Gensler Confirmed As SEC Chair, Safe Harbor Updated

Key Takeaways

  • The U.S. Senate has passed a vote that will make Gary Gensler the next chair of the U.S. Securities and Exchange Commission.
  • Meanwhile, SEC Commissioner Hester M. Peirce has published an updated version of her “Safe Harbor” proposal.
  • Both developments could create a better regulatory environment for up-and-coming crypto projecs.

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The U.S. Securities and Exchange Commission has seen two developments. Gary Gensler has been approved as the next SEC chair, while its Safe Harbor crypto plan has been updated.

Gensler Approved By Senate

On Apr. 14, the U.S. Senated passed a vote by a count of 53-45 that confirms Gary Gensler as the SEC’s next chair.

Gensler is currently a blockchain professor at MIT. Gensler has also served as chair of the Commodity Futures Trading Commission and previously worked as a Goldman Sachs banker.

He succeeds former chairman Jay Clayton, who became infamous for his harsh stance toward crypto. Under Clayton, many new cryptocurrencies were considered securities, leading the SEC to create several regulatory lawsuits against ICOs.

Though that practice is unlikely to change, some believe Gensler could take a more nuanced stance toward crypto due to his blockchain knowledge. Furthermore, in March, Gensler stated that he would seek “regulatory clarity around cryptocurrencies.”

Cryptocurrencies will almost certainly still be considered securities under Gensler, but a change in leadership could plausibly lead to the approval of a Bitcoin ETF in the U.S. for the first time.

Peirce Updates Safe Harbor Plan

Meanwhile, SEC commissioner Hester M. Peirce has published an updated version of her Safe Harbor proposal, which aims to provide blockchain projects with greater flexibility.

“The safe harbor seeks to provide network developers with a three-year grace period within which … they can facilitate participation in and the development of a functional or decentralized network exempted from the registration provisions of the federal securities laws,” Peirce wrote in a post on Apr. 13.

Peirce noted that there are three new changes to the latest version of the proposal. In short, those changes include extra requirements around development plan disclosures and exit reports.

The Safe Harbor rule was first announced by Peirce during a speech at the International Blockchain Congress in February 2020.

Peirce also noted that Gensler’s arrival makes this an ideal time for the regulatory body to reconsider its rules and responsibly create accommodations for cryptocurrency.

Disclaimer: At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins.

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Coinbase Closes First Day of Trading Down 14% From Debut Price

In brief

  • Coinbase went public today, debuting on Nasdaq at $381 per share.
  • It shot up to $424 before tumbling to $310, and ended the day at $328.
  • That’s still 31% higher than its reference price.

Coinbase wrapped its first day of public trading on Nasdaq with a share price of $328.

It’s down 14% from its debut at $381, but still up 31% from the reference price of $250.

The public debut of $COIN marks an important moment for the crypto industry. A product of the Y Combinator startup accelerator program, Coinbase is now the largest American crypto exchange, with a market capitalization of over $85 billion. It’s seen investments from the likes of Fred Wilson and Marc Andreessen, and played an important role in acquainting US retail traders with popular cryptocurrencies like Bitcoin and Ethereum.

But today’s listing is crypto’s biggest step yet into the mainstream. Tesla, Square, PayPal, Morgan Stanley, and BlackRock have all dabbled in Bitcoin-related investments and products over the past few months, but Coinbase’s valuation is spotlighting crypto in a big way. For context, Facebook went public with a valuation of $104 billion, and Uber was initially valued at around $82 billion.

The price of $COIN is also different from other buzzy tech stocks in that it’s tied to the performance of the crypto market. Coinbase makes money by taking a chunk of each transaction on its platform; the more trades there are, the better the exchange does. And when Bitcoin sends the market way up, as it has for the past few months, it tends to mean more volume for Coinbase.

Thanks to the current state of the market, Coinbase is coming off its best quarter ever—it made more in Q1 of 2021 than it did in all of 2020.


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Binance Stalls Coinbase Stock Token Listing Due to ‘Market Volatility’

Just hours after announcing it would offer a tokenized version of Coinbase stock for trading, leading crypto exchange Binance has postponed the listing “due to market volatility.”

