Bitcoin Forum

"Exercise Caution with Crypto Asset Securities: Investor Alert"

https://www.sec.gov/oiea/investor-alerts-and-bulletins/exercise-caution-crypto-asset-securities-investor-alert



This whole statement sounds innocent and, in a sense, as pretty good and sensible advice to investors, but is probably an indication of future actions relating to US crypto crack-down.
Bitcoin doesn't seem to be in a direct thread, but if they go after stablecoins (to kill the competition and make a room for CBDC) the entire market will likely get hit.

The entire market is likely surviving on stable coin like the USD most especially. Let me say for instance if the US government succeed on killing the Pegged United dollar ( Tether) which is the major pairs on the entire crypto market. There will definitely be a break and a shock on the entire market which even if the market survive it, won't be an easy one.

This kind of announcement is not new.  I think every now and then SEC gives a warning to crypto investors especially when the cryptocurrency market is getting bullish.  Now that they have CBDC I believe SEC will be more aggressive in their propaganda to discredit the cryptocurrency industry, especially these stablecoins to kill competition and will possibly promote or suggest CBDC as a better replacement.

I believe once the preparation for CBDC is complete (study, laws, regulation. technology), SEC will launch more thorough propaganda that can defame cryptocurrency and promote CBDC.

Spot on. This not about securing the assets of those who believe in decentralized money, like Bitcoin, but rather we are witnessing the beginning of a more aggressive campaign against one of the most important parts of the market: the stable coin liquidity.

The SEC and the government of the United States are not stupid, there are aware that in order to exercise the surveillance and control they seek with their incoming CBDCs, they may need to kill the competitors through legal means.

Also, for whatever reason it seems the governor of Florida (De Santis) and Ted Cruz are using the lack of trust towards digital banknotes to boost his (unannounced) presidential bid and career in the chamber. Let us see if other states follow this lead, assuming this is not just hot air from the governor and the representative.

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Source: https://www.coindesk.com/policy/2023/03/22/gop-senator-ted-cruz-proposes-legislation-to-block-cbdc/

What I see is that the SEC is increasingly persecuting us from all sides and they have no intention of hiding their intentions. They are pinching us and trying to control us, nothing more, nothing less. Regulation is inevitable, but I don't pay much attention to this rubbish news. There are ways to bypass the government if it wants to collect taxes and control us more.

Like always this statement is 100% correct about altcoins (crypto) and 100% wrong about bitcoin.

In any case the US and consequently dollar hegemony is threatened as dedollarisation is spreading across the globe and USD gets weaker and the SEC is afraid that more people are going to choose bitcoin as an escape from the sinking ship called dollar. Hence they try to discourage at least some of the people who are fleeing... :)

That is a possibility too although US is already too late to the CBDC nonsense game and I don't see how that could be able to compete with the existing CBDCs while dollar itself is being abandoned.

This is not new though, I mean since 2017, since the bubble that we have going to $20k, per pop, they started to show their aggressiveness towards crypto, not bitcoin per se, but stable coins and other altcoins for that matter. True, regulation is imminent, but now we should know that, but it's not a threat to bitcoin. Maybe some other projects that could be a treat to them. They even take a crusade against privacy coins already and not might be looking at those stable coins and others. Tether used to be the target since 2018, but maybe they know it's hard to bring them down.

I am inclined towards mikeywith's point of view, which he had mentioned in a post cant remember  ??? ???.
In short, the war started by the SEC aims to end any link between digital currencies and banking systems, and thus drain them of liquidity sources that come from stablecoin or from guaranteeing depositors’ funds in dollars, and thus keep these currencies hostage to supply and demand in the peer-to-peer trading markets, which makes them more vulnerable to price fluctuations and less in value. growth and expansion.

it is the time when the free money will end, and therefore 99% of cryptocurrencies will not survive, and hence this warning makes sense.
It remains for Bitcoin to either succeed and thus increase the market capacity to more than a trillion dollars, including the beginning of a real organization as a new financial party, or the fluctuation that will drive many investors out of the market.

Whenever a first or second iteration of a technology that makes sense and is useful gets killed, rest assured a third iteration will come. We might not be there yet that there is an algorithmic stable coin we can fully fall back on, but if governments decide to kill stable coins backed by their own treasury bonds, the only way out will be a decentralized solution and I wonder if that is a solution the government would like more than a stable coin they actually have control over?

I doubt that they will kill stable coins. But I am sure that they will shove regulation down the providers' throats. But not too hard, step by step such that a provider has more reason to comply than to deny.

They might be better off putting that warning at the next Superbowl, really. Or on any crypto ad airing then or anywhere else. Think people will have their guard up if a friend whispers crypto in their ear but it's when Tom Brady and Matt Damon splashes coins in their face that they need to have their spider sense up...

I think the reason they issues this is because back in late 2021, many worried about inflation so they bought stocks and crypto. And they obviously would of been better off staying in cash if they held till now.

So now they are saying this because they don’t want people to invest in Bitcoin as a safe haven compared to a bank account. Because people see posts like “BTC to $1M in 90 days” and they borrow money and buy crypto and then end up being a bag holder.

SEC is actually right to that about tip of investing only what anyone can afford to lose. Maybe they're foreseeing something like we'll be back in the bull run and the essence of it is for those sudden companies that will come out offering investments to people like HYIP, fake crowdfunding and of the same.

They understand how bitcoin is doing and performing and that's why it's an indirect hit to it and most likely, this is also for bunch of altcoins where people are following every single meme coin, trending altcoin and what not.

This is something I'm quite worried about because if the government feels that they have done all kinds of ways to discredit cryptocurrency and it doesn't work, they will turn to manipulating the crypto market, whether it's by going after stablecoin providers or making negative news which it will have a negative impact on the crypto price. The point is how the government makes the crypto market a volatile market, untrusted and makes many people not interested in investing in this market.

There is nothing strange or worrying in that statement, because similar statements could be read in the past from many central banks and similar institutions. On the one hand, it's smart to warn people what they're getting into so they don't knock on the wrong door later when things go downhill, but on the other hand, let everyone decide what they want to invest their money in, as long as it is something legal.

However, what can be interesting about this statement is the moment in which it was made public - and the data for March 2023 say that in this month alone, about $286 billion of deposits were withdrawn from banks, and a good part of that money went to institutions like Fidelity, JPM or Goldman Sachs. Given that some of them also have links to cryptocurrencies (especially Fidelity), we should not be surprised that such statements are being released right now.

On the other side of the big pond, similar warnings could be heard in the past.

Source (https://www.cnbc.com/2021/05/07/bank-of-englands-bailey-crypto-investors-risk-losing-all-their-money.html)

CBDC is coming. Although there are officials trying to stop it, it's going to roll as planned and SEC sending messages like this one is just one example of how they are going to make CBDC reliable money while crypto is not. They are excluding BTC so Bitcoin is good.

On the other side of the fence, dollarization is happening in every corner of the world and it's not picked up by the media so there is something big that is coming and stablecoin might really be broken as well.

Now today we got CTFC suing Binanace. It seems this is not going to end soon. If you read the lawsuit, most likely it means that Binance US is dead and most likely it will be impossible to use any US banks to transfer USD into and out of the Binance exchange.

Remember how a few months ago Binance had issues with US fiat deposits/withdraws? They denied any rumors of this lawsuit and now here it is. This is proof that this investigation was ongoing for a few months and the hint was the bank getting rid of Binance.

BNB down -5% so far.

Some of the stable coin providers backed their stable coins with long-term treasury bonds, but isn't that what ultimately led to some banks to collapse as well now because those bonds lose in value as interest rates rise and when liquidity is needed, they need to sell it at a loss? Essentially, these exchanges or organizations offering those stable coins are making the same mistakes as banks. Their balance sheets must be faulty as well and carry assets that need to be devalued, but then their promise that every stable coin dollar is sufficiently backed doesn't hold true anymore.

It seems true, this statement is not something new, in fact every day we echo the same thing to anyone who wants to invest in bitcoin or altcoin. But underneath all that, I think they're hatching a plan to be able to prevent some people from entering the crypto space especially into bitcoin after the bank crash. This is a classic plan that may have been the first step to prevent many billionaires from turning to bitcoin, but sadly it cannot be prevented completely.

Yup. I see their statement as "don't say we didn't warn you" kind of thing when they crack down on crypto even harder and might singlehandedly cause a crypto-market collapse (off course to protect the investors from losses lol).

They've already attacked Coinbase and Paxos for issuing BUSD (with a help of NYDFS). Still failing to clearly define what the "security" is and how can they possibly view some stablecoins as securities if they offer no promises of profits.


Good to hear. But I fear it's just a publicity stunt with no chance of getting passed. Hope I'm wrong.


It's hard not to notice that Binance is particularly targeted by US authorities. The rumour is Binance has a secret support of Chinese government, and as such, US will do anything not to allow them to get any dominant position in the crypto market in the US.
 

That's much likely of it. They'll chase any company that have been in the hot seat if it's for the US. And with that, it's what the other countries could do if they don't have such a lovely and friendly approach with crypto. Well then, this has been seen years ago and many of them don't really like bitcoin. But just to see them neutral is already more than enough that there's no such worries but with such statement from SEC itself, it looks scary and providing FUD to every possible guy that shows interest in investing on crypto.

This could be alarming but we should not panic and remain focus with out goal, expect the market to react on this and a possible correction, FUB is not leaving cryptomarket after all and this is expected. Government agencies are attacking crypto, and mostly those are agencies that came from US so you’ll see the pattern here. Most probably they are preparing for the worst crisis that can ever happen to them, and they have to control every market as much as possible or else they will lose control. A case against Binance is a true test for crypto exchanges, let’s be more updated for this case and act accordingly.

That is, yes I said this before they could not target bitcoin and cryptocurrency directly so they direct their war against stablecoins to cut the link and prevent the flow of liquidity to crypto.

In addition to targeting stablecoins, they are also targeting Crypto VIPs such as the CEO of Binance CZ and Justin Sun, the founder of Tron (TRX) ....etc.

So yes, they are trying to "kill competitors through legal means".

It's alarming for those companies that don't comply to the US regulations. But as an individual, we don't have to worry about nothing. Let us say that they're just doing their jobs and that's pretty normal for them to do it since we've known them to be against really to crypto. It's temporary like that and in the past, they're not aggressive at all because it's not gaining traction. And now that it has become popular and gaining the traction that we all want on this community, they're now starting to do what they think is right. However, that right of them isn't really right at all because they're aware that many lives have been changed by crypto and those that have been bad did lacked of their own proper researches.

I read that as a declaration of war, really.


Well, pretty much every foreign exchange company has come under fire from the US in one place or another, and have been forced to restrict their services to US people respectively. And it's not just them, but some other countries like the United Kingdom as well.


It would give me some laughs if they spent the money they fined these exchanges with on a Super Bowl ad like that.  ;D

Correct me if I'm wrong but this is about crypto-based securities, not cryptocurrencies as a whole. I highlighted the relevant bit from the quote which to me spelt it out, as well the following:


The reasons why crypto-based securities are high risk is clearly because they aren't approved by the SEC, and so far there has been no regulation surrounding them, at least no relevant legislation.

I also think this is merely further clarity after the exchanged-based staking-related change up, that exchanges can't offer a %, only the crypto protocol in itself can.

Needless to say this doesn't effect Bitcoin, nor other cryptocurrencies it seems. Only companies that are making security based offerings.

I think we shouldn't think in advance and be negative. They can also be sincere when they say that. They know that cryptos are unstoppable and they can't do much about it but only give people a piece of advice.

Even if they are planning on something to prevent people from entering, I don't think they will be successful with it. People knows what they want and they know that getting involved in crypto will help them on achieving their dreams so why will they allow someone to stop them? Banks have crashed last time but what was the connect of it to crypto? They better be concerned on the banks so that they won't experience the same issue ever again.

The problem is SEC itself is unable/unwilling to clearly define what falls into definition of crypto-based security. There's not much clarity in that statement neither.
They've already hinted in the past that even well-known cryptos like ETH may actually be securities. If, for all those years SEC themselves cannot provide a clear rule, then how can any crypto-business potentially comply to their rules?
The recent case with Paxos being ordered to stop minting new BUSD tokens, because they may fall into the definition of security, shows how loosely they use that definition.
The most accepted method of determining if something is security or not, is the Howey test, which has 4 conditions:
1 - An investment of money
2 - In a common enterprise
3 - With the expectation of profit
4 - To be derived from the efforts of others

No stable coin, by definition, bears any expectations of profit - yet, that didn't stop SEC/NYDFS from going after Paxos.

What I said before is starting to come true, a large number of Americans have been pulling their money out of the banks. So far hundreds of billions of dollars have been pulled out. Very few of those who make a withdrawal would put it in their mattress! Majority of them would try to invest into something specially since dedollarisation is expanding to more countries and the threat of dollar collapsing is more serious now; obviously one of the very viable options is bitcoin.
Hence the SEC fear and their subsequent warning...

This was exactly came to my mind while reading the post. People should be cautious if considering any investment at all, why do they need to always target the crypto market? Just take a look at their second statement, "Investments in crypto asset securities can be exceptionally volatile and speculative". Please I would like to know a market be it stock, forex that is not speculative. Yea, we know its good advice, I see advices like this all most everyday even on this forum but when it comes from people whose aim to to cripple the crypto market then it's a subtle attack.


You know them too well. Funny how they hate cryptocurrency so much but their big idea came through cryptocurrencies. Their hypocrisy stinks.

Indeed, very good point. I think they are mainly unable and unwilling as they quite simply don't know/understand what constitutes a security, in regards for cryptocurrencies. For example if they could charge the Ethereum protocol itself as being a security because of APY from staking, then they probably would, but obviously there is no company responsible for this offering (and it's not a guarantee either).


This is all very true. I also think Paxos will end up fighting this accusation of BUSD being a security, on the very basis it can't be. To me this case just seems like they are "testing the water" as to what they can claim is a security and what is not, unless there is something about Paxos/BUSD that we don't know about. Maybe there was borrowing/lending going, or it was "staking" options from centralised providers?

Notably, they didn't try go after the bigger stablecoins like USDT/USDC, so seems like they were targeting small fish instead, as I said to test the water here. That's just my interpretation of it anyway. Having stablecoins deemed illegal forms of producing (and potentially inflating) fiat currencies seems like a simpler root to shutting them down at least. But that involves new laws I imagine.

The amount of withdrawn deposits from banks is slightly less than $300 billion in the US, and that's only in this month, and I already wrote in my previous post that money market funds profited the most from this. Probably some of that money went into Bitcoin and some altcoins, possibly into gold and bonds, which people still consider a much safer way of storing value than fiat.


Source (https://uopxinternational.com/business/markets/money-market-funds-swell-by-more-than-286-billion-as-investors-withdraw-deposits-from-banks/)

If there's indeed a massive cash pull-out, I don't expect this would be driven by an average Joes converting the fiat into bitcoins and/or other investments. Certainly this is not reflected in BTC price.
I would be guessing it's either the wealthy individuals or businesses escaping with any excess cash to mitigate the risk. The FDIC insurance only covers up to $250k, so it's best to strategically move any excess either to another bank or somewhere else.

This statement alone makes them already bias, since their behavior towards crypto is unclear. I always think that they are only using the word "law" as an excuse for them to gain more benefit whenever they have something they want. They're only using it as means when it is convenient for them. A friend of mine living in US told me that some Americans are little by little pulling out their money from the banks and started to either invest into crypto or invest into stocks. Their reason is that, they no longer trust the words of the government, and either they profit or lose the money at least they were the ones playing with their own money rather than letting the banks play them, is what my friend said.

This should be what about government agencies always warn to the investors. Government agencies have always been and are negative towards Bitcoin or cryptocurrencies. But having the adverse situation the market achieve its goals. But there is no doubt that they are trying to attack cryptocurrency. In this regard they will never achieve that success. Because cryptocurrencies are not governed by the laws of any particular country. However, it is very important for the government or government agencies to take strict action against those who want to scam with the people but not for all.

Markets could be crazy like that. You watch 2 banks going bankrupted and swallowed hole, and the entire nation gets together to save the people who deposited, so you think to yourself "hmm the people who deposited their money into a bankrupted bank still got their money back, so there is no danger" and invest even more? That's really it? That's how the market thought?

These people are crazy and I would really wonder how their brain works in other situations. Hmm my friend almost got eaten by a shark here, but didn't, so I could safely go in there myself as well? Because that is exactly what happened and that's exactly how they are responding to this situation.

Firstly, this warning is something that has been said many times, thousands of times on forums by thousands of people, I think.
Then furthermore, every country has rules regarding cryptocurrencies so you know for sure that in the jurisdictions of certain countries crypto is not a legal currency. It's just that the government cannot control it (unless it is centralized), while only users can be controlled with some rules.

The government's statement is only because they want to prevent and raise doubts among potential new investors towards crypto. I know this is nothing new, you must have noticed this too.

It seems like the SEC and government officials as a whole have started taking a more aggressive stance against crypto and Bitcoin. It seems like they’re getting their “anti-crypto army” assembled and are preparing for a fight. While the government trying to stop crypto has always been the biggest hurdle to climb, and it appears that battle is about to begin, I would remind people that first they ignore you, then they laugh at you, then they fight you… Now is when we win.