[2021-09-11] Biden’s SEC is ready to regulate cryptocurrency

[Woodie]

Cryptocurrency has an SEC problem — and it just got bigger.

The Biden administration is taking a more hands-on approach to the highly volatile, little understood, and barely regulated cryptocurrency industry. Cryptocurrencies are decentralized digital currencies secured by blockchain technology. Bitcoin, ethereum, and other cryptocurrencies have become almost as accessible as government-issued currency in recent years, but the government offers few consumer protections for them.

The Securities and Exchange Commission (SEC) — led by Gary Gensler, who taught a class on cryptocurrency at MIT — is trying to make the case that it can and will regulate whatever cryptocurrency investment schemes it decides fall under its purview. The relative newness and rapid expansion of the cryptocurrency industry have put it in a regulatory gray area. The Internal Revenue Service (IRS) classifies crypto as property. The Commodity Futures Trading Commission (CFTC) considers crypto to be a commodity. And the SEC has said that digital assets “may be securities, depending on the facts and circumstances.” A security is a financial asset that can be traded, like stocks and bonds, and which is governed by several laws designed to prevent fraud and protect investors.

The SEC appears to have decided that an upcoming offering from Coinbase, the largest cryptocurrency exchange in the United States, meets its definition of a security. And it’s showing that it will step in and regulate it accordingly — and, by extension, regulate the rest of the crypto finance industry more assertively.

Read more https://www.vox.com/recode/22663312/coinbase-sec-cryptocurrency-bitcoin

[1715026553]

1715026553

[1715026553]

1715026553

[1715026553]

1715026553

[1715026553]

1715026553

[1715026553]

1715026553

[1715026553]

1715026553

[bbc.reporter]

This is creating a stronger argument for much of the liquidity in the cryptospace to begin going to unregulated sectors. This is the art market where NFTs will also be considered art. It would not he surprising if the Biden administration begins cracking down on the art industry, however.

It also appears that Biden is worse for the cryptospace than Trump hehehe. Where are those liberals and progressives in the cryptospace? I told you.

[DooMAD]

Unsure how this is any different to what they've been saying for the last few years.  I recall ages ago they were saying that just about every ICO probably fell into the category of a security and was under their remit.  They never acted in time to do anything about any of those.  Crypto seemingly moves too fast for them, heh.  We'll see if they manage to actually do something this time around.

[20kevin20]

What this is telling us is that they still don't fully understand crypto and I doubt they will at some point in the near future. Some authorities likely do understand it, but unless it becomes general knowledge for all of them it's going to be hard to both categorize Bitcoin and regulate it.

Unsure if regulations are good or bad news. Good news probably for adoption, but bad news for us since regulations restrain your range of freedoms, actions etc. I would still place it among a completely separate stock category: not Commodities, not Securities nor is it just a normal stock. It's a Cryptocurrency, which can fit in multiple categories on the stock market depending on how it's perceived.

[bbc.reporter]

Unsure how this is any different to what they've been saying for the last few years.  I recall ages ago they were saying that just about every ICO probably fell into the category of a security and was under their remit.  They never acted in time to do anything about any of those.  Crypto seemingly moves too fast for them, heh.  We'll see if they manage to actually do something this time around.

Agreed, however, it is not to be underestimated similar to China. There were many people in the cryptospace that did not think that the crackdown of Beijing would be true.

There is also Janet Yellen from the treasury department who has her attention on stablecoins. It appears she has noticed that there are printers of American dollars without owning a Federal printer hehehhe.



The U.S. Treasury Department met with a number of industry participants this week to quiz them about the risks and benefits posed by stablecoins -- a rapidly growing type of cryptocurrencies, the value of which is pegged to traditional currencies, according to three people with direct knowledge of the meetings.

Washington policymakers are alarmed at the rapidly expanding cryptocurrency market which exceeded a record $2 trillion in April. As of Friday, the market cap of stablecoins stood at roughly $125 billion, according to industry data site CoinMarketCap. It is unclear which financial regulations apply to these relatively new products.

Source https://www.reuters.com/technology/exclusive-us-treasury-financial-industry-discuss-cryptocurrency-stablecoins-2021-09-10/

The crackdown on stablecoins if successful will be the big short of the cryptospace.

