The Shark Tank star, crypto bull and Dallas Mavericks owner Mark Cuban has taken to Twitter to air his opinion on how the crypto sector should be regulated – drawing mixed reviews from the community.
Cuban, who has grown increasingly vocal about all things crypto-related – including dogecoin (DOGE) – in recent months, wrote that while “‘crypto’ is not monolithic,” certain rules needed to be applied.
Here are his five hot takes:
- Stablecoins will be the first to get regulated, as buyers were uncertain as to how “stable” such tokens really are. “It needs standards,” he opined.
- Smart contracts “are the most likely source of fraud,” and “intentional omissions” and “undisclosed actions,” as well as “lack of clarity” could blight their cause. But rather than seek regulatory approval, Cuban noted they would likely be subject to fraud probes and “certified audits” – ruling out “anonymous smart contract” deals. “Proof of authorship and identity could be a thing,” Cuban remarked.
- Tokenomics are “confusing” and “a ripe opportunity for fraud.” Liquidity and authorship checks could address possible issues.
- Anonymity may have to be sacrificed for tokenomics and smart contracts so the “feds and victims will have a person/entity to sue or indict.” Stoically, he mused: “that’s the price that will be paid.”
- Regulation built around existing fraud laws “is not a bad thing,” will not hamper innovation, and will “open the door for more people to confidently use” crypto.
Many chimed in with their responses, with crypto trader ‘cubantobacco’ suggesting that regulators create “a separate whitelist for regulated contracts” and “a regulator standard certification for smart contract auditing companies.” Cuban (Mark, that is), responded by calling the notion a “great idea and tagging the Securities and Exchange Commission (SEC) chief Gary Gensler.
Cuban opined that a similar notion already exists “in the stock market” in the form of the OTC Markets Group-compiled over-the-counter (OTC) securities liquidity gauge Pink Sheets and the Financial Industry Regulatory Authority’s OTC bulletin board quotation service.
The OTC stock market, he complained, is “full of small market cap junk and trade huge volumes for less than USD 0.01 per share.” “If it works in stocks,” he asked, “Why not crypto?”
Others took a very dim view of Cuban’s opinions, with Meltem Demirors, Chief Strategy Officer at CoinShares, quipping acerbically:
“It’s truly incomprehensible to me why y’all simp for this man.”
The Wintermute Trading Founder and CEO Evgeny Gaevoy was no less critical.
But it seems that at least one of Cuban’s forecasts may well hit the mark. Bloomberg reported that the American Treasury was “readying” a stablecoin “clampdown,” having identified “urgent risks.”
The report stated that sources close to the matter were concerned about a lack of “consumer protections”: “Treasury officials are paying special attention to how stablecoin transactions are processed and settled, and whether that changes based on market conditions.”
Meanwhile, the General Counsel at Compound Labs Jake Chervinsky issued a warning on Twitter, where he wrote:
“Reminder: We have two weeks left until the fiscal year ends for the SEC and the [Commodity Futures Trading Commission]. I have no inside knowledge of any impending actions, but won’t be surprised if we see crypto enforcement activity from either or both agencies soon.”News Source
Commissioner Peirce suggests SEC to work with crypto businesses to build a “reasonable framework”
Commissioner Hester Peirce, aka “crypto mom” strikes back at the SEC for not working with crypto businesses in carving out a reasonable framework for the securities laws. Peirce spoke remotely at the Wall Street Journal’s Tech Live conference on Wednesday and continued to criticize SEC Chief, Gary Gensler on his anti-crypto stance.
Furthermore, Peirce suggested that the commission should decipher a system to work with cryptocurrency firms, given the inevitable growth of the decentralized industry. The Commissioner noted that the sooner regulators understand the importance of crypto, the better it will be in foreseeable future for the nation’s financial markets.
“I think it’s safe to assume that crypto is going to grow in size…And so what we can do now to invest in building a reasonable framework, I think, will pay off down the line.”, said Peirce.
