U.S. Securities and Exchange Commission (SEC) Commissioner Mark Uyeda advocates for the withdrawal of Staff Accounting Bulletin 121 (SAB 121), which sets guidelines for accounting crypto liabilities. He argues that the method of its issuance undermines the foundational checks and balances designed to prevent excessive administrative control. Despite bipartisan support for a resolution to repeal […]
Bitcoin News
SEC Commissioner Proposes Joint US-UK Digital Securities Sandbox
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has proposed a joint US-UK digital securities sandbox. She noted that the U.S. and UK are ideally positioned for this initiative, emphasizing that this collaboration would benefit innovators, regulators, and consumers in both countries. Hester Peirce Pushes for US-UK Collaborative Financial Sandbox U.S. Securities and Exchange […]
Bitcoin News
SEC Commissioner Criticizes Delay in Spot Bitcoin ETF Approval — ‘We Squandered a Decade of Opportunities’
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has slammed her agency for the delay in approving spot bitcoin exchange-traded funds (ETFs). “Our arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively,” the commissioner stressed.
‘Diminished Trust From the Public Will Inhibit Our Ability to Regulate the Markets Effectively’
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce issued a statement following the approval of 11 spot bitcoin exchange-traded funds (ETFs) by the SEC.
“Today marks the end of an unnecessary, but consequential, saga,” Peirce began. “More than ten years after the filing of the first spot bitcoin exchange-traded product (‘ETP’) application, the Commission finally has approved multiple applications by exchanges to allow the listing and trading of spot bitcoin ETPs. This saga likely would have spanned well beyond a decade were it not for the DC Circuit-ex-machina.”
Noting that “Bitcoin-based products have been trading for years under other regulatory regimes,” she stressed: “The Commission should have drawn comfort from the successful launch and smooth trading of these products, even through market stress and volatility. Instead, until today, the Commission remained steadfast in its unwillingness to let spot bitcoin ETPs into US markets.” She added:
In the meantime, the Commission has driven retail investors to less efficient means of attaining bitcoin exposure in the securities markets.
One of the ways retail investors had to gain exposure to bitcoin and the crypto market is through bitcoin futures exchange-traded funds, which the Commission did not have a problem approving. “These futures-based products are more complex and more difficult to manage than the spot product, which can translate into higher costs for investors,” Peirce noted. “But, until a court reminded us that our ‘unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decisionmaking,’ we persisted in denying a spot bitcoin ETP.”
Peirce added:
The Commission, rather than admitting error, offers a weak explanation for its change of heart.
“In the past, the Commission, allowing our prejudice against the underlying asset to get in the way, has rejected applications on the basis that the bitcoin market was still immature and that there were outstanding manipulation concerns,” she detailed.
“We squandered a decade of opportunities to do our job. If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago, but we refused to do so until a court called our bluff. And even now our approval comes only begrudgingly, as demonstrated by our continued insistence that these products satisfy a correlation test we have not demanded of prior commodity-based ETPs,” Commissioner Peirce stated.
“Today’s order does not undo the many harms created by the disparate treatment of spot bitcoin products,” she added, elaborating:
Our arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively.
Do you agree with SEC Commissioner Hester Peirce about spot bitcoin ETFs? Let us know in the comments section below.
SEC Commissioner Crenshaw Dissents From Spot Bitcoin ETF Approval
SEC Commissioner Caroline A. Crenshaw voices her dissent against the commission’s approval of spot bitcoin ETFs, highlighting the risks of market manipulation, the concentration of bitcoin ownership, and the inadequacy of current regulatory measures in safeguarding investor interests.
SEC Commissioner Critiques Spot Bitcoin ETF Approval
Following the SEC’s spot bitcoin ETF mass approvals, Commissioner Caroline A. Crenshaw has released a letter expressing her dissent, raising serious concerns about investor protection and market integrity.
