The US Securities and Exchange Commission (SEC) is divided along party lines on the crypto industry regulation generally and the ‘safe harbor’ proposal specifically, while a senior White House official claims that President Joe Biden’s administration is getting ready for an even tougher stance on the sector. And while two prominent Commissioners are knowledgeable on the industry, a lawyer argues that the actions of the SEC are overall harmful.
Following the latest crypto-related remarks by the SEC Commissioners Caroline Crenshaw and Hester Peirce, attorney Gabriel Shapiro noted that, regardless of where the two land on the issue, their respective takes are “extremely well informed.”
That said, while Crenshaw argues that existing laws are sufficient for dealing with the human trust and possibility of exploitation aspect of the industry, Peirce argues that new laws are needed to address autonomous technology design risks.
And well-researched opinions can both be right from a certain perspective, wrote Shapiro. However, the SEC is taking a different and harmful approach, he stated:
That is the one approach that just makes no sense, and almost shows a kind of bad faith.
I truly hope that finally the SEC will offer a viable, pragmatic path forward for people who simply want to write good software. I & other 'cryptolawyers' stand ready to help.— _gabrielShapir0 (@lex_node) October 12, 2021
Commissioner Crenshaw said in her October 12 remarks that the technology that enables crypto – which is “a small but growing portion of the economy” – as well as its potential, are positive. But, as expected, this came with a ‘but’.
“[I]t turns out, few digital assets projects have gone through the registration process. Many operate as if they are not subject to regulatory oversight,” said the member of the Democratic Party.
Among the proposals that have been brought up and that Crenshaw argued against is the ‘safe harbor’ one, which aims to enable crypto businesses to offer tokens under initial coin offerings (ICOs) in compliance with the regulator’s rules. This proposal has been supported by Commissioner Hester Peirce, a member of the Republican Party.
“Had a safe harbor been in place during the Initial Coin Offering or initial coin offerings (ICOs) boom of 2017 and 2018, I think the results would have been even worse for investors and the markets,” Crenshaw argued.
Her take on crypto comes at the time when the SEC Chair, Gary Gensler, continues to push for more registration within the industry. Gensler took this position in April, while Crenshaw became a Commissioner in August last year.
Crenshaw said that,
“I do not think that a safe harbor that permits unlimited capital raising with only limited disclosures, and no registration requirement, is in the best interest of investors. Nor will it be effective at preventing a re-run of the excesses and failures of the recent past. [….] Instead of a harbor, my hope is that we can build a bridge.”
In response to Crenshaw’s remarks, Peirce tweeted: “If government wants to bring law to crypto, it should behave lawfully.”
In her own remarks, dated October 8, Peirce discussed Gensler calling the crypto industry ‘Wild West’, offering a different take on it. Like the Wild West, she said, the crypto frontier appears “pretty wild” at first glance – but, like in the former West, “there is order and discipline in all of that rough and tumble. Because crypto is built on code, the code itself serves as a governor of conduct.”
“The safe harbor I proposed for token distribution events acknowledges there is uncertainty about when cryptoasset offerings implicate the securities laws, but the prevailing attitude at the SEC is that there is clarity, so why bother with a safe harbor? The idea that there is clarity as to when cryptoassets are securities must come as a surprise to the lawyers advising crypto projects that have struggled with this issue for years.”
However, Crenshaw appears to have the ruling administration’s support. Peter Harrell, senior director for international economics and competitiveness with the National Security Council, told The Wall Street Journal that: “You’re really seeing the [Joe Biden] administration at the beginning of what we expect will be an ongoing, quite aggressive effort to make sure we understand and address the whole range of risks that we see in the cryptocurrency space.”
Mike Novogratz Says XRP Price Tripled This Year Despite SEC Lawsuit
- Mike Novogratz says XRP price tripled since the start of the US SEC lawsuit.
- He strongly believes that SEC couldn’t manage to suppress XRP price in any way.
- This is a testament to a resilient community with a common interest.
Ex-hedge manager Mike Novogratz is back again with what he observed about the XRP price of late. This time, he noted that despite the waves of the never-ending Ripple-SEC lawsuit, XRP price tripled this year.
