taken by the SEC against numerous crypto enterprises recently, including the Ripple (XRP) blockchain, the Coinbase crypto exchange, Paxos, the company that produces the BUSD stablecoin, and Bittrex, which today filed for chapter 11 bankruptcy.
The SEC filed a lawsuit against Ripple Labs in December 2020, alleging that the company had conducted an unregistered security offering by selling XRP. The SEC believes that XRP is a security because it meets the definition of an investment contract under the Howey Test. Ripple and Deaton argue that XRP is a digital currency and not a security. The lawsuit is ongoing, with several court filings made over the past three years.
Deaton Challenges Legal Precedent On Investment Contract Cases
In a recent Twitter post, blockchain lawyer John Deaton challenged the legal precedent on investment contract cases, stating that no case in the past 76 years has considered the underlying asset security.
Deaton arrived at this conclusion after conducting extensive research and examining the findings of legal experts like Lewis Cohen, a New York-based lawyer who authored the book “The Ineluctable Modality of Security Law: Why Fungible Crypto Assets Are Not Securities.” The lawyer’s remarks are significant in light of the ongoing lawsuit between the SEC and Ripple over the classification of XRP.
The cryptocurrency industry has been in a state of uncertainty and confusion due to the lack of regulatory clarity in the United States. The recent testimony of SEC Chair Gary Gensler before the House Financial Services Committee has further highlighted the urgent need for clear guidelines and rules.
The failure to differentiate between cryptocurrencies as securities or commodities has left the market unstable, with crypto firms unsure of how to comply with regulations or whether they will face enforcement actions. This has led to growing concerns among industry stakeholders that many crypto firms may choose to move offshore if regulatory clarity is not provided soon.
XRP Or Commodity? Gary Gensler Cannot Differentiate!
The recent testimony of SEC Chair Gary Gensler before the House Financial Services Committee has further highlighted the urgent need for regulatory clarity, as he refused to clarify whether Ether is a security or commodity. This lack of clarity has led to confusion and instability in the market, with crypto firms unsure of how to comply with regulations or whether they will face enforcement actions.
Congressman Tom Emmer has criticized Gensler for his handling of the situation, accusing him of causing chaos in the market and pushing innovation to China. Emmer believes that many Americans are unhappy with Gensler’s approach and are hoping for his dismissal from the SEC.
Lack of Clarity Is Hurting Crypto
The need for clarity and regulation in the industry has also been emphasized by lawyer Bill Morgan, who submitted a proposal for a bespoke regulatory framework for digital assets on behalf of his law firm.
Without clear rules and regulations, many crypto firms may choose to move out of the US, leading to a loss of innovation and economic opportunities. The US must act swiftly to provide regulatory clarity and prevent further confusion and instability in the market. It is crucial that the SEC provides clear guidelines for crypto companies to comply with, rather than relying on enforcement actions without clear rules in place. The cryptocurrency industry is in need of certainty and stability, and the US government must provide the regulatory clarity necessary to ensure its continued growth and success.
Should Gary Gensler Step Down?
All Committee Republicans, led by Chairman Patrick McHenry, have written a letter to SEC Chair Gary Gensler criticizing his attempts to force digital asset trading platforms to “come in and register” under a non-existent registration process. The letter accuses Gensler of overstepping his authority and urges him to work with Congress to establish a clear regulatory framework for the cryptocurrency industry.
Gensler’s testimony before the House Financial Services Committee holds significant implications for Ripple and the global digital asset market. While it is unlikely to substantially impact the ongoing legal dispute between the SEC and Ripple, the outcomes of the hearing could shape the future trajectory of the industry.
What outcome are you hopeful for?
Congressional Republicans Slam SEC Chair Gary Gensler’s Crypto Approach! Explosive Details Emerge in Today’s Hearing
The battle between the US Securities and Exchange Commission (SEC) and the crypto industry has taken center stage as SEC Chair Gary Gensler faces criticism from Republicans on the House Financial Services Committee. The committee claims Gensler’s approach to crypto companies is not compatible with existing law, and his statements urging the industry to register are a “willful misrepresentation” of the agency’s frameworks. Amidst this tug-of-war, Gensler is set to testify before the committee, followed by a crypto-specific hearing discussing stablecoins.
