Tag: U.S. Securities And Exchange Commission

Animoca Brands to Focus on Markets Outside U.S. after SEC Labels Sand Cryptocurrency an Unregistered Security

by Blockchain News

According to a report by South China Morning Post (SCMP), Hong Kong-based blockchain giant, Animoca Brands, has announced its plans to shift its focus to markets outside the U.S. This strategic move comes in the wake of the U.S. Securities and Exchange Commission’s (SEC) decision to label the firm’s Sand cryptocurrency token as an unregistered security, amid recent lawsuits against major crypto exchanges Binance and Coinbase Global.

Sand is the native crypto token used by Animoca’s metaverse platform, The Sandbox. It was among more than a dozen tokens explicitly labeled as securities by the SEC, a list that also includes Solana, Polygon, and Mana – the token used in the Decentraland virtual world. This decision by the SEC has elevated the legal risks for any company involved in selling these tokens.

Despite the regulatory challenges in the U.S., Animoca Brands remains optimistic about its global operations. The company’s co-founder and chairman, Yat Siu, commented in an email, “Animoca Brands is not focused on a single territory but operates globally. The SEC focuses on the U.S., so that should not have an impact on Animoca Brands in broader markets where Sand is widely available and accepted, including in more progressive jurisdictions like Hong Kong and Japan.”

Siu also disclosed that Animoca has already initiated measures to emphasize more on other markets in response to the recent “blockchain-hostile” approach observed in the U.S. This strategic shift represents Animoca’s adaptive response to the evolving regulatory landscape and is reflective of a broader industry trend towards seeking more cryptocurrency-friendly jurisdictions.

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XRP Surges 20% in Less Than a Day As SEC Lawsuit Takes Turn

by Dailyhodl

XRP is surging in price as the U.S. Securities and Exchange Commission (SEC) lawsuit against Ripple Labs reaches a crucial turning point.

Over the last 24 hours, XRP has surged 21.87% from $0.64 to $0.78, XRP’s price at the time of writing.

Investors have put buying pressure back onto XRP after a major decision from Judge Analisa Torres, the presiding magistrate over the SEC vs. Ripple case.

The SEC filed a lawsuit in December 2020 alleging that Ripple sold XRP as a security during its launch. The regulator also alleges that the token remains a security to this day.

Yesterday, Judge Torres ordered the unsealing of three important documents: 172-1, the notice of Ripple Labs CEO Brad Garlinghouse’s deposition in the SEC formal investigation, 179-4, an e-mail string from Ripple co-founder Chris Larsen, and 179-5, a Brad Garlinghouse email.

John Deaton, an attorney representing XRP holders in the lawsuit, says of the ruling,

“What these rulings clearly show is that Judge Torres favors public disclosure. Ripple can’t seal certain documents (i.e., legal Memo). The same applies to the SEC.”

In a new YouTube update, legal expert and Ripple supporter Jeremy Hogan says of Judge Torres’ decision,

“Our final takeaway from the judge’s order is this: I think we are going to get a ruling on these three dispositive motions very soon. And by that, I mean, within a month possibly. 

In fact, Judge Torres may have already decided and written her orders on two of the three dispositive motions and just needs to figure out what exhibits can be shown or referenced in her order when they are published. 

This is definitely a housekeeping order and these usually happen when a judge is ready to invite people over to their home and look at something.

So, there is one last brief due on February 9 from Ripple, and then, hold on to your hats, we could get that long-awaited and key ruling on whether the fair notice defense survives any day now.”

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SEC Probes Three Crypto Firms in New Enforcement Review: Report

by Dailyhodl

The U.S. Securities and Exchange Commission (SEC) is probing several cryptocurrency firms that offer high-interest yields amid a broader governmental effort to regulate digital assets.

According to a new Bloomberg report, the SEC is specifically looking at the methodology that Celsius Network (CEL), Voyager Digital Ltd. and Gemini Trust Co. employ when paying interest on virtual tokens deposited by users.

Whereas traditional financial institutions offer savings account holders less than a tenth of a percent in yields, the report notes that crypto token interest rates range from 3% to 18%.

Bloomberg says of the disparity,

“The firms are able to pay customers rates higher than most bank savings accounts by lending out their digital coins to other investors…

But since the firms don’t register their products with authorities, regulators have said they worry that potential risks aren’t disclosed to investors.”

Last September, the US states Texas and New Jersey each filed legal actions against the Celsius Network, but thus far the SEC has not accused it or the other two companies of wrongdoing.

The Gemini crypto exchange was founded in 2015 by twins Cameron and Tyler Winklevoss, who previously gained notoriety while disputing Mark Zuckerberg’s claim to have founded Facebook, now Meta.

Regarding the SEC inquiry, Voyager spokesman Mike Legg says,

“It’s normal for financial services companies, digital asset-related or otherwise, to be in ongoing dialog with regulators.”

Just this week news broke that the White House intended to take action on regulating digital assets, including a possible executive order.

Days earlier, the Federal Reserve released a report outlining the pros and cons of central bank digital currencies, commonly referred to as CBDCs.

