U.S. crypto market regulatory bulls join the SEC and CFTC to fight for power

The U.S. is undoubtedly the center of gravity for the crypto market right now, and its regulatory dynamics have always been an important event for the crypto market. This article briefly summarizes the recent regulatory attitudes and measures of the United States towards cryptocurrencies, encrypted exchanges, stablecoins, and encrypted mining. At the same time, this article also makes a brief analysis of the current regulatory landscape and regulatory disputes in the crypto market in the United States, hoping to be helpful to investors.

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U.S. SEC wants to monopolize the power of cryptocurrency supervision, establishes a new cryptocurrency filing office

The U.S. Securities and Exchange Commission (SEC) has long wanted to regulate cryptocurrencies as securities as much as possible, and a new move this week is bringing that idea to life, meaning more cryptocurrencies are likely to face investigations in the future and regulation.

On September 8, according to BitTweet, SEC Chairman Gary Gensler delivered a virtual speech at a legal conference in Washington on Thursday, saying: “Among the nearly 10,000 tokens in the crypto market, I believe that The vast majority are securities. Without prejudging any one token, most crypto tokens fall under investment contracts under the Howey test. Some in the crypto industry have called for clearer guidance, but in the past In five years, the SEC’s voice was very clear.” However, Gensler also said: “There are some tokens that may not meet the definition of securities, which I call non-security tokens, which are small in number but potentially large in value.”

On September 9, Bittui reported that the U.S. Securities and Exchange Commission will set up a new cryptocurrency filing office. Cicely LaMothe, the department’s deputy director for disclosures, said the office, which will fall under the corporate finance department, is expected to have a legal and accounting branch for consulting and filing for crypto companies, as well as handling public company disclosures. The SEC believes the new office is necessary to process “unique and evolving” filings around cryptoassets, the vast majority of which are considered securities by the SEC.

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Crypto exchanges and stablecoins cannot escape supervision, and the SEC has already been involved in the investigation

In addition to cryptocurrencies, the SEC is also making every effort to supervise and investigate encrypted exchanges; in addition, for the “fat” stablecoins, it also believes that it may be securities and wants to be included in the scope of supervision. However, stablecoins are more similar to “currency” in the end, and the Federal Reserve is also very concerned about this. Therefore, Federal Reserve Chairman Powell proposed to adopt legislation. Once legislation is made, the Federal Reserve is likely to be responsible for this aspect of regulatory obligations.

On September 8, Bitcoin Archive said on social media that SEC Chairman Gary Gensler stated that Coinbase , FTX , Binance and other exchanges fall under the jurisdiction of the SEC. And as early as August, according to a staff member in the office of U.S. Senator Cynthia Lummis , the SEC is not only investigating Coinbase, but every U.S. cryptocurrency exchange, including Binance, is in various stages of investigation .

SEC Chairman Gary Gensler said earlier in a conference that stablecoins could fall under the category of unregistered securities. Powell may not agree, though. According to the news on September 8, Federal Reserve Chairman Powell said in a live broadcast of the Cato Institute conference on Thursday that stablecoins should be “appropriately regulated” to play a role in the financial system. We need to legislate on this, you know, you don’t really get a regulatory framework after paying for stablecoins, so I think that’s what is needed. Stablecoins should provide consumers with clarity, transparency, and a “complete reserve of high-quality assets that are highly liquid.” U.S. lawmakers have been working on stablecoin bills behind closed doors for months, with House Financial Services Committee Chair Maxine Waters and Republican Rep . Patrick McHenry trying unsuccessfully to release draft stablecoin legislation in July.

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The United States regulates encrypted mining, and Ethereum may be favored by institutions after the merger

In 2021, Musk’s Tesla announced that it would increase its holdings of bitcoin , and then announced that Tesla accepted bitcoin payment, but then shelved bitcoin payment due to environmental issues. This series of operations had a huge impact on the encryption market at that time. Recently, the regulation of mining in the encrypted market in the United States is also advancing. Bitcoin mining is likely to face a serious blow in the United States, which will undoubtedly become bad news for the encrypted market. It is worth noting that after the merger of Ethereum, it may be more favored by institutions and gain long-term development opportunities.

The White House Office of Science and Technology Policy, in a new report released Thursday, called for further research into the energy impact of crypto mining in the United States, according to news from BitTweet on the 8th. This is the office’s first public response to President Joe Biden’s executive order on cryptocurrencies, and the report details its approach to the question of how crypto mining affects the environment, including the scale and manner of the impact of different cryptocurrencies Currencies have different energy needs.

“The world’s largest crypto-assets by market capitalization generate a total of 1.4 ± 30 million tons of carbon dioxide (Mt CO2/y) per year, which is about 0.3% of global annual greenhouse gas emissions,” the report said. The report recommends White House efforts to reduce greenhouse gas emissions , ensure energy reliability, improve energy efficiency rules, collect data to better understand the impact of cryptocurrency mining and conduct other research. If these measures prove ineffective in reducing their impact, the government should explore executive action, and Congress may consider legislation to limit or eliminate the use of energy-intensive and intensive consensus mechanisms in crypto asset mining.

Institutional investors holding bitcoin may turn more to embrace ethereum if U.S. legislation restricts crypto mining. Following the ethereum merger, the price of ethereum could decouple from other cryptocurrencies, as its staking rewards would make it similar to instruments such as bonds or commodities with an arbitrage premium, according to a report published by crypto analytics firm Chainalysis . ETH staking is expected to provide pledgers with yields of 10-15% per annum, making ETH an attractive bond alternative for institutional investors considering that Treasury yields are much lower in comparison. The report also noted that one of the reasons staking would be attractive after the Ethereum merger is that moving to PoS would also make Ethereum more environmentally friendly, which could make the asset more comfortable for investors with a commitment to sustainability. This especially applies to institutional investors.