SEC rules are affecting small businesses
The Commissioner highlighted the authorities’ perspective, noting that the conservative approach is to steer clear of accusations if anything goes south. However, Peirce also emphasized that this conservative approach negatively targets start-ups and smaller businesses, as they get caught up in the “tremendously hard” and time-consuming process of complying with SEC rules.
“Regulators tend to be very conservative for a reason…If something doesn’t get approved, we’re not going to get blamed; if something does get approved and something goes wrong, we will get blamed. But that hesitation is really costly for smaller entities.”, Peirce added.
SEC failure to draw up a clear legal framework
Earlier this month, Commissioner Peirce was seen in her ‘crypto mom’ form, criticizing the government for its inability to finalize a clear legal framework for virtual currencies in the United States. At Yahoo Finance Live, Peirce noted that “it’s a real shame” that the US regulators’ are consistently failing at drawing up a clear legal framework for cryptocurrencies and securities.
“It is disconcerting to me that for three years now I’ve been asking for regulatory clarity, and we can’t seem to provide any…I think this is really becoming a huge barrier to this industry being able to develop in a way that’s safe, but also in a way that allows innovation to happen. And it’s a real shame to me that we are not just taking up the mantle as regulators to develop a regulatory framework.”
SEC Commissioner Warns Celebrities Will Not Bail Out Crypto Buyers
Celebrities will not bail out naive cryptocurrency buyers, SEC commissioner warns
U.S. Securities and Exchange Commissioner Hester Peirce told Washington-based newspaper Roll Call that cryptocurrency investors have to manage their risk tolerance when taking cryptocurrency advice from celebrities.
Peirce, who is affectionally called “Crypto Mom” because of her pro-cryptocurrency stance, warns that there will no bailouts if things go south:
It’s your money that’s on the line, so do your own research and make your own decision based on your own risk tolerance and your own circumstances. After all, if things turn out badly, the celebrity won’t be there to bail you out.
During the initial coin offering (ICO) mania, some celebs were charged by the SEC with unlawfully shilling tokens on their social media profiles. Actor Steven Seagal, who became a Russian citizen in 2016, agreed to pay a disgorgement of roughly $330,000 in 2020. After he failed to pay the whole fine, the agency moved to collect money through his U.S. representatives.
A slew of musicians, actors, athletes and prominent influencers hopped on the crypto train once again to cash in on the ongoing bull run.
As reported by U.Today, Kim Kardashian’s ad promoting a dubious cryptocurrency called “Ethereum Max” was seen by a third of crypto owners.
In September, Charles Randell, the head of the UK’s Financial Conduct Authority (FCA), stated that those who invested their money in the token promoted by Kim K had to be prepared to lose it all.
Dogecoin, the meme cryptocurrency touted by centibillionaire Elon Musk, rapper Snoop Dogg and a bunch of other stars, is currently down 66% from its historic peak that coincided with Musk’s appearance on “Saturday Night Live” in early May.
Law professor Lawrence Cunningham told Roll Call that celebrities, who often have little to no knowledge of crypto, are fueling crypto speculation, which can cause system risks:
At scale, that can lead to a systemic misallocation of capital with adverse system-wide effects.
Gary Gensler met with Jay Clayton in 2018 and was instrumental in XRP hostility: Report
- Gary Gensler is said to have held a sitting in 2018 with Jay Clayton to discuss cryptocurrencies, and he was fond of BTC and hostile towards XRP and Ethereum.
- According to a new report, Gensler’s contribution to the meeting was instrumental in the ensuing XRP hostility and even the famous Bill Hinman speech.
When Gary Gensler took over at the U.S Securities and Exchange Commission (SEC) this year, many in the cryptocurrency community touted it to be the beginning of a new era – one that would spell clarity and prosperity for the nascent industry. However, it’s been anything but. Genser has been just as tough, if not even more so than his predecessor. And as a new report now reveals, Gensler’s hostility, especially towards XRP, started years ago and could have influenced the SEC’s stand against the cryptocurrency even before he took over the leadership.