Since the start of the lawsuit, XRP has maintained its price potential to the max. In fact, doing this has prevented it from decreasing in value according to Novogratz. He also stressed how XRP tied up its performance steadily is clear evidence of a resilient community that has a shared interest.
The value of $XRP has actually almost tripled since the SEC actions. It hasn’t plummeted. It’s a testament to the fact that once communities are formed with shared interest they are damn resilient. https://t.co/0IPcd8wyuN— Mike Novogratz (@novogratz) October 17, 2021
On this note, Novogratz believes that the Securities and Exchange Commission (SEC) couldn’t bring the XRP price down as people thought. Expanding further on the matter, the XRP community couldn’t remain silent on the tweet as they reacted with much enthusiasm.
Many applauded Novogratz for expressing what he feels, more especially about XRP. Also, the XRP Twitter netizens reminded him about his previous statement that he can’t stand XRP but he owns Ripple equity.
As of now, the crypto world still keeps guessing about what the SEC lawsuit is going to bring. Whether the SEC will win the case over XRP or vice versa, all depends on time. We will stay focused on the matter and keep you updated on the lawsuit.
SEC Approves ETF Exposing Investors to ‘Bitcoin Industry Revolution Companies’
The U.S. Securities and Exchange Commission (SEC) is approving a new exchange-traded fund (ETF) that offers investors indirect exposure to crypto assets.
The regulator has given the go-ahead for the Volt Crypto Industry Revolution and Tech ETF (BTCR) to trade on the New York Stock Exchange (NYSE).
According to the new filing,
“The Fund defines companies with exposure to Bitcoin as ‘Bitcoin Industry Revolution Companies,’ which are domestic and foreign… companies that:
(i) hold a majority of their net assets in Bitcoin on their balance sheet as can be reasonably determined by the company’s annual filings from the past 12 months; and/or
(ii) derive a majority of their revenue or profits directly from mining, lending, transacting in Bitcoin, or manufacturing Bitcoin mining equipment as can be reasonably determined by the company’s annual filings from the past 12 months.”
While the Volt ETF approval is a noteworthy milestone for the crypto space, it is not a straightforward Bitcoin ETF. The SEC announced this week that it is postponing application deadlines for four BTC ETF products until later this year.
The regulator says it needs additional time to look into a proposed rule change that will allow the Nasdaq Stock Market to list and trade shares of the Global X, Kryptoin, Valkyrie, and WisdomTree Bitcoin ETFs.
San Francisco-based Volt Equity targets investment in disruptive technologies, including autonomous driving, financial technology (fintech), and cloud computing.
According to the company’s website,
“Volt aims to provide investment solutions that allow investors to take part in [what] we believe are some of the most innovative publicly traded companies.”
SEC Chair Dodges Question About Regulatory Status of Bitcoin and Ether
The SEC boss remains mum about the regulatory status of the two largest cryptocurrencies
During a hearing held by the U.S. House Committee on Financial Services on Tuesday, Securities and Exchange Commission Chair Gary Gensler refused to answer the question asked by North Carolina Rep. Patrick McHenry about whether or not Bitcoin and Ethereum are securities:
I’m not going to get into any one token, but I think that the securities laws are quite clear.
Earlier today, McHenry, one of the most influential Republicans on the Financial Services Committee, introduced a bill that would exempt developers from complying with certain securities laws when raising money through token sales.
Gensler has once again emphasized that most of the cryptocurrencies are “investment vehicles”:
A lot of these are not real currencies. They are not being used to buy a cup of coffee at Starbucks…Most of them are investment vehicles…They should be within the securities laws.
A handful of digital assets might be competing with gold and silver as a speculative store of value, according to Gensler.
The SEC boss reiterated that his agency needs more help from Congress in order to fill the regulatory gaps.
“It’s a real shame”
Commissioner Hester Peirce, who’s fondly called “Crypto Mom” by some members of the community, recently delivered the most blistering critique of her agency to date.
During her appearance on Yahoo Finance, she said that the lack of regulatory clarity is “a real shame”:
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.
Gensler seemingly avoided McHenry’s question about whether or not he has reviewed Peirce’s “safe harbor” proposal.