Stock tokens allow investors to buy fractions of a share without commission, while also getting dividends. Unlike actual stock holders, however, investors in token stocks have no voting rights in the company.

Binance was set to list the Coinbase Stock Token (COIN) to be backed by actual Coinbase stock ($COIN), which began selling publicly today on Nasdaq. However, as one might expect of a new stock being traded via direct listing, the price is fluctuating as the public figures out what the US-based crypto exchange is worth.

$COIN’s reference price yesterday was $250, but it debuted today 52% higher at $381. It then climbed as high as $424 before sliding to $313. It’s a bit all over the place. While 15% to 20% swings are just a typical Wednesday in crypto markets, they’re less common to stocks–at least, well-established ones.

And Binance, hopeful to cash in on its rival’s big day, isn’t ready to press “go” on COIN/BUSD trading until that volatility settles.

That’s what XRP trading is for, apparently.


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Coinbase adds hidden message with political undertones to BTC blockchain on day of IPO

The crypto exchange, whose CEO has previously dissuaded employees from expressing political views, started its initial public offering off with a message referencing U.S. President Joe Biden’s stimulus package. 

According to Coinbase, the crypto exchange had mining pool F2Pool embed the title of a New York Times article in the Bitcoin (BTC) blockchain at 2:05 PM UTC today. The message in block 679,187 refers to the U.S. Congress passing the American Rescue Plan Act of 2021 on March 10 — a bill which set aside $1.9 trillion for measures aimed at curbing the economic impact of the pandemic.

In posting the message on the day its COIN stock opened on the Nasdaq, Coinbase said it was paying homage to the title of a news article Bitcoin creator Satoshi Nakamoto embedded in the BTC genesis block mined on Jan. 3, 2009. The story, “Chancellor on Brink of Second Bailout for Banks,” was from the publication The London Times during the financial crisis starting in 2008.

Though Satoshi started the trend, other crypto miners have previously used hidden messages to mark notable events in Bitcoin history. Immediately prior to the third BTC halving in May 2020, F2Pool included a message in the Bitcoin blockchain containing the title of a New York Times article comparing the financial crisis caused by COVID-19 to the situation in 2008. An unknown miner also embedded a Bible verse in a transaction in block number 666,666 of the blockchain — the number 666 is well known for its religious connotation.

U.S. lawmakers voted on the American Rescue Plan almost entirely along party lines, with the bill receiving no Republican support in the House or the Senate. However, the implication of an article like the one Coinbase had F2Pool add to the blockchain would seemingly go against CEO Brian Armstrong’s stance on his employees expressing political views.

Last September, Armstrong wrote a blog post claiming Coinbase’s mission did not include advocating “for any particular causes or candidates internally that are unrelated to our mission because it is a distraction from our mission.”

“We won’t debate causes or political candidates internally that are unrelated to work,” said Armstrong at the time. He added that Coinbase employees should not “expect the company to represent our personal beliefs externally” and the exchange should instead be “laser focused on achieving its mission.”

Sixty Coinbase employees, or roughly 5% of its staff at the time, reportedly left the firm following the CEO’s announcement. Armstrong later claimed that a “silent majority” of employees sided with him on keeping politics out of Coinbase, but some who stayed have allegedly said the firm is stifling their freedom of speech.

Though there is no constitutionally mandated right to free speech within private companies, the topic has been fiercely debated. Institutions like Coca-Cola, Delta Air Lines, Major League Baseball, and others have spoken out against a Georgia law many civil rights advocates say is aimed at voter suppression. In a followup interview on CNBC’s Squawk Box regarding politics at Coinbase today, Armstrong said companies “with great intentions can sometimes end up creating division and unwelcoming environments internally by engaging some of these issues.”

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The embedded BTC blockchain message from today did not seem to spark the same level of outrage from social users as the CEO’s tweet in October. On that occasion, during regular business hours, Armstrong sent a link to his more than 500,000 Twitter followers to an article containing falsehoods about then-candidate Joe Biden’s son, Beau.