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The CFTC and the SEC reach a consensus, and the regulation of encrypted derivatives tends to mature

Unlike other important components of the crypto market, the regulation of crypto derivatives tends to be more mature. Bitcoin futures contracts were first launched by the CFTC as early as 2017. Although the SEC-approved Bitcoin futures ETF is a little later, the trading volume has grown rapidly. The two “old rivals” that regulate the encryption market in the United States have formed a lot of tacit understanding. and consensus, which has accelerated the regulation of crypto derivatives.

On Aug. 11, the U.S. Commodity Futures Trading Commission (CFTC) voted to propose a joint rule with the U.S. Securities and Exchange Commission (SEC) that would require hedge funds to report cryptocurrency exposure. On August 10, the US SEC also voted to support the proposal. The rule, which requires hedge funds to report cryptocurrency exposure through confidential documents, is partly an attempt to improve the Financial Stability Oversight Council’s ability to monitor systemic risk and strengthen broader regulatory oversight. Hedge funds with net assets of more than $500 million will report their cryptocurrency exposures in a confidential Form PF, created after the 2008 financial crisis. Funds will also report information related to concentration and borrowing.

CFTC Commissioner Christy Goldsmith Romero said in a statement that the financial crisis has shown the risk of contagion in private fund activity, and the proposal aims to increase the transparency of private fund activity. Our goal is to increase the usefulness of the data collected to ensure it is actually used by Congress to bring transparency to previously hidden risks.

US SEC Chairman Gary Gensler also pointed out that the private equity sector has grown significantly in recent years without significant transparency mechanisms. Funds will also report information related to concentration and borrowing.

Although the proposal was passed, there are still many voices against it. CFTC Commissioner Caroline Pham said in a dissenting statement: “The proposed joint amendment is an action by the CFTC and SEC that appears to impose overly broad obligations that would be unnecessarily burdensome if not under the Commodity Exchange Act. ” (Commodity Exchange Act, CEA) to conduct a persuasive cost-benefit analysis, which will bring potentially significant operational challenges and costs.”

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U.S. SEC seeks power, CFTC complains about uneven budget allocation

U.S. Securities and Exchange Commission Chairman Gary Gensler maintained his view on crypto enforcement, Gensler continues to treat most cryptoassets as securities and crypto trading platforms as stock exchanges, which would oblige both issuers and exchanges to register with the SEC, This argument was opposed by many parties. Among them, the US Commodity Futures Trading Commission (CFTC), which has been fighting for power with the SEC, expressed strong opposition.

Recently, “SEC accused Coinbase of insider trading and listed the 9 cryptocurrencies involved as securities”, the CFTC commented that if the SEC did not intervene, the case should be within the jurisdiction of the CFTC. The CFTC had also investigated insider trading allegations, but it was put on hold after the SEC declared nine tokens, including seven traded on Coinbase, to be securities and within its jurisdiction, according to people familiar with the matter. CFTC officials have said bitcoin and ethereum are commodities and fall under their jurisdiction, but the legal status of thousands of other tokens, including those named in the SEC lawsuit last week, remains murky.

CFTC staff have argued internally that some of the tokens the SEC identified as securities in its complaint could also easily be considered commodities. Some are concerned that the SEC’s case against Coinbase could set a precedent that the derivatives regulator needs to be licensed to handle digital asset cases, one of the people said. It is reported that under current US law, the regulation of commodity-based derivatives markets is governed by the CFTC. Aitan Goelman, a former CFTC enforcement director, said: “If the SEC tried to say that almost every token other than Bitcoin is a security, that would be an existential threat to Coinbase and the crypto-economy as a whole.”

The reason why the US SEC took the lead in listing 9 cryptocurrencies as securities is related to budget allocation, and the US CFTC commissioner also complained a lot about this. The CFTC has an annual budget of $1.5 billion and nearly 700 employees, while the SEC has a budget of $2.65 billion and more than 5,000 employees. CFTC Commissioner Chris Giancarlo said: “The SEC may get three times the size of the CFTC’s budget, but you know, everything they do is because they have enough budget, but the SEC’s work The amount should also be three times that of the CFTC.”

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Who will kill the deer, the encryption market will respond to the era of great supervision

How will the regulatory battle between the SEC and the CFTC develop? According to a staff member in the office of U.S. Senator Cynthia Lummis, after the SEC took several actions to demonstrate the regulator’s jurisdiction over the cryptocurrency industry, and the CFTC’s strong response, the committee opposed what it called “regulation through enforcement.” “. The SEC is eager to resolve its dispute with the CFTC over crypto jurisdiction. If the matter is not resolved internally, he said lawmakers will have to get involved, and Congress will likely sided with the CFTC.

Regarding regulation, the crypto market does not seem to be very impressed with the SEC’s approach. Ripple Labs general counsel Stu Alderoty recently published an article in The Wall Street Journal “SEC Wants to Be America’s Crypto Police”, saying that the crypto market volatility caused by regulators does not protect consumers, and the market needs crypto regulatory clarity, not the SEC Protect its turf at the expense of the more than 40 million Americans in the crypto economy.

On the whole, with the continuous growth and development of the encryption market, the supervision of the encryption market is becoming more and more urgent. Once the contradiction between the US SEC and the CFTC is resolved, the encryption market will undoubtedly usher in a real era of great supervision.

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Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/u-s-crypto-market-regulatory-bulls-join-the-sec-and-cftc-to-fight-for-power/
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