Tag: sec

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SEC and CFTC Commissioners Reach Out To The Industry at DC Blockchain Summit

DC Blockchain Summit

A collegial chat between regulators from the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) highlighted an impressive day-long agenda attracting 850 attendees to the DC Blockchain Summit from the Chamber of Digital Commerce in Washington, D.C. yesterday.

The Chamber’s Annemarie Tierney didn’t hesitate in her moderation role in the morning session with the blockchain industry’s two most important regulatory bodies and immediately brought to the fore the key differences in jurisdiction between the two agencies – securities vs. commodities – and under which agency do the various tokens and cryptocurrencies land. Commissioner Hester Peirce of the SEC went first and repeated the gyst of her well-known views that do not necessarily sync with the rest of the SEC commissioners and its Chairman:

“A token [that] is sold as part of securities offering does not in my mind necessarily mean that the token continues on in its entire life to have to be treated as a security. That’s one of the areas where I’d like to see us provide more clarity. It has not been our standard practice over the years to identify what are security offerings and what aren’t. It’s pretty broad rules. And we expect that when people are out there raising capital, they comply with our initial offering rules, regardless of what it is. But that’s led to the treatment of certain things – securities offerings that you might not think the underlying object to be sold is [part of the securities offering]. So that’s the distinction – I would like us to deal with it better (…)”

CFTC Commissioner Christy Goldsmith Romero weighed in next saying that she agreed with her counterpart in the SEC on the overall need for greater clarity – particularly around that which is decentralized. Beyond the jurisdictional question, in order to help her create a regulatory framework, Goldsmith Romero appealed to the audience on educating her and the CFTC on how the blockchain community innovates and also protects consumers: Continue reading “SEC and CFTC Commissioners Reach Out To The Industry at DC Blockchain Summit”

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SEC Chair Gensler Discusses FY 2023 Budget with House Appropriations (Video)

SEC's Gensler at House Appropriations

Fiscal Year 2023 is in focus today for U.S. Securities and Exchange Commission Chair Gary Gensler who is presenting his group’s budget for next year to the House Committee on Appropriations chaired by Rep. Rosa DeLauro (D, CT).

The live hearing began at 10:30 am ET on Wednesday, May 18. Chair Gensler will also be answering questions with U.S. Federal Trade Commission chair Lina Khan, who will discuss her commission’s budget for the next fiscal year.

As outlined by the SEC’s FY 2023 budget justification in March, points of discussion with the House committee as it relates to crypto includes:

    • Staying ahead of investor protections with more full-time employees for SEC’s Enforcement (ENF) division.
    • Continuing to grow the Investment Management (IM) division which approves and regulates ETFs and other financial vehicles which may involve cryptocurrencies.
    • Coordinate across the U.S. government and with international partners on applicable policy decisions related to integration and use of distributed ledger technology in a securities context.

See the on-demand video stream of the hearing:

There is no member of the Congressional Blockchain Caucus on House Appropriations.

Live blog …
Continue reading “SEC Chair Gensler Discusses FY 2023 Budget with House Appropriations (Video)”

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Preview: SEC Budget for 2023 and House Appropriations Committee Meeting

House Appropriations

On Capitol Hill this Wednesday, Securities and Exchange Commission (SEC) Chair Gary Gensler will appear before the House Appropriations Committee to review the SEC’s 2023 budget proposal as it looks to continue to fulfill its mission to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

In late March, the SEC submitted its budget “justification” to Congress (PDF) as a precursor to the meeting and revealed several areas in which it expects to continue to engage crypto markets in 2023.

Side note: there are no members of the Congressional Blockchain Caucus on the House Appropriations Committee.

Enforcement

Following up on the SEC’s recent announcement of doubling positions related to crypto enforcement this year, the 2023 budget justification outlines a request for 125 additional positions in the Department of Enforcement (ENF) to help enforce regulations across financial assets – including crypto:

“ENF requests 125 additional positions to enhance the division’s ability to timely pursue the wide variety of misconduct within the SEC’s remit. They will also strengthen ENF’s capabilities to investigate new and emerging issues, including crypto-asset markets, cyber-related risks, and the environmental, social, and governance space. Finally, it is expected that the number of litigated cases will continue to rise as ENF increasingly holds wrongdoers accountable for their misconduct with more meaningful and, in some instances, escalating sanctions. ENF requires additional resources to ensure that it has an adequate number of attorneys to staff the increasing number of litigated cases.”

The ENF only accounts for an increase of 63 full-time employees in the justification’s line item – from 1302 in 2022 to 1365 in 2023 .

Investment Management Continue reading “Preview: SEC Budget for 2023 and House Appropriations Committee Meeting”

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Stablecoin Debacle Speaks To Potential For Congressional Action

Stablecoins

Clearly not all stablecoins are stable as crypto experienced a major liquidation moment this past week. How this will affect blockchain regulation in DC remains to be seen, but there is opportunity.

To recap, the stablecoin known as TerraUSD (a.k.a UST -its ticker) went down 90+% and the governance token associated with its peg – Terra LUNA – cratered a similar percentage. Together, the size of the loss is reminiscent of Lehman Brothers and its bankruptcy during the Great Financial Crisis in 2008.