Gary Gensler Faces Intense Criticism
In a bold move, Republicans on the committee have recently signed a letter arguing that national securities exchange regulations do not fit well with digital assets due to their potential for non-investment use. The letter accuses Gary Gensler, the chair of the Securities and Exchange Commission (SEC), of making a “willful misrepresentation” by urging the industry to “come in and register” with the agency. These statements, the Republicans argue, are inconsistent with the SEC’s current regulatory frameworks.
The letter said:
“Given an NSE can only list securities that have been offered in compliance with the securities laws, the inability to register makes the current NSE framework ill-suited for digital asset trading platforms. Moreover, the lack of clarity provided by the SEC as to what digital assets are considered securities also limits what an NSE can list.”
As the crypto industry eagerly awaits Gary Gensler’s testimony before Congress, the Securities and Exchange Commission (SEC) Chair has reaffirmed his stance on crypto regulation. In a prepared statement released on Monday, Gensler doubled down on his belief that “most crypto tokens are securities” and called for all crypto exchanges to register with the SEC.
This comes as the SEC has taken enforcement actions against several exchanges, including Beaxy and Bittrex, signaling Gensler’s push for exchanges to register as a national securities exchange, broker, and clearinghouse.
Gary Gensler Fails To Describe Crypto Regulations
During a hearing before the House Financial Services Committee, Chairman Patrick McHenry criticized Gary Gensler for his lack of clarity on how cryptocurrency firms should adhere to current laws and regulations.
SEC Chair Gary Gensler faced tough questioning during the hearing, particularly around the classification of Ethereum. Committee Chairman Patrick McHenry pressed Gensler on whether ETH should be considered a security or commodity, citing the SEC’s 50 enforcement actions in the crypto space. However, Gensler avoided giving a direct answer and instead offered a vague response, saying “it depends on the facts of the law,” much to the frustration of McHenry.
“Not clearly mentioning the rules as to how companies should comply and punishing them is not ideal.”
McHenry cited conflicting statements about whether Ethereum is a security or a commodity, including a 2018 statement by a former SEC director that it is not a security and a 2023 statement by the CFTC chairman that it is a commodity. He noted that the lack of clarity in the market is further compounded by the New York attorney general’s position on the matter.
The ongoing debate between the SEC and Ripple continues to draw attention as the crypto market is filled with controversies regarding crypto securities. Ripple’s Policy Chief recently entered the fray, taking issue with the views expressed by Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), on the compatibility of cryptocurrencies and securities.
Susan Friedman Slams Gary Gensler’s Views On Crypto
Ripple, a significant player in the blockchain and cryptocurrency space, has long been at odds with the SEC over the classification of its native digital asset, XRP. The SEC argues that XRP should be treated as a security, while Ripple maintains that it is a currency. The ongoing legal battle has made headlines, as it could potentially set a precedent for the classification of other digital assets after the highly anticipated summary judgment.
Recently, SEC Chairman Gary Gensler took to Twitter to express that there is no incompatibility between the crypto markets and securities laws. He highlighted the SEC’s objective of aligning the cryptocurrency space with existing regulations, ensuring that digital asset investors enjoy the same protections as those in traditional markets.
In a recent public statement, Ripple’s Policy Chief criticized Gensler’s stance on cryptocurrencies, arguing that the SEC Chair’s views are overly restrictive and false. Susan Friedman pointed out that, in contrast to securities, cryptocurrencies typically don’t entail a financial claim on the issuer and can be settled in real time without intermediaries.
She argues that these distinctions necessitate tailored regulations rather than blanket statements asserting that a one-size-fits-all approach is the most appropriate course of action.
XRP Investors Wait For The Final Outcome
The crux of the disagreement between Ripple’s Policy Chief and Gensler lies in their divergent interpretations of the Howey Test, a legal framework used to determine whether a financial instrument qualifies as a security. Ripple believes that the Howey Test, which was established in the 1940s, is outdated and ill-suited to the unique characteristics of digital assets.
