Newsletter: No hedge
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Last week, Coinbase’s CEO decided to blame the Securities and Exchange Commission for “rough action,” and some cryptocurrency exchange bosses were watching in horror. But others applauded.
Twitter salvo by Coinbase boss Brian Armstrong reflects growing anger among crypto entrepreneurs who claim regulators are curbing innovation, providing clear rules for the early digital asset industry. It’s too late.
“Coinbase is in a good fight. If they lose … The SEC will be even more aggressive. They will draw a line in the territory of cryptocurrencies,” said Celsius Network, CEO of cryptocurrency lending platform Celsius Network. One Alex Masinsky said.
Tensions increased when Coinbase revealed: SEC threatened to sue the exchange When you launch a product called Lend that is designed to get users interested in a particular digital asset on the platform. The company claims that Lend is outside the jurisdiction of the regulatory agency and the SEC has not explained its concerns.
But on Tuesday, SEC chairman Gary Gensler said existing legislation and Supreme Court case law were clear as US senators called for further guidance.
He also complained about the lack of consumer protection, especially when lending goods, and said Coinbase had not registered with the SEC “despite having dozens of potentially securities tokens.” I did.
A pending confrontation with the largest crypto exchange in the United States may help determine the scope of SEC’s authority over future digital assets, and other crypto groups, especially Trader’s juicy yield About 7 to 12 percent of cryptocurrency deposits.
“This is an enforcement regulation,” said John Collins, a partner at FinTech advisory firm FS Vector and former Coinbase policy director.
“These products are currently very active throughout the crypto space … Responsible companies in the space, it’s [similar] product. “
The SEC has curtailed the first coin offering market by pursuing enforcement measures. In December, we sued crypto group Ripple for providing XRP tokens as unregistered security. It also claimed that the messaging app provided $ 1.3 billion in unregistered securities and agreed to a settlement with Telegram.
Similarly, at the heart of the battle between SEC and Coinbase is Whether Lend is eligible as a security under US law.. Some argue that the crypto exchange’s guarantee that it will benefit all customers from its lending program is approaching the definition of securities under the US Supreme Court’s case law called Howie Test. It is safe to reasonably expect the benefits of the efforts of others.
Coinbase told the Financial Times that given the existence of other similar products, it’s unclear why this particular product was targeted.
Clarity is required as more and more crypto platforms begin to offer yield-hungry traders complex and highly risky interest-bearing products in the era of ultra-low interest rates. Products tend to have different structures from issuer to publisher, but in the Coinbase controversy, many are skeptical about the future of the product.
“Currently, we’re guessing armchair quarterbacks,” said Stephen Ehrlich, CEO of Toronto-listed cryptocurrency exchange Voyager Digital, which offers deposit yields to US clients. Says.
Antoni Trenchev, CEO of digital asset platform Nexo, said his company’s lawyers, like Coinbase, are working on the presumption that “everyone in the industry will get the same question” from regulators. ..
He said Nexo’s interest-bearing products did not violate any rules, but added that if Coinbase pursued it and subsequently lost its proceedings, the company was looking for other options. This includes “whether to allow only accredited investors to sell these products,” he said, for example, whether to partner with banks.
Coinbase said it was concerned about similar products it offers due to lack of clarity. Celsius said he was confident that none of the offers in the United States were securities. Gemini, which offers an annual interest rate of 8% on US dollar coins, declined to comment.
Coinbase and other companies have a third option to register their products as securities rather than throwing them away altogether or risking being sued. This is an approach encouraged by Gensler, arguing that crypto exchange should “seek for permission” rather than “begging for forgiveness.”
But Voyager’s Ehrlich argued that this could also be difficult given the nuances of digital assets. “How can you explain cryptography? [as] Is there any way to cover digital assets? He pointed out that cryptographic audits were not clear.
Whether standoffs should put digital assets under existing regulatory frameworks, or do regulators need to develop a specific cryptocurrency system, as is done in some jurisdictions? It highlights the debate about what to do.
“Companies since the 1930s have been finding ways to innovate for 90 years,” Gensler said on Tuesday, within the scope of securities registration requirements.
However, Isaac Boltansky, Director of Policy Research at Compass Point Research & Trading, said:
Crypto bosses say Coinbase is ‘fighting the good fight’ Source link Crypto bosses say Coinbase is ‘fighting the good fight’