Market cap comparison:

    • Lehman Brothers – $60 billion at its peak in 2007.  Filed for bankruptcy and effectively went to zero in late 2008.
    • TerraUSD – $18.6 billion market cap as of May 8, 2022. Approximately $2 billion as of today according to CoinMarketCap.
    • Terra LUNA – The backing governance token for TerraUSD reached a peak market cap of $41.05 billion as of April 3, 2022. Today, it’s $1.8 billion.

It should be noted that the remaining value for TerraUSD and Terra LUNA could be fleeting as traders try to play an arbitrage opportunity. But, overall the future of both appears bleak.

For now, the promise of providing stability in volatile crypto markets with stablecoins appears to be damaged. False advertising? How will government policymakers react?

Continue reading “Stablecoin Debacle Speaks To Potential For Congressional Action”

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For Crypto, The Next New SEC Hire May Be More Important Than Chair Gensler

SEC Job Openings

The listing slid quietly into the public last Thursday, but the new “Senior Officer-National Unit Chief (Crypto Asset & Cyber Unit)” role at the Securities and Exchange Commission could have huge ramifications in determining the future of cryptocurrency, NFTs and blockchain technology in the United States.

This role may replace Kristina Littman who the Wall Street Journal reports is leaving her leadership role in enforcement at the SEC in June.

The ad for the new role came in advance of yesterday’s SEC announcement by Chairman Gary Gensler that the enforcement division of the “Crypto Asset & Cyber Unit” (was “Cyber Unit”) will add 20 positions “for protecting investors in crypto markets and from cyber-related threats.” This will bring the unit to 50 positions according to the SEC release.

Influential responsibilities in the Unit Chief job listing include:
Continue reading “For Crypto, The Next New SEC Hire May Be More Important Than Chair Gensler”

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House Gives CFTC Responsibility with Digital Commodity Exchange Act

Congressman Thompson

To be a commodity, or a security, that is the question.

Another crypto-related bill was introduced in Congress last week with the Digital Commodity Exchange Act of 2022 (DCEA), which built on the DCEA of 2021.

Four members of the Congressional Blockchain Caucus are leading the crypto-as-a-commodity charge beginning with Representative Glenn “GT” Thompson (R, PA), who is the Ranking Member of the House Agriculture Committee, along with co-sponsors Rep. Ro Khanna (D, CA), Rep. Darren Soto (D, FL) and Rep. Tom Emmer (R, MN).

H.R. Bill 7614, which was referred to the House Ag Committee, aims to assign responsibility for crypto exchanges with the Commodity Futures Trading Commission (CFTC) rather than the Securities and Exchange Commission where exchanges tradable assets would therefore be associated with securities.

Continue reading “House Gives CFTC Responsibility with Digital Commodity Exchange Act”

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McHenry Proposes New Regulator for Digital Assets -not SEC or CFTC

Patrick McHenry

The Securities and Exchange Commission (SEC)  is not set up to handle the digital assets world said Rep. Patrick McHenry (R, NC) at a Punchbowl News event in DC today.

“I fundamentally think that the Securities Exchange Commission and the CFTC lack that capacity to well-regulate this new innovation,” McHenry told interviewer Anna Palmer. “I think you have to have a separate regulatory sphere for digital assets… that is neither the SEC nor the CFTC.”

Welcome to the Digital Assets Trading Commission (DATC)? Digital Assets Exchange Commission (DAEC)? 

As it relates to stablecoins, specifically, and regulatory infrastructure, McHenry said that existing regulators could handle it. Moreover, he seemed mildly optimistic about recent stablecoin proposals by the Biden administration as it related to his party’s emerging proposals (such as here and here).

Continue reading “McHenry Proposes New Regulator for Digital Assets -not SEC or CFTC”

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Bitcoin Spot ETF ‘Hot Take’: It’s Time

Axios on Crypto

In today’s Axios live webcast, Axios crypto reporter Brady Dale asked law professor J.W. Verret of George Mason University, if the long-awaited spot ETF is ready for prime time.

Brady Dale: The argument against a Bitcoin ETF for allowing people in their brokerage accounts to own Bitcoin, through publicly traded instruments has mainly been the market is too small and it’s too easy to manipulate. But, the market is now three times bigger than it was when the Winklevoss brothers first proposed an ETF in 2017.  How big do you think it needs to get before it’s big enough for a spot Bitcoin ETF?

J.W. Verret: I think it’s already big enough. And if the SEC were judging the Bitcoin spot ETF applications by the same metric they’ve used in the past for other ETF applications, they would have approved it already in the same way that Canada and Germany have and the same way I expect Australia will eventually. So I think we’re just behind other comparable nations. And it would be nice if the SEC said, ‘Look, here’s what’s required in order to obtain full approval.’ It’s also interesting to that the SEC recently approved a futures ETF application is based on the 33 Act and not the 40 act. In that way, SEC Commissioner Gary Gensler has already crossed the red line that he previously said he wouldn’t cross with respect to Bitcoin ETFs that gives a lot more wind behind the sails of folks like Grayscale and other applicants for Bitcoin ETFs. I think it’s just a matter of time.

Brady Dale: Can you explain the red line he crossed? Continue reading “Bitcoin Spot ETF ‘Hot Take’: It’s Time”