Attorney Bill Morgan emphasized that the US SEC’s own expert conceded that since mid-2018, the price movements of the two largest crypto assets, Bitcoin and Ethereum, can account for up to 90% of Ripple’s native token price fluctuations. Despite this, the notion that Ripple Labs’ substantial XRP holdings imply that the XRP ledger (XRPL) is centralized and that XRP constitutes a security continues to endure.
He stated that in the event of a split decision in the XRP lawsuit, the judge could rule that XRP sales conducted after mid-2018 were not considered securities.
Although Gensler and Friedman may hold differing opinions on the specific regulatory framework to be applied to the crypto market, they both appear to concur that some degree of regulation is essential for safeguarding investors and maintaining market integrity.
In the midst of the ongoing legal dispute over the XRP token’s nature, Brad Garlinghouse, CEO of Ripple, launched a new attack on the U.S. Securities and Exchange Commission (SEC). Gary Gensler, the head of the Securities and Exchange Commission, told the House Appropriations Committee that the market for cryptocurrencies can be adequately regulated by the existing securities laws.
Garlinghouse Slams SEC
Ripple (XRP) CEO Brad Garlinghouse said US Securities and Exchange Commission (SEC) Chair Gary Gensler acts like an “autocrat,” urging elected officials to take notice of the regulator. Garlinghouse responded to a news story in which Gensler claimed that the industry is already covered by current regulations, so no new legislation is required.
To which Garlinghouse responded, “For the Chair of the SEC to assert that he dictates what is a security – and not the legislation from which his agency derives its power – is beyond comprehension. It’s time for elected officials in the US to take notice.”
As long as the SEC head acts like an autocrat in charge of a $2.2 billion bloated agency, the authority will never want to be clear about which crypto assets are “in” or “out.” Garlinghouse emphasized that ambiguity can pass for authority in the absence of clear jurisdiction.
Garlinghouse’s Opinions Echo Those of Crypto Stakeholders
The crypto community has long expressed its concerns about the SEC’s approach to Crypto. The commission recently increased its regulatory efforts against the cryptocurrency industry.
Justin Sun, a cryptocurrency entrepreneur, and his businesses are the targets of a new lawsuit from the Commission. Moreover, for failing to register as a national securities exchange, the financial authority also brought charges against the cryptocurrency platform Beaxy.
The legal battle between SEC and Ripple is nearing its end with several crypto attorneys predicting a win for the crypto firm. However, it seems like the SEC is not budging on its regulatory approach.
The United States Securities and Exchange Commission Chairperson Gary Gensler reiterated that all proof-of-stake (PoS) crypto tokens should be registered as securities. According to Gensler, creators of PoS protocols often promote their projects on social media, thus luring investors based on the expectation of earning a return. Without naming any crypto token, Gensler indicated that the PoS crypto projects should begin seeking regulatory consideration.
“I would suggest that each of these token operators, obviously consulting with the appropriate talent, seek to come into compliance,” Gensler said during an open meeting of the SEC on Wednesday.
Previously, Gensler indicated that all digital assets apart from Bitcoin, which utilizes a proof-of-work (PoW) consensus mechanism, are unregistered securities. As a result, Gensler’s sentiment puts the most prominent smart contract ecosystem, Ethereum, at risk of being classified as unregistered security in the United States.
Nonetheless, the crypto market is global, and the United States only controls approximately 25 percent of worldwide economic activities.
The Bigger Picture
Notably, crypto firms do not want to be regulated under the securities act due to the investor-protection requirements that come along. For instance, if Ripple loses the case with the SEC, XRP holders will be entitled to dividends on the company’s income, thus diluting the company’s revenue. Additionally, the SEC is trending carefully not to send crypto companies to overseas jurisdictions that have friendly legal regulations.
Moreover, Ripple CEO Brad Garlinghouse has previously indicated that Ripple will move to a crypto-friendly market like Dubai if the SEC wins the ongoing XRP lawsuit. Meanwhile, the SEC is torn between protecting investors and harming nascent technology.
