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Crypto Exchange

New U.S Regulatory Agency Possibly In The Works To Oversee Crypto Exchanges Directly

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The U.S. Securities and Exchange Commission (SEC) Chair, Gary Gensler, said Congress needs new regulatory frameworks for crypto exchanges. At present, no single agency is directly responsible for them, leading to an incoherent regulatory approach.

A possible solution lies in the formation of a new agency to oversee crypto exchanges directly. Alternatively, an existing agency would see an expanded role. Either way, regulatory clarity remains a central sticking point for the cryptocurrency industry. Can we now expect to move forward on the issue?

The U.S. Crypto Industry May Finally Get Regulatory Clarity

Newly appointed Gensler addressed the House Financial Services Committee yesterday. Among the many topics discussed was the fact that no single agency is in charge of crypto exchanges in the U.S.

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The statement was Gensler’s first regarding his approach to cryptocurrency regulation. He pointed out that crypto businesses must deal with multiple regulators. The issue is compounded by a mishmash of rules at both the state and federal levels.

By putting in place a regulatory framework for exchanges, Gensler hopes more direct oversight will lead to a vibrant crypto marketplace that’s safer for investors.

“That could instill greater confidence. Right now there’s not a market regulator around these crypto exchanges. And thus there’s really not protection against fraud or manipulation.”

Chief Legal Officer at Coinbase, Paul Grewal, said he welcomes the opportunity to discuss how to get crypto regulation right. Adding, his firm is willing to share its knowledge on what works and what doesn’t.

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Earlier this year, in responding to SEC allegations of selling unregistered securities, Ripple CEO Brad Garlinghouse said the regulatory landscape is a mess. Going further, he explained that Ripple deals with eight different agencies, and each has its own take on cryptocurrency.

With 8 different govt agencies, each with their own (and sometimes opposing) views of crypto, U.S. market participants are facing conflicting policies and no surprise, some act conservatively.

Robinhood Under Fire

Also on the agenda with the House Financial Services Committee was Robinhood. Lawmakers raised concerns over the possible conflict of interest that comes with zero commission trading apps.

Under its “payments for order flow” business model, the firm receives compensation and other benefits for directing orders to different parties for trade execution, with Citadel Securities executing near half of Robinhood trades.

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Julian Emanuel, the Chief Equity and Derivatives Strategist at BTIG, said zero commission at the front end increases the likelihood of users trading.

“When you can engage in an activity that used to cost you something and no longer seemingly costs you anything, the inclination is particularly if you’re making money doing it, you’re likely to do it more often. It’s a perfect example of the law of unintended consequences.”

Similarly, accusations of “gameifying” trading have the same effect. Regulators widely criticized the use of confetti and other techniques to entice customers into trading.

In December last year, Robinhood agreed to settle with the SEC for $65 million over charges it failed to disclose its “payments for order flow” model adequately.

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Grayscale

Grayscale’s Top Executive Joins Robinhood as New Chief Compliance Officer

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Robinhood hires a new CCO, the chief compliance officer of Grayscale

Robinhood brokerage app has welcomed Benjamin Melnicki as a new Chief Compliance Officer, who is also the holder of the same position at Grayscale Investments. He joined Grayscale in early January this year.

At the moment, Robinhood’s cryptocurrency arm is facing scrutiny from financial regulators. Last year, Robinhood was a target of an investigation connected to anti money laundering and certain cybersecurity problems experiences by its crypto division.

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As reported by U.Today previously, later this year, the brokerage firm plans to roll out cryptocurrency wallets for its users. The trials of wallets will kick off in October and will allow customers to deposit and withdraw cryptocurrencies to addresses beyond Robinhood seamlessly.

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Crypto Exchange

Average Aussie crypto portfolio grew 258% in FY 20-21, survey reveals

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The average portfolio size on Australian cryptocurrency exchange BTC Markets has grown from $577.65 (795.5 Australian dollars) to $2,069.16 (2849.5 AUD) in the financial year 2021, signaling a 258.2% increase in portfolio holdings, according to exchange data compiled by Statista on a recent BTC Markets survey.