Crenshaw’s dissent follows the SEC’s decision to approve rule changes allowing the listing and trading of bitcoin-based Exchange Traded Products (ETPs) on national securities exchanges. In her statement, she argues that these actions are inconsistent with the SEC’s mandate to protect investors and the public interest.
The Commissioner’s primary concern revolves around the underlying global spot markets for bitcoin, which she says are marred by fraud and manipulation. She points to examples such as the alleged bitcoin price manipulation by the former CEO of FTX to keep its price under ,000 for his benefit. In somewhat of a head scratcher, Crenshaw also cites the recent hacking of an SEC social media account and subsequent false announcement of spot bitcoin ETFs, which led to volatile bitcoin prices, as indicative of potential market manipulation. After the false announcement had been revealed as a hack, some members of the crypto community had even joked that the SEC might use it as evidence to withhold approval.
“on second thoughts, bitcoin spot market is too easily manipulated (by us), so we’re denying the ETF”
— nic
carter (@nic__carter) January 9, 2024
According to Crenshaw, concentration of bitcoin ownership is also a concern:
Concentration of ownership among spot bitcoin holders also leaves bitcoin investors (and now spot bitcoin ETP investors) vulnerable to the whims and trading practices of a few. Analysis shows that mining and holdings of bitcoin are highly concentrated.
She argues that the spot bitcoin markets’ susceptibility to manipulation and the lack of adequate oversight make it difficult to say that the approved rule changes are designed to protect investors effectively.
In her critique of the recent Grayscale vs. SEC case, Crenshaw notes that the correlation analysis used to justify the approval of spot bitcoin ETPs is inadequate. She draws attention to the significant differences in investor protection between futures and spot bitcoin ETPs, likening the latter to an unregulated, global free-for-all, with little recourse for investors in cases of fraud or manipulation.
She criticizes the creation of a new regulatory standard without clear guidelines and questions the reliability of the data used in the SEC’s correlation analysis. In a broader critique of the cryptocurrency ecosystem, Crenshaw questions the tendency to recreate the existing financial system with less regulation and more risk, diverging from the original ideals of Bitcoin as a peer-to-peer, censorship-resistant digital currency. She fears that linking Bitcoin too closely to the traditional financial system may not serve the interests of investors but rather inflate the prices of these investment products.
Are you receptive to any of Commissioner Crenshaw’s concerns? Share your thoughts and opinions about this subject in the comments section below.
SEC Commissioner Hester Peirce Blasts ‘Scorched Earth’ Approach Against LBRY
Hester Peirce, commissioner of the U.S. Securities and Exchange Commission (SEC), issued a statement of dissent that referred to how the commission dealt with the LBRY case. Peirce criticized the approach that the SEC took when, according to her, the company had made significant disclosures about its token offering, having “no path” to register its token offering.
Commissioner Hester Peirce Raises Her Voice on SEC v. LBRY
Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC) known as “Crypto Mom,” has recently issued a statement of dissent regarding how the commission managed the case against LBRY, which created a blockchain decentralized publishing platform with its token, now that litigation in this case is over.
In an industry of frauds and scams, Peirce criticized the SEC’s determination to go after LBRY when the company had already created a working product and took a more “conservative approach” than other projects.
Given that LBRY did make a series of disclosures to customers that the SEC didn’t qualify as “fraudulent or misleading,” Peirce criticized the “scorched earth” approach the commission took in this particular case.
Peirce stated:
Why go after a company that sold a token for a functioning blockchain with an established use when we could have pursued plenty of other projects that were outright frauds and did not attempt to comply with the securities laws?
‘There Is No Path for a Company Like LBRY to Come in and Register’
Peirce continued to blast the commission for this enforcement action, arguing that there is no clear path for crypto projects to register their operations with the commission.
Peirce explained:
The application of the securities laws to token projects is not clear, despite the Commission’s continuous protestations to the contrary. There is no path for a company like LBRY to come in and register its functional token offering.
Peirce’s statements resonate with ideas expressed by executives of companies battling SEC’s enforcement actions, like Coinbase CEO Brian Armstrong and Ripple’s CEO Brad Garlinghouse, who have criticized the lack of clarity in the space.
Nonetheless, SEC President Gary Gensler has stressed several times that there is indeed a clear path for crypto companies to register with the commission, with a firm called Prometheum being the only receiver of a special purpose broker-dealer for digital assets.
Prometheum is currently being probed by several lawmakers, who have qualified its license approval as “shady.”
What do you think about SEC Commissioner Hester Peirce’s thoughts on the legal actions against LBRY? Tell us in the comments section below.
CFTC Commissioner Proposes ‘First-Ever’ US Pilot Program for Crypto Regulation
A commissioner with the Commodity Futures Trading Commission (CFTC) has proposed the “first-ever” pilot program in the U.S. “to support the development of compliant digital asset markets and tokenization.” The regulator emphasized: “Our principles-based framework is built for innovation in technology, new products, and market structure.”
‘Time-Limited CFTC Pilot Program’ for Crypto
Commodity Futures Trading Commission (CFTC) Commissioner Caroline D. Pham unveiled her proposal for a regulatory sandbox program to regulate crypto assets on Thursday. She posted on social media platform X:
It’s time to take action. I propose the first-ever U.S. pilot program for digital asset markets as a regulatory sandbox to test, gather data, & examine innovation. This creates a safe framework for new technologies & market structures under existing regulations & protections.
During her remarks at the Cato Institute on Thursday, the commissioner explained that the “wait and see” approach currently adopted by U.S. regulators towards the potential opportunities of blockchain technology and digital assets “falls short of the proactive measures needed in this rapidly evolving industry.”
Noting that she has “consistently called for the CFTC to use [its] existing authority to provide regulatory clarity for digital assets to ensure that robust guardrails are in place,” the commissioner detailed: “Our principles-based framework is built for innovation in technology, new products, and market structure.”
She noted that the pilot program she is proposing will incorporate previous pilot initiatives which focused on areas such as trading rules, reporting requirements, registration requirements, and risk disclosure requirements.
The commissioner also emphasized that given the CFTC’s oversight of the world’s largest financial markets, the regulatory body bears “a responsibility to proactively take on new challenges instead of passive observation.” She stressed:
That’s why I’m recommending a time-limited CFTC pilot program to support the development of compliant digital asset markets and tokenization.
“As a first step, the CFTC should call for a roundtable to engage all stakeholders,” she described. “After that, the CFTC should propose and adopt rules establishing a pilot program for a specific period of time that incorporates many of the components drawn from past pilot programs, including registration and eligibility requirements, financial resources and other conditions, risk management, products and contract terms, and other requirements including disclosures and reporting.”
Pham added: “At the conclusion of the pilot program, the Commission should examine the data gathered from the pilot and consider whether there should be a permanent change to our rules.” She concluded: “This proposal shows us how the CFTC can safely explore innovation while maintaining appropriate protections for our markets.”
What do you think about the proposal by CFTC Commissioner Caroline D. Pham for the regulation of crypto assets? Let us know in the comments section below.
SEC Commissioner Hester Peirce States Proposed Amendments to Definition of ‘Exchange’ Render Innovation ‘Kaput’
Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), has issued her opinion on the recent attempts of the institution to change the definition of “exchange” under the Exchange Act Rule. According to Peirce, the institution is now expanding its reach to solve “problems that do not exist,” stifling innovation in the process.
SEC Commissioner Hester Peirce Issues Dissenting Opinion
U.S. SEC Commissioner Hester Peirce, also known in cryptocurrency circles as “crypto mom,” has written a letter blasting the recent decision of the Commission to amend the definition of “exchange” under the Exchange Act Rule. Peirce states that instead of bolstering innovation, this decision will render it “kaput,” bringing even more confusion to cryptocurrency circles in the U.S.
Peirce argued that, compared with the 90’s SEC that acted in a different way, today’s SEC uses the rulemaking process as a threat. She commented:
Today’s Commission tells entrepreneurs trying to do new things in our markets to come in and register. When entrepreneurs find they cannot, the Commission dismisses the possibility of making practical adjustments to our registration framework to help entrepreneurs register, and instead rewards their good faith with an enforcement action.
Two U.S.-based crypto exchanges — Kraken, which already settled a case with the institution, and Coinbase, which has received a Wells notice — have complained about this course of action on the part of the SEC.
Peirce also addressed the lack of details when it comes to the applicability of these new standards to defi structures, commenting that the norm does not even consider if compliance for these platforms would be possible.
SEC’s Decision
The cause of this dissent lies in the introduction of supplemental information to the definition of “exchange” in the Exchange Act Rule, directed to clarify which cryptocurrency structures fall under the umbrella of the agency.
While the amendment targets defi platforms and how can they be regulated under this new proposal, SEC Chair Gary Gensler clarified that many of these platforms are already covered by existing rules. He stated:
Make no mistake: many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws. Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets.
Commenters will have a period of 30 days to issue their ideas and doubts to the institution, which will be discussed and potentially applied to the amendment.
What do you think about Hester Peirce’s stance on the amendment of the “exchange” definition? Tell us in the comments section below
European Commissioner Says Impact of SVB Collapse ‘Limited’ as Credit Suisse Drags Down Banking Stocks
Silicon Valley Bank’s (SVB) collapse has had a “limited impact” on the European Union but authorities must still “stay alert” to events as they unfold, European Commissioner Mairead McGuinness has said. Despite McGuinness’ reassuring remarks, stocks of Europe’s largest banks still plunged by as much as 10% on March 15.
Silicon Valley Bank’s ‘Limited’ EU Impact
According to the European Commissioner for financial services, Mairead McGuinness, the collapse of the U.S. bank Silicon Valley Bank has so far had limited impact on the European Union (EU). However, in her March 15 remarks before the EU parliament, McGuinness said the region’s authorities should “stay alert” to the unfolding events in the international markets.
McGuinness also revealed that the European Commission (EC) is currently monitoring the banking situation in the United States and that it hopes to learn important lessons.
“The direct impact on the European Union seems to be limited but we should reflect on whether there are lessons to be learned for the European Union’s banking sector,” the commissioner told the EU parliament.
Credit Suisse Drags Down European Banking Stocks
Prior to McGuinness’ remarks on the impact of SVB’s collapse on the EU, an unnamed spokesperson for the European Commission was quoted in a Reuters report stating the bank had an insignificant presence in the region, hence the limited impact. While the commission expects the EU to emerge from the latest U.S. banking system crisis largely unscathed, McGuinness however warned that rising inflation still remains a key threat.
However, despite McGuinness’ reassuring remarks, stocks of Europe’s largest banks still plunged by as much as 10% on the same day. The stocks were dragged down by Credit Suisse, Switzerland’s second-largest bank, whose shares hit an all-time low after the group’s main shareholder, the Saudi National Bank, said it could no longer bail out the beleaguered entity.
According to a report, the Saudi National Bank’s decision was made after a PwC audit revealed “material weaknesses” in Credit Suisse’s internal controls. As of writing, Credit Suisse shares have seen marked recovery on Thursday, after news of assistance from the Swiss National Bank.
What are your thoughts on this story? Let us know what you think in the comments section below.
FTC Commissioner Cites Libra In Support of Feds Real-Time Payment System
FTC Commissioner Rohit Chopra cited Libra concerns in his letter supporting the Fed’s potential FedNow real-time payments service.
CryptScout #BitFeed RSS – Bitcoin and Cryptocurrency News 24/7
EU Finance Commissioner Vows New Rules on Crypto, Libra Stablecoin
EU’s financial services commissioner Valdis Dombrovskis intends to create a new regulations for crypto, particularly Facebooks Libra stablecoin.
CryptScout #BitFeed RSS – Bitcoin and Cryptocurrency News 24/7