Furthermore, some crypto projects have predatory tokenomics, whereby the founders have diluted the project’s market with fresh tokens, thus diluting the underlying value.
According to attorney John E. Deaton, the United States Securities and Exchange Commission (SEC) chair Gary Gensler could be in hot water due to the SEC’s failure to investigate questionable Chinese investments by Sequoia Capital. Deaton made this assertion in a tweet last Saturday, stating that Sequoia was also an investor in FTX.
The tweet was in response to a thread by Brian Costello, a technology executive with a background in international finance, in which he called out Congress for enabling China to become a more significant threat to U.S. national security by turning a blind eye to the reluctance of the Gensler-led SEC to investigate firms like Sequoia.
Costello argues that the failure to hold Gensler accountable for investigating capital market claims against Sequoia’s China principal, Neil Shen, has major consequences for the United States. In a Senate Armed Services hearing in the summer of 2021, colleague Sen. Dan Sullivan revealed that “everybody knows” in both parties what’s going on with Sequoia’s China affiliate.
Furthermore, Deaton questioned why the Treasury (CFIUS) is meeting with Sequoia when the Department of Justice (DOJ) and SEC have criminal allegations against one of their Global Stewards (MD for China). He asked if that is common practice or if it’s just because they are big donors.
Deaton’s statement raises the possibility of a congressional investigation into Gensler’s leadership at the SEC and the potential consequences that could follow. The SEC’s reluctance to investigate questionable Chinese investments could lead to Gensler’s downfall, and he could be held accountable for the regulatory agency’s inaction.
The claims made by Deaton and Costello could have significant implications for the SEC and the wider financial industry. It remains to be seen how this situation will unfold and what, if any, action will be taken against Gensler or the SEC.
As the situation develops, it will be interesting to see how the SEC responds to these allegations and whether or not they will launch an investigation into Sequoia Capital and Neil Shen.
Gary Gensler is a former investment banker and American financial regulator who has been the chairman of the United States Securities and Exchange Commission (SEC) since April 2021. He has recently been in the news owing to the litigation against Ripple and SEC’s legal measures against various exchangers/firms including LBRY, and Kraken.
Criticisms of Gensler’s ostensibly harsh stance on cryptocurrency regulation have significantly increased since he was appointed head of the SEC. It has also been claimed that Gensler and the SEC have failed to provide clear direction for crypto enterprises on matters such as registration and compliance, as well as to make crypto compliance appealing and accessible to market participants.
Gensler has an update about Ethereum. Is there a reason to be cautioned? Let’s explore.
Could Ethereum be Classified as a Security?
Securities and Exchange Commission (SEC) Chief Gary Gensler stated in a recent interview with New York Magazine that he believes Ethereum (ETH) might be classed as a security. According to Gensler, other cryptocurrencies outside Bitcoin are often developed by a group of businesspeople that utilize various covert strategies to market their tokens and draw in investors. He stated that these tokens are fundamentally securities since investors are betting on the efforts of intermediaries to make money.
Gensler previously expressed his reluctance to address the question of whether Ethereum is secure in his remarks regarding the cryptocurrency. He also commented on the regulation of stablecoins earlier in 2021. According to him, stablecoins that are connected to a conventional currency or gold, like the dollar, should be categorized as securities.
Gensler’s Criticism of Crypto Projects
The head of the SEC has previously blasted cryptocurrency initiatives that attempted to pass themselves off as something else in order to avoid registering with the SEC. He contended that many cryptocurrency initiatives that are securities are attempting to claim that they are not, which he considers sad.
Gensler insisted that the fundamental principle of obtaining money from the public and providing them with basic disclosures should stay in place, even for crypto tokens, in spite of the criticism the regulatory agency has gotten for being somewhat out of step with contemporary technologies.
With this comment from Gensler on Ethereum, it seems as though yet another problem may emerge in the cryptocurrency industry.