Data on the survey shows that the average portfolio size of female and male investors in fiscal 20-21 on BTC Markets was $1,924.30 (2,650 AUD) and $2,214.03 (3,049 AUD), respectively. However, in 2020, the average portfolio size of female Aussie investors exceeded male investors slightly. 

Transaction data on the exchange also showed a pattern of growing investment demand with aging. Considering the data provided by BTC Market on Australia’s average initial investment, investors above 65 years old have invested roughly $3,158.03, the highest ofall demographics.

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Following an incremental reduction across the various age groups, the youngest cryptocurrency traders, ranging from 18 to 24 years, tend to make comparatively small investments, standing at $792.96 on average. While older Australian crypto investors outweigh the new generation in initial investment, the younger crowd shows comparatively more activity in terms of daily trades.

Resonating the findings above, a September report from financial comparison website Finder shows that one in six Australians own cryptocurrencies, amounting to $8 billion in total investment. The report suggests that, like many other users in advanced industrialized countries, Australians were increasingly viewing cryptocurrencies as a new asset class. 

According to Cointelegraph’s report on the matter, Bitcoin (BTC) is the most popular cryptocurrency for the Australian crypto market held by 9% of investors. Other popular investments include Ether (ETH), Dogecoin (DOGE) and Bitcoin Cash (BCH). The report showed that, despite the growth in crypto investments, a significant barrier to entry for Australians is the difficulty in understanding crypto and the risks related to volatility.

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Crypto Exchange

Switzerland to Impose Anti-Money Laundering Rules on Crypto Providers: Report

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FINMA requires all cryptocurrency providers to step up their game and monitor whether criminals use digital assets in illicit transactions.

The Swiss Financial Market Supervisory Authority – FINMA – would reportedly require local digital asset providers to take additional steps in preventing criminals from employing cryptocurrencies. The watchdog would also turn its sight towards bitcoin ATMs as it believes that drug dealers often use these machines.

FINMA Targets Criminals Operating with Crypto

According to a Finews report, Switzerland’s financial regulator – the Swiss Financial Market Supervisory Authority or simply FINMA – would closely supervise local crypto providers as an attempt to clamp down on money-laundering transactions.

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Swiss platforms and brokers dealing with digital assets would have to enhance their monitoring efforts and observe if bad actors employ cryptocurrencies. The Bern-based watchdog believes the initiative is “urgently necessary,” stressing that criminals use the asset class even to fund terrorism acts.

FINMA also turned its attention towards bitcoin automated teller machines. According to the regulator, drug dealers frequently use such ATMs as payment systems. It is worth noting that Switzerland is a relatively small nation, but its 130 Bitcoin automated teller machines place it in the sixth position among the countries with the most stations.

FINMA also passed an anti-money laundering provision according to which it lowered the threshold for unidentified crypto purchases from 5,000 Swiss Francs (CHF) to 1,000 CHF (around $1,080). Or, in other words, all financial providers dealing with digital assets have to collect data on anyone initiating transactions that exceed this amount.

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UBS: Crypto Regulations Could Spell Trouble

One of the leading banks in Switzerland – UBS – recently shared its views on the hot topic of digital asset regulations as it indicated that implementing certain rules might negatively impact the market.

Furthermore, the bank warned its customers that regulatory crackdowns can pop the “bubble-like” crypto markets. The Swiss bank also labeled the asset class as “speculative” alerting that it could be dangerous for professional investors:

“While we can’t rule out future price gains in cryptos, we see this as a speculative market that poses significant risks to professional investors.”

On another note, though, when the cryptocurrency market was booming at the beginning of May, UBS demonstrated a different attitude. Back then, it intended to enable its wealthy customers to receive digital asset exposure later in 2021 through third-party vehicles.

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