[DooMAD]

There is also Janet Yellen from the treasury department who has her attention on stablecoins. It appears she has noticed that there are printers of American dollars without owning a Federal printer hehehhe.

I figure most stablecoins are a ticking timebomb anyway.  Whether they put a dent in the market through regulatory shutdown or just good old fashioned malfeasance, it seems like it's destined to happen one way or another.  If regulators are going to be poking their noses in, I'd rather they do it there.

[bbc.reporter]

@DooMAD. What do you reckon would be the effect of a crackdown on stablecoins in the cryptospace if successful? Much of the liquidity of the market are presently in stablecoins. I have argued before that it might be a cause of one of the largest liquidity crunches in history that would pop the bubble, however, there were people telling me that I was antagonizing and spreading fud.

They have also argued that it would pump the price of bitcoin because USDT holders would buy bitcoin as an exit from USDT. My answer to that was why would bitcoin holders sell bitcoins for USDT? Their reply was the same, I am an antagonizer hehehe.

[DooMAD]

@DooMAD. What do you reckon would be the effect of a crackdown on stablecoins in the cryptospace if successful? Much of the liquidity of the market are presently in stablecoins. I have argued before that it might be a cause of one of the largest liquidity crunches in history that would pop the bubble, however, there were people telling me that I was antagonizing and spreading fud.

They have also argued that it would pump the price of bitcoin because USDT holders would buy bitcoin as an exit from USDT. My answer to that was why would bitcoin holders sell bitcoins for USDT? Their reply was the same, I am an antagonizer hehehe.

Hard to say, really.  Trying to predict market movements before they happen is basically a guessing game.  I wouldn't attempt to claim I knew how severe the impact would be or how long it would last for.  But I'd imagine it would be a similar effect if people lost faith in stablecoins because a major one like USDT failed and everyone suddenly realised how vulnerable they are with a single central point of failure.

A lot of people likely would end up bag-holding USDT if Tether's backing assets got seized, their peg completely failed or it collapsed in some other way.  Or regulators made it impractical to use or shut it down completely.  A small number of people with fast reactions would get out via existing open BTC orders.  A few more might get out via altcoins, but even then it might be slim pickings to find an off-ramp after reality had sunk in for most people.  One of the many reasons I steer well clear of it.  

[zanezane]

I don't know about that but I don't think that SEC will have their way in all of this, crypto will persist and it's difficult for them to pull strings behind the back on this one because people will notice.

[stompix]

What this is telling us is that they still don't fully understand crypto and I doubt they will at some point in the near future. Some authorities likely do understand it, but unless it becomes general knowledge for all of them it's going to be hard to both categorize Bitcoin and regulate it.

It's not about understanding crypto, and the government has a lot of people who understand crypto far better than a lot of the people here, don't forget that the sha was developed by the NSA, they were able to infiltrate darknet marketplaces, they were tracking coins and users well before bitcoin really made the news. When it comes to technicalities they know everything too well.

What we have here is not a matter of understanding it's a matter of classification and a useless debate between 3 government institutions that all want to impose their point of view but at the same time, they are not that eager to be the only ones on which is this handed to. Each has its own idea of how it is better but at the same time, they don't want to be blamed for anything if their plan goes south. And to add to this mess two parties, each with its one faction in them, and even in those factions people with different ideas, pour a bit of an overwhelming desire to tax everything to rise up money from one side, and there you have it.

Also, the major drama around those has another culprit and that is Elizabeth Warren, right now I would consider her the biggest enemy of cryptocurrencie,s she is relentless with her ideas and her attacks, and unfortunately she seems to gather more and more support, including that of the other pain in the ass, Yellen.

[bbc.reporter]

@DooMAD. What do you reckon would be the effect of a crackdown on stablecoins in the cryptospace if successful? Much of the liquidity of the market are presently in stablecoins. I have argued before that it might be a cause of one of the largest liquidity crunches in history that would pop the bubble, however, there were people telling me that I was antagonizing and spreading fud.

They have also argued that it would pump the price of bitcoin because USDT holders would buy bitcoin as an exit from USDT. My answer to that was why would bitcoin holders sell bitcoins for USDT? Their reply was the same, I am an antagonizer hehehe.