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SEC Awarded More Time To Fight Order To Hand Over Sensitive Documents in XRP Lawsuit

by Dailyhodl

The U.S. Securities and Exchange Commission (SEC) is receiving more time to fight an order to hand over certain documents in its lawsuit against Ripple, potentially delaying the outcome of the case.

In a new order, federal judge Sarah Netburn says the SEC has until February 17th to file a motion for reconsideration on a previous order directing the regulator to hand over drafts and emails relating to a 2018 speech from William Hinman, the former director of the SEC’s Division of Corporate Finance.

Ripple’s legal team will have until February 25th to file a response.

The SEC alleges that XRP was an unregistered security upon its launch and that it remains a security to this day.

Hinman, however, does not view all crypto assets as securities. He said in that 2018 speech that he doesn’t think Bitcoin (BTC) or Ethereum (ETH) are securities due to the decentralized structures of their networks.

Attorney and crypto legal expert Jeremy Hogan says in a new tweet that there is “no silver lining” to the ruling for Ripple.

“Now discovery won’t conclude until March at the earliest.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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SEC Head Wants To Take Steps To Bring Crypto Exchanges Under Regulations: Report

by Dailyhodl

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler says he wants to bring crypto exchanges under the umbrella of regulation this year.

Gensler says in a new virtual press conference that he hopes crypto exchanges will take steps towards becoming regulated in the coming months, Bloomberg reports.

Explains the SEC chair,

“I’ve asked staff to look at every way to get these platforms inside the investor protection remit.

If the trading platforms don’t come into the regulated space, it’d be another year of the public being vulnerable.” 

Gensler told the U.S. Senate Committee on Banking, Housing, and Urban Affairs last year that cryptocurrency investors are vulnerable to scams and other illegal activities due to the lack of “enough investor protection” in the space. He also likened crypto assets to securities that would fall under the jurisdiction of the SEC, according to Bloomberg.

“Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending.

Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.

This asset class is rife with fraud, scams, and abuse in certain applications. We can do better.”

However, the SEC chairman has also acknowledged that the underlying blockchain technology “has been a catalyst for change around the globe.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Banking Giant BNY Mellon Expects Significant Revenue From Its Crypto Services: Report

by Dailyhodl

America’s oldest bank is eager to capitalize on the cryptocurrency revolution but remains concerned that the government still has not provided regulatory clarity.

According to a new Bloomberg report, Bank of New York Mellon Corporation (BNY Mellon) chief financial officer Emily Portney says the holding company expects digital assets to act as a significant revenue source by 2023.

Portney says,

“There are proposals in front of the Securities and Exchange Commission that haven’t yet been approved on whether ETFs [exchange-traded funds] can actually hold digital assets directly versus futures.”

BNY Mellon is already moving forward into the crypto space by partnering with financial technology firm Fireblocks, which also recently announced a deal with interest-earning blockchain protocol Aave (AAVE) to launch the world’s first permissioned decentralized finance (DeFi) platform.

The BNY Mellon CFO reiterated how important it is for mainstream financial institutions to obtain clear definitions of what is permitted from the U.S. Securities and Exchange Commission (SEC) before offering crypto investment services to their clients.

Portney says in an interview with Reuters,

“We’re hoping for more clarity around digital assets.

Frankly, it’s a bit confusing about who actually regulates digital assets and especially crypto… and of course exactly what you can or cannot do.

A lot of the activity is happening in I guess what I would call the shadow banking system just because of the lack of clarity.”

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Investors Can Expect Lack of Regulatory Clarity on Crypto Markets To Persist, According to SEC Commissioner Peirce

by Dailyhodl

Two members of the U.S. Securities and Exchange Commission (SEC) are saying that the body’s recently released regulatory agenda fails to address the crypto sector adequately.

SEC Commissioners Hester Peirce and Elad Roisman say in a joint statement that the SEC’s Regulatory Flexibility Agenda for the US securities markets “comes up short” as the agenda fails to offer more clarity on crypto assets despite the growth of the sector in the recent past.

“The agenda also comes up short on furthering the investor protection prong of our mission by failing to provide more clarity on digital assets.

First, the agenda makes no mention of any regulation with respect to digital assets. In the last several years, this sector has grown in size, complexity, diversity, and investor interest.”

The two SEC Commissioners say that the failure to offer more regulatory clarity on the crypto sector will hinder honest players while emboldening those with ulterior motives.

“Rather than taking on the difficult task of formulating rules to allow investors and regulated entities to interact with digital assets, including digital asset securities, the agenda—through its silence on crypto—signals that the market can expect continued questions around the application of our securities laws to this area of increasing investor interest.

Such silence emboldens fraudsters and hinders conscientious participants who want to comply with the law.”

This is not the first time the SEC under Chair Gary Gensler is being criticized for its approach to cryptocurrency regulations.

In September U.S. Senator Pat Toomey accused the regulatory body of adopting a strategy of “regulation-by-enforcement” rather than proactively providing “rules of the road to industry.”