SEC Chair Gary Gensler Issues Stern Warning To Crypto Firms, Demands Compliance Following Action on Kraken Staking
In the world of cryptocurrencies, the U.S. Securities and Exchange Commission (SEC) is considered the watchdog. The SEC ensures that investors are protected from fraudulent and illegal activities in the crypto industry. In recent years, the SEC has been closely watching crypto firms that are offering investors unregistered securities, which has brought questions regarding the transparency and legality of those firms.
In a recent interview on CNBC’s Squawk Box, SEC chair Gary Gensler flashed red signals with heavy fines to those crypto firms operating their crypto business without following the law. This statement came after the SEC fined crypto exchange Kraken a whopping $30 million for offering unregistered staking services to US investors.
SEC Takes Leading Role In Bringing Crypto Firms Under Regulations’ Umbrella
In the interview, Gary Gensler alarmed other crypto firms to take note of the SEC’s move to halt crypto exchange Kraken’s operation and forced it to pay $30 million as a fine for offering unregistered securities in its staking service to US customers.
Gensler noted that it is time for crypto firms to register their businesses with the SEC and abide by the laws of the United States to keep running their operations. As the regulatory body is on a mission to protect investors from illegal and fraudulent activities in the cryptocurrency industry, Gensler is making it clear that exchanges must play by the rules.
According to Gensler, many crypto exchanges opt not to register with the SEC, which puts them at risk of violating the regulations. Gensler has criticized the business models of many crypto projects as being “rife with conflict” and needing “disentangling” bundled products.
Gensler stated, “Companies like Kraken can offer investment contracts and investment schemes, but they have to have full, fair, and truthful disclosure. And this puts the investors who watch your program in a better position. That’s our basic bargain. They were not complying with that basic law. 330 million Americans are our clients; Kraken knew how to register, others know how to register, it’s just a form on our website… And if they want to offer staking, we’re neutral, come in register because investors need that disclosure.”
Regulations Are The Only Way For Success In The Crypto Market
The exponential growth of the crypto market needs to come under regulation to propel great success in the future. Therefore, Gensler has also been engaging directly with market participants, discussing the importance of compliance and explaining the SEC’s regulatory framework.
When asked about the SEC’s goals for the crypto market, Gary Gensler emphasized that the regulator is “technology neutral.” This means that the SEC is not attempting to eliminate crypto from the mainstream financial system, but rather, it is focused on ensuring that all participants in the crypto market comply with its regulations.
Gensler said, “If this field has any chance of survival and success, it’s time-tested rules and laws to protect the investing public. Don’t have your hand in the customer’s pocket, using their funds for your own platform.”
Moreover, the SEC has targeted the astronomical surge in bankruptcy filing recently following FTX’s collapse as Gensler commented,
“If somebody’s taking their tokens and transferring it to that platform, the platform controls it, and guess what happens if they go bankrupt? You stand in line at the bankruptcy court.”
Hence, crypto firms should take Gensler’s warning seriously, as the SEC can put hefty fines, halt operations, and put unregulated firms in trouble. However, the community has criticized SEC’s steps as regulators need to provide clear guidelines before taking legal actions.
U.S FED’s Chair, Jerome Powell is going to speak at the Sveriges Riksbank International Symposium on Central Bank Independence, while the crypto markets and the stock market investors are presently clueless. Most analysts believe the markets could turn extremely volatile as the Bitcoin price is expected to rise slightly and after it hits $17,500, massive liquidations may explode.
Previously, the markets responded in a negative way whenever the FED chair delivered his speech citing the dovish outlook. A similar trend is believed to replicate and hence the analyst here has warned his 37.8K followers to be careful in performing any trade.
Besides, another popular analyst, Micheal van de Poppe, believes that Jerome Powell has no base to produce a dovish speech apart from having more than 50 PMI from Friday. Hence believes that the markets may just be relaxed and display no major impact of his speech.
Collectively, after a significant upswing, the markets are again consolidating within a very narrow range. Hence it appears that the Bitcoin and major altcoins are preparing for the event and hence began accumulating well in advance.
While the FTX-Alameda crisis unfolds, there is a new revelation about connection between FTX new CEO, Caroline Ellison and SEC chair Gary Gensler. It’s a known fact that Gensler was a professor at MIT where he offered a course on Blockchain and Money which stresses on use of blockchain technology. During his MIT career, Gensler was in close connection with Glenn Ellison and FTX CEO Caroline Ellison is the daughter of Glenn Ellison.
This comes out after Caroline Ellison recently claimed that other than Sam Bankman-Fried, the other two FTX executives were aware of funds transfer to Alameda.
Ethereum max (EMAX) has been surrounded by controversy ever since it was launched in May 2021. It is an altcoin that uses Ethereum’s blockchain ledger to record sales and transactions.
It is important to note that Ethereum max has lost 95.3% of its value since June 2021, when Kim Kardashian promoted it. This means that if you invested $100 following Kardashian’s post about the token, your investment would be worth about $5 today!
Kim Kardashian promoted Ethereum Max (EMAX) and acknowledged that she was being paid for it. However, she didn’t tell her followers the exact amount she received for the promotion. The SEC took action against her and fined her $250,000 for promoting unregistered security.
Soon after, the community broke out in a debate.
“Should it be required to disclose the amount received to promote an investment opportunity?”
The FTC’s Regulatory Policies
Celebrities and social media influencers have made a handsome amount of money from such promotions and endorsements of services and products ranging from clothing to beauty products, supplements, and medications.
The Federal Trade Commission (FTC) sees to the regulation of endorsements by requiring various acts and disclosures. The acts and disclosures include looking at crucial information like whether a financial relationship exists between the endorser and the company, whether a post was paid for, and even requiring an endorser to personally try a product before endorsing it. However, the FTC has never gone so far as to require endorsers to disclose the amount they were paid to promote a product, as in this case.
In this case, the “product” is an investment opportunity falling under the regulation periphery of the SEC. Kardashian had included disclaimers such as “#Ad” and “this is not financial advice,” as required by the FTC’s Endorsement and Testimonial Guidelines.
However, all this is not sufficient under the SEC’s regulations as it also required Kardashian to disclose the exact amount, i.e., $250,000 that she was paid by EthereumMax (EMAX) to “tout” the token.
SEC Cracks Down On Kim Kardashian
Some will argue that Kardashian’s disclosure in the particular ad is enough and that the SEC’s anti-touting provision’s requirement to disclose the exact amount of consideration is senseless. One may also like to believe that disclosing that she was paid $250,000 to promote the token would not have any material effect on her followers in their decision to invest or not.
However, whether or not a particular disclosure is material to a potential investor is a question that the investor in the situation can best answer. The SEC has to ensure that potential investors receive as much information as possible to assist them in their decision-making to safeguard the investing public.
The FTC recently proposed an amendment to its Endorsement Guidelines on Digital Advertising to address the growing influencer market. Section 255.5 is of much relevance as it
“Disclosure of Material Connections,” which proposes “business, family, or personal relationships; monetary payments; the provision of free or discounted products or services to the endorser; early access to the product; or the possibility of winning a prize, of being paid, or of appearing on television or in other media promotions.”
With such financial disclosures, people might refrain from buying or investing in products if they realize their favorite influencers/celebrities are doing it only for the “cheque.”
SEC Chairman Gary Gensler also warned the general public that celebrities’ incentives aren’t typically aligned with consumers’ best interests. In the SEC’s press release, Gensler highlighted that celebrities and influencers must be mindful that the law requires them to make heightened disclosures to protect individuals who may look up to them for “financial advice.”
Many celebrities, who vouch for certain products and services, do not have sufficient expertise to ensure that the investment is appropriate and complies with U.S. securities laws. This gives power to celebrities such as Kardashian to influence millions of individuals, prompting them to make uninformed decisions solely based on their admiration and loyalty for the celeb.
Kardashian’s $1.6 million settlement is a reminder that the SEC will not shy away from pressing charges against those with great influence for unlawfully touting crypto securities to ensure greater regulation. The investing public should also look with wide eyes before investing.
Additionally, Altcoins like EMAX lack stability like the older cryptocurrencies such as Ether and Bitcoin. EMAX is a risky investment because once investors stop buying or start selling, the token’s value can quickly plummet.