Regulation
Senator Cynthia Lummis Critiques US SEC’s Crypto Regulation Approach
Wyoming Senator, Cynthia Lummis, an advocate for digital assets, has criticized the US Securities and Exchange Commission’s (SEC) handling of cryptocurrency regulations. Speaking on CNBC’s Squawk Box, Lummis criticized SEC Chair Gary Gensler for his attitude towards the cryptocurrency market saying it was counterproductive and problematic.
Senator Cynthia Lummis Critiques US SEC’s Crypto Regulation
During the interview, the Senator stressed that the US crypto industry has many problems, which are only accentuated by the current tactics of the SEC. Lummis took aim at SEC Chairman Gary Gensler for his approach to regulating the sector, which she said involved using enforcement actions instead of clear guidelines.
She pointed out that this has resulted in a lot of uncertainty, with many digital asset companies ending up mired in legal disputes instead of being offered clear rules to follow.
According to Senator Cynthia Lummis, the SEC has been a significant hindrance to the further development of the cryptocurrency sector despite the need for regulatory certainty. She pointed out that the current legal framework is insufficient and incapable of catching up with the advancement, especially considering the EU which adopted a complete set of crypto laws in 2023. Lummis noted that the United States might lose its position in the global financial services market if such shortcomings in regulation are not filled as soon as possible.
“Crypto Assets Should Fall Under CFTC Oversight”
Lummis also touched on the category of digital assets and shared her view that Bitcoin and Ethereum are commodities and should fall under CFTC jurisdiction instead of the SEC.
She noted that the SEC strategy, which has tended to categorize digital assets as securities, does not apply to decentralized cryptocurrencies such as Bitcoin and Ethereum.
Senator Cynthia Lummis also stressed that Congress should step up and come up with proper legislation that would state the scope of different agencies concerning digital assets. She noted that despite the fact that there are still some assets that can be regulated by the CFTC, there is a need to have a clear and current framework for the regulation of the market. She also pointed out that the Howey Test, which is a legal test applied to ascertain whether an asset can be considered a security, may require an update in view of the current developments in the crypto market.
Gary Gensler’s Stance on BTC and ETH
In contrast with Senator Cynthia Lummis, SEC Chair Gary Gensler has maintained that the U.S. already has crypto regulations in place. During an interview, Gensler responded to criticism from industry stakeholders, arguing that “not liking the rules is not the same as there being no rules.”
He insisted that the SEC is focused on protecting investors, noting that many crypto firms have benefited from public interest in digital assets without providing proper disclosures.
Gensler affirmed that Bitcoin is not a security, a stance shared by his predecessor Jay Clayton. This distinction, Gensler noted, allowed the SEC to approve the launch of Bitcoin Spot Exchange-Traded Funds (ETFs) earlier this year. However, Gensler has remained largely silent on the classification of Ethereum, though its treatment as a commodity has been inferred from regulatory decisions regarding Ethereum ETFs.
Lummis Calls for Changes in Crypto Regulation
According to the Wyoming Senator, these gaps can only be closed by legislation. She cited her plan with Senator Kirsten Gillibrand to change the wash sale rule in order to increase the funding for the CFTC and its capacity to regulate the digital asset space.
This proposal, she said, would allow for a more comprehensive approach to regulating the crypto space without jeopardizing its potential.
In addition, Senator Cynthia Lummis and a number of other lawmakers have also expressed concern about the SEC’s Staff Accounting Bulletin 121 (SAB 121) that forces crypto custodians to include customer assets as liabilities. In a letter to Gensler, lawmakers demanded that SAB 121 be withdrawn stating that it places undue regulatory restraints on the crypto industry.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
US SEC Publishes Grayscale’s Digital Large Fund Cap Filing In Federal Register
The US Securities and Exchange Commission (SEC) has published Grayscale’s 19b-4 filing for its Digital Large Cap Fund in the Federal Register. This significant development has officially kickstarted the US SEC’s review process for the asset manager’s application to convert this fund into an ETF.
US SEC Publishes Grayscale’s Filing In Federal Register
Grayscale announced in a press release that the US SEC has published the NYSE’s 19b-4 filing to list and trade its Digital Large Cap Fund as an Exchange-Traded Product (ETP) in the Federal Register.
This formally initiates the review process for the Commission to review and possibly approve the application. As noted in the press release, this review process can take up to 240 days before the regulator must decide whether to approve or deny the application.
If the US SEC approves the NYSE’s proposed rule change, it would be the first time a national securities exchange would list and trade shares of multi-crypto asset ETPs. The SEC’s acknowledgment of the 19b-4 filing just comes around two weeks after the asset manager filed to convert the Digital Large Cap Fund into an ETF.
According to Grayscale, as of November 1, the GDLC currently holds over $530 million in assets under management (AuM) for the fund. The fund holds Bitcoin, Ethereum, Solana, XRP, and Avalance, which are weighted according to their respective market caps.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
Former SEC Official Criticizes Wells Notice Against Immutable
Former SEC official Marc Fagel has voiced concerns over the Securities and Exchange Commission’s recent issuance of a Wells Notice to Immutable, an Ethereum-based Web3 gaming company. Immutable claims that the Wells Notice arrived with limited prior communication or explanation, marking a sharp departure from what is typically a more extensive investigative process.