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Ripple CEO Brad Garlinghouse Says Payments Firm Making Good Progress in SEC Lawsuit, Gives Timeline for Resolution: Report

by Dailyhodl

Ripple chief executive Brad Garlinghouse thinks “good progress” has been made in the payment company’s legal battle with the U.S. Securities and Exchange Commission (SEC).

In a new interview with CNBC, Garlinghouse also issues a loose prediction on the case’s timeline.

“We’re seeing pretty good progress despite a slow-moving judicial process in the federal courts. Clearly, we’re seeing good questions asked by the judge, and I think the judge realizes this is not just about Ripple, this will have broader implications, and I think that’s a very good thing. I’m hopeful that certainly in 2022 there’ll be closure here.”

The SEC filed charges against Ripple last December alleging that the San Francisco-based company sold XRP as an unregistered security during its launch. The regulator alleges that XRP remains a security to this day.

Garlinghouse says in the CNBC interview that countries like the United Arab Emirates, Japan, Singapore and Switzerland have provided leadership on crypto regulations. Though he notes that certain countries, naming China and India, have taken a more restrictive approach to digital assets recently – the CEO argues that “the direction of travel is very positive” overall for crypto regulations around the globe.

Ripple recently proposed various measures for regulating the cryptocurrency industry in the US, including “innovation sandboxes” and the creation of a “safe harbor” regime that would allow network developers to be exempt from the registration provisions of federal securities laws for a limited time.

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Ripple Issues Statement Suggesting New System for Regulating Crypto Industry

by Dailyhodl

Global payments firm Ripple is proposing various measures for regulating the cryptocurrency industry in the US.

Ripple says it hopes for a regulatory framework that “encourages the unleashed potential of cryptocurrency and blockchain technologies, while also establishing important consumer and market protections.”

The San Francisco-based company says it supports innovation sandboxes which offer a conducive regulatory environment necessary to spur innovation.

“The current uncertainty in the US regulatory landscape discourages innovation and could cause a ‘brain drain’ in the cryptocurrency and blockchain space.

In order to incentivize innovation and inform the development of a clear and consistent regulatory framework for cryptocurrencies, we believe innovation sandboxes should be encouraged.”

Ripple says developers in the crypto space should be protected from liabilities or penalties under safe harbor provisions for a certain period.

“As proposed by SEC [U.S. Securities and Exchange Commission] Commissioner Hester M. Peirce, US financial regulators should consider the creation of a ‘safe harbor’ regime under which network developers, under certain conditions and for a limited time, would be exempt from the registration provisions of federal securities laws.

During this ‘safe harbor’ period developers would be allowed to launch their products and develop their networks.

Fraud, of course, would not be subject to any protections in the sandbox.”

According to Ripple, its proposed measures could help maintain the overall worldwide competitiveness of the US capital markets.

“Ripple believes that each of the above proposals – whether implemented separately or together –can succeed in keeping industry within the U.S. while also maintaining the strong consumer and investor protections that have made American capital markets the best in the world.”

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SEC Commissioner Releases Statement on Crypto, Says DeFi Presents Wide Array of Opportunities

by Dailyhodl

A U.S. Securities and Exchange Commission (SEC) official is offering clarity on decentralized finance (DeFi) while weighing its benefits and risks.

In a statement, SEC Commissioner Caroline A. Crenshaw says that DeFi offers notable opportunities and advantages, but aspects of the sector remain riddled with confusion.

“DeFi presents a panoply of opportunities. However, it also poses important risks and challenges for regulators, investors, and the financial markets. While the potential for profits attracts attention, sometimes overwhelming attention, there is also confusion, often significant, regarding important aspects of this emerging market.”

Crenshaw says that investing is at the “core of DeFi activity” and one of the benefits participants enjoy is the ability to transfer assets “quickly and easily.”

“Developers have also constructed smart contracts that offer individuals the ability to invest, to lever those investments, to take a variety of derivative positions, and to move assets quickly and easily between various platforms and protocols. And there are projects that show a potential for scalable increased efficiencies in transactions speed, cost, and customization.”

The SEC commissioner says that relying on investors to conduct the proper due diligence before investing in DeFi is inadequate.

“Accordingly, DeFi participants’ current ‘buyer beware’ approach is not an adequate foundation on which to build reimagined financial markets. Without a common set of conduct expectations and a functional system to enforce those principles, markets tend toward corruption, marked by fraud, self-dealing, cartel-like activity, and information asymmetries. Over time that reduces investor confidence and investor participation.”

Crenshaw says that some DeFi ecosystems ought to be under the SEC’s jurisdiction and developers should therefore seek clarification from the regulator if they are unsure about the status of their project.

“A variety of DeFi participants, activities, and assets fall within the SEC’s jurisdiction as they involve securities and securities-related conduct. But no DeFi participants within the SEC’s jurisdiction have registered with us, though we continue to encourage participants in DeFi to engage with the staff.

Importantly, if DeFi development teams are not sure whether their project is within the SEC’s jurisdiction, they should reach out to our Strategic Hub for Innovation and Financial Technology… or our other Offices and Divisions, all of which have experts well-versed in issues relating to digital assets.”

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