The report by the New York Post revealed that Gensler met with his predecessor Jay Clayton in 2018. At the time, Gensler was just settling into his new role as a professor at the MIT Sloan School of Management. Ironically, at MIT, he served as the senior advisor to the school’s Digital Currency Initiative, teaching extensively about blockchain technology.
According to Charles Gasparino, the Fox Business reporter who exposed the 2018 meeting, the two leaders talked about how much they could regulate cryptocurrencies at the meeting.
Citing sources who were privy to the meeting, the report claims Clayton and Gensler dwelt on how digital currencies were largely unregulated and a haven for scams. They both agreed that most coins were securities that fell under the SEC oversight.
SCOOP (1/3): In March 2018 @GaryGensler then of @MITSloan met w then @SECGov Jay Clayton to discuss #Crypto regulation, stating @Bitcoin should not be considered a security but the SEC should crack down on other aspects of the biz, sources confirmed to @FoxBusiness. The meeting— Charles Gasparino (@CGasparino) October 12, 2021
Liking Bitcoin, opposing Ether and XRP
Gensler has always been a big fan of Bitcoin, a fact he conveyed during the meeting. According to him, it was the only “true crypto.” This is a belief he has held since before joining MIT and the SEC, back when he was the head of the CFTC, yet another regulator that has dipped its toes into cryptocurrency regulation.
Gensler disliked Ethereum, which at the time wasn’t nearly as big as it is today. He disliked XRP even more, sources revealed. Both, he claimed, were securities that were using jargon and regulatory ambiguity to escape securities regulations.
Gensler has never been shy to admit that he believes the two – Ethereum and XRP – are securities and not currencies. In 2018, he gave an interview to the New York Times in which he claimed:
There is a strong case for both of them — but particularly Ripple — that they are non-compliant securities.
According to those close to the economist, his biggest problem with XRP and Ether are that Ripple and the Ethereum Foundation respectively sold the coins and used the proceeds to build their platforms. This makes them illegal securities.
It gets better.
Three months after the Clayton-Gensler meeting, Bill Hinman went on to give his famous 2018 speech. Hinman, who was the director of the division of corporate finance at the SEC, claimed that BTC and ETH were not securities.
This speech has been the subject of intense legal face-offs between Ripple and the SEC in their ongoing lawsuit. Hinman has claimed that these were personal opinions. However, according to the report, Clayton reviewed the Hinman speech before the presentation, “and provided some reactions.”
And if this in itself isn’t dubious enough, there’s the career advancements of the two – Clayton and Hinman – after leaving the SEC. As CNF reported Clayton now works with an organization that manages billions of dollars worth of BTC. The firm, known as One River Asset Management, has even applied for a Bitcoin ETF, which ironically, Clayton repeatedly turned down when at the helm of the SEC.
Hinman, on the other hand, is an adviser to Simpson, Thatcher and Bartlett, a member of the Enterprise Ethereum Alliance, which seeks to advance the growth of the Ethereum blockchain.
Is the SEC picking the winners and losers?
Just about a year ago, there were three top cryptocurrencies – Bitcoin, Ethereum and XRP. While the other altcoins were coming up quite remarkably, these were the three to watch. The SEC’s lawsuit against XRP dismantled this trinity, bringing devastating losses to XRP, and since then, it has yet to recover.
XRP is the only cryptocurrency in the top 10 to not hit an all-time high in this year’s bull run.
Gasparino believes that the SEC is picking winners and losers, and at the moment, it’s skewed against XRP and for Bitcoin. The top cryptocurrency recently had an ETF approved, indicative that the SEC is fully onboard with the coin, he observed.
Ethereum held an ICO, why aren’t they [SEC] going after them? It’s just a weird regulatory thing that they’ve got going on here. I think it’s time Congress steps in if this [the blockchain industry]is worth saving. The Internet was worth saving.