blockchain tipsheet

out-of-reach

Hong Kong-based Animoca Brands is glad it made a bet on non-US jurisdictions for its crypto token project says an article in the South China Morning Post. The company’s Sand token was named a security in this week’s SEC lawsuits against Binance and Coinbase. The Post explains, “Sand is the native crypto token used by Animoca’s metaverse platform The Sandbox, and it was one of more than a dozen such tokens to have been explicitly named by the SEC as securities, with others including Solana, Polygon and Mana, the token used in the Decentraland virtual world.” Read it.

regulating crypto ads

Saying its issuing “tough new rules” for advertising cryptoassets, the United Kingdom’s Financial Conduct Authority (FCA), the equivalent of the Securities and Exchange Commission (SEC) in the U.S., said that the new rules will go into place this October and ban such marketing tactics as “refer a friend.” Overall, the agency hopes that the introduction of what it’s calling a “cooling off period” will give investors pause before diving into what the FCA sees as highly speculative investing. Read the announcement. And, get the rules (PDF).

Read a summary from CoinDesk. Continue reading “Choosing Offshore From The Get-Go; UK Regulating Crypto Ads”

Treasury speaks

U.S. Treasury Secretary Janet Yellen appeared on CNBC’s Squawk Box yesterday and talked crypto after the recent enforcement actions against Binance and Coinbase. She said, “[Treasury recently] wrote a set of reports in response to the President’s Executive Order to examine the risks inherent in crypto. And we identified a number of risks – some of which – risks to consumes, investors – our laws are already strong. The SEC, The CFTC, other regulators have the ability and tools to protect consumers and investors. I’m very supportive of seeing those agencies use the tools they have. (…) I see some holes in the system where additional regulation would be appropriate. We’d like to work with Congress to see additional regulation pass.” See it.

intro to crypto

A new publication,  “Introduction To Cryptocurrency,” hit the Congressional Research Service database in late May. “Currently, there is no comprehensive regulatory framework for crypto, but regulators may apply existing regulatory frameworks when applicable to crypto,” writes author Paul Tierno, an analyst in financial economics at CRS. Download it (PDF).

Tierno explains several key policy issues facing Congress including: “The regulatory policy debate has focused on whether a regulatory regime that is tailored for crypto is necessary. Other key policy issues can be summed up in three unanswered questions: Is the current authority sufficient, or is congressional action required? If new regulatory authority is required, who should be the primary regulator? Is it better to create a new, overarching structure, or is a refinement of the existing framework sufficient?”

Tierno also wrote the lengthy and detailed “Cryptocurrency: Selected Policy Issues (PDF)” which was released in February. The new “Intro To Crypto” appears to “peel out” a digestable version of his February tome.

europe salivating

In the wake of the U.S. regulatory crackdown on digital assets, Europeans are beginning to salivate at the potential to tilt the global economic order their way. Joachim Schwerin, a principal economist in the European Commission’s department responsible for economic growth tells CoinDesk, “What we hear from businesses is that now a lot of them are looking to grow, to stay safe, and to manage their risks. (…) They don’t know what will happen in the U.S., so they come to us. This is good for us, this is good for competitiveness.” Read more. Continue reading “Secretary Yellen On Crypto: Additional Regulation Would Be Appropriate”

SEC charges Coinbase

Coinciding with another round of hearings aimed at creating legislation for digital assets – and Monday’s action against Binance – the Securities and Exchange Commission (SEC) delivered an enforcement action against Coinbase. The agency said in a statement that Coinbase was “operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency.” The SEC also charged Coinbase for “failing to register the offer and sale of its crypto asset staking-as-a-service program.”

Read the statement. And, see the 101-page lawsuit (PDF).

The suit was not unexpected given the “Wells notice” Coinbase received in March suggesting an enforcement action was on the way.

It was only two years ago that Coinbase’s registration statement allowing it to go public was approved by the SEC.

SEC charges Coinbase – states

The lawsuits for Coinbase didn’t stop with the SEC yesterday either. Though likely well-coordinated with the securities agency, “a multistate task force comprising state regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin have issued a Show Cause Order against cryptocurrency exchange Coinbase,” reports Cointelegraph. Note the inclusion of both “red” and “blue” states in the group.

“The Order gives Coinbase 28 days to show cause why they should not be directed to cease and desist from selling unregistered securities in Alabama” and in coordination with the other states mentioned. The action stems from the Coinbase’s staking rewards service says the Order. Read the order (PDF). Continue reading “SEC, States Aim Enforcement Actions Against Coinbase; SWIFT Testing Tokenized Asset Systems”

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SEC charges Binance

The Securities and Exchange Commission (SEC) charged cryptocurrency platform Binance and its CEO Changpeng “CZ” Zhao with thirteen separate charges related to securities violations yesterday.  Director of the SEC’s Division of Enforcement Gurbir Grewal said, “We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk – all in an effort to maximize their own profits.” Read the release. And, see the 136-page lawsuit (PDF).

In a tweet yesterday afternoon, the SEC (quoting from the press release) quoted a “Binance chief compliance officer 2018” who allegedly said, “We are operating as a fking unlicensed securities exchange in the USA bro.”

The Wall Street Journal notes, “For the SEC, the lawsuit is another significant bet that U.S. courts will agree it has jurisdiction over the crypto industry, which often disputes that digital assets are securities.” Read it.

SEC charges Binance – reaction

Binance rejected the SEC’s suit in a company blog post yesterday and said in part, “Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations.  But despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate.  We are disheartened by that choice.” Read the blog. And, read an early “take” on the lawsuit by industry participants on CoinDesk.

Meanwhile, Reuters also reports that from 2019 to 2020, Binance executive Guangying Chen operated five Silvergate Bank accounts belonging to Binance’s “purportedly” independent US affiliate. Read more. Continue reading “Binance and CEO CZ Charged By SEC; House Digital Assets Hearings Today And Tomorrow”