SEC plans to propose new rule changes that could impact crypto firms

According to recent reports, the United States Securities and Exchange Commission (SEC) intends to propose new regulation changes this week that might have an effect on the kind of services that cryptocurrency businesses are permitted to provide their customers.

According to a report that was published on February 14 by Bloomberg, which cited “people familiar with the matter,” the securities regulator is working on a draft proposal that would make it more difficult for cryptocurrency companies to act as “