Hard to say, really.  Trying to predict market movements before they happen is basically a guessing game.  I wouldn't attempt to claim I knew how severe the impact would be or how long it would last for.  But I'd imagine it would be a similar effect if people lost faith in stablecoins because a major one like USDT failed and everyone suddenly realised how vulnerable they are with a single central point of failure.

A lot of people likely would end up bag-holding USDT if Tether's backing assets got seized, their peg completely failed or it collapsed in some other way.  Or regulators made it impractical to use or shut it down completely.  A small number of people with fast reactions would get out via existing open BTC orders.  A few more might get out via altcoins, but even then it might be slim pickings to find an off-ramp after reality had sunk in for most people.  One of the many reasons I steer well clear of it.  

I reckon it is very easy to say. It will bring one of the biggest bubble pops in the history of the cryptospace market. Tether have brought much of the liquidity after 2017 and have presently become a systemic risk. Removing this would bring a market failure where liquidity cannot support the market dump.

[tuertezii]

In addition to monitoring the exchanges' access to gold channels, are there other ways of monitoring?
China seems to have driven the mine manager away, but many people in China are still very free to hold cryptocurrency.

[DooMAD]

I reckon it is very easy to say. It will bring one of the biggest bubble pops in the history of the cryptospace market. Tether have brought much of the liquidity after 2017 and have presently become a systemic risk. Removing this would bring a market failure where liquidity cannot support the market dump.

Having been around long enough to ride the 80+% drop when Gox collapsed, I don't think it would be as dramatic as that.  I suspect a larger overall percentage of Bitcoin users were involved with Gox in 2013/2014 compared to the overall percentage of users who store wealth in stablecoins today (although I could be wrong).  I would also hope that regulators would announce a sensible timetable, well in advance of any major changes, to prevent panic.  Pretty confident that any fluctuations with Bitcoin's price would be short-lived and would probably recover fairly swiftly.    

I believe the far greater harm will come to those who opt to continue holding stablecoins from this point on.  And, to be perfectly blunt, I'm going to have little sympathy for anyone who gets burned when something negative happens there (and it is definitely a 'when', not an 'if').  The warning signs have been there long enough for even the most blinkered person to take notice.  They looked sketchy even before the regulators took an interest.  I'm of the view that people who freely choose to continue holding vast sums of these corporate IOUs, despite all the mounting evidence as to why it's a terrible idea, must have a mental impairment.  There's no other logical explanation for it.  All gamblers lose eventually and that's what stablecoin holders are.  Get out while you can.

[dansus021]

I hope Biden do nicely to crypto

like everyting US will be major move and other country will start following so if biden says yes maybe other country will also says yes

[bbc.reporter]

I reckon it is very easy to say. It will bring one of the biggest bubble pops in the history of the cryptospace market. Tether have brought much of the liquidity after 2017 and have presently become a systemic risk. Removing this would bring a market failure where liquidity cannot support the market dump.

Having been around long enough to ride the 80+% drop when Gox collapsed, I don't think it would be as dramatic as that.  I suspect a larger overall percentage of Bitcoin users were involved with Gox in 2013/2014 compared to the overall percentage of users who store wealth in stablecoins today (although I could be wrong).  I would also hope that regulators would announce a sensible timetable, well in advance of any major changes, to prevent panic.  Pretty confident that any fluctuations with Bitcoin's price would be short-lived and would probably recover fairly swiftly.    

I believe the far greater harm will come to those who opt to continue holding stablecoins from this point on.  And, to be perfectly blunt, I'm going to have little sympathy for anyone who gets burned when something negative happens there (and it is definitely a 'when', not an 'if').  The warning signs have been there long enough for even the most blinkered person to take notice.  They looked sketchy even before the regulators took an interest.  I'm of the view that people who freely choose to continue holding vast sums of these corporate IOUs, despite all the mounting evidence as to why it's a terrible idea, must have a mental impairment.  There's no other logical explanation for it.  All gamblers lose eventually and that's what stablecoin holders are.  Get out while you can.

In 2013 - 2014, the cryptospace’s total market capitalization might not be more than $2 billion, the daily volume might not be more than $1 billion and regulators were not very active. Mtgox’s systemic risk might not be as large as Tether’s present systemic risk. I speculate a liquidity shock of losing Tether will have much more impact than losing Mtgox on 2013 - 2014 and the recovery might be longer.