Fagel commented that it is unusual for the SEC to issue such notices without first conducting a thorough investigation, suggesting that this approach could be “risky.”
Former SEC Official Questions Rapid Wells Notice Issued to Immutable
Immutable announced it had received a sudden Wells Notice from the U.S. Securities and Exchange Commission (SEC). The notice, which serves as a formal alert for potential enforcement action, cited alleged securities law violations related to private IMX token sales in 2021. However, the specifics of these alleged violations were minimally detailed in the notice, sparking questions about the SEC’s procedural approach.
Former SEC Official Marc Fagel commented on the surprise issuance, noting that it’s uncommon for the agency to send such a notice without preliminary investigation. In typical cases, companies expect several months of interviews or exchanges before receiving a Wells Notice, and Fagel stated that deviating from this standard practice could be seen as “risky.”
In a heated discussion on the X platform, the former SEC official added,
“BTW, it’s hard to believe the SEC would Wells without conducting sufficient investigation to support the claims; way too risky outside the TRO scenario. That said, I’ve heard plenty of anecdotes about the crypto unit dropping a Wells out of the blue, which is kinda scuzzy.”
Wells Notice Reflects SEC’s “Regulation by Enforcement” Strategy
The crypto sector has witnessed similar actions, with companies such as Coinbase, Consensys, and Crypto.com also receiving Wells Notices. The sudden notice aligns with a broader trend criticized as “regulation by enforcement.” Here, the agency proceeds with legal action rather than establishing clear compliance guidelines.
Immutable pointed out that its interaction with the SEC was exceptionally brief before the Wells Notice was issued. More so, they noted that it lacked meaningful explanation, containing fewer than 20 words specifying the alleged securities violations.
The Securities and Exchange Commission approach has caused considerable frustration within the crypto community. Fagel highlighted that the SEC’s surprising strategy of issuing Wells Notices abruptly in the crypto sector has become increasingly common.
ConsenSys Responds to SEC Claims on MetaMask
In parallel, blockchain company ConsenSys recently filed a response to the SEC’s claims regarding alleged securities violations by MetaMask. ConsenSys disputed the allegations, stating that MetaMask’s product embodies essential blockchain principles. It allows users to interact in a decentralized way. The company also reinforced its commitment to defending its product and technology within the legal framework.
Notably, under SEC Chair Gary Gensler, crypto firms have reported heightened compliance burdens. Regulatory enforcement actions have cost the industry an estimated $400 million, according to the Blockchain Association. These reports aligns with what the former SEC official, Marc Fagel, terms as “scuzzy”.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
Why A 25Bps Cut Is “Pretty Straightforward”
Former Cleveland Fed President Loretta Mester recently discussed a potential Fed rate cut at the November FOMC meeting. She said that a 25 basis point (bps) cut seems pretty straightforward at this point and explained why.
A 25bps Fed Rate Cut Is “Pretty Straightforward”
Loretta Mester mentioned during a CNBC interview that a 25 basis point Fed rate cut seems pretty straightforward at this point, considering that inflation has come down quite a bit from its peak even though it is not yet at the US Federal Reserve’s 2% target.
She alluded to all the recent inflation data since the September FOMC meeting, which she claimed doesn’t change the base narrative that inflation has come down and the growing confidence that it will continue to trend downward.
The former Fed president also noted that the unemployment rate is moderating, and the job data shows that the labor market is healthy. As such, she remarked that the Fed should be trying to implement monetary easing policies as the US economy normalizes.
Mester’s comments come amid the release of the US job data, which showed that the non-farm payroll rose by 12,000 in October, lower than the expected 110,000. Meanwhile, the unemployment rate remained unchanged at 4.1%.
Commenting on this, the former Cleveland Fed president said that the lower-than-expected job figures were likely due to the hurricanes in the United States last month. She added that she is glad the unemployment rate remained unchanged as it showed that the US economy isn’t as weak as the non-farm payroll suggested.
Like Mester, traders seem confident that a 25bps Fed rate cut should be the Fed’s next step. FedWatch tool data shows there is a 99.8% probability of the Federal Reserve cutting interest rates by 25 bps at its November FOMC meeting.
The Significance Of The Fed’s Decision
A 25bps Fed rate cut is significant as it could be the catalyst for a Bitcoin price rise past its current all-time high (ATH) of $73,700. Bitcoin and the broader crypto market reacted positively in September following the 50 bps rate cut at the September FOMC meeting.
It is worth mentioning that a Fed Rate cut decision will come just two days after the November 5 US presidential elections. As such, the aftermath of the elections, coupled with a rate cut, is the perfect recipe for a BTC and crypto market rally.
Crypto stakeholders like BitMEX co-founder Arthur Hayes have suggested that the crypto community should focus even more on the Fed’s decision rather than the US election. Arthur Hayes claimed that the US election outcome won’t impact BTC. Instead, he remarked that money printing and increased US debt issuance could ultimately boost Bitcoin.
However, according to a CoinGape market analysis, the Bitcoin price could suffer an 8% to 13% correction should Kamala Harris win the election. Meanwhile, if Donald Trump wins, BTC could easily surge past its ATH and rise to as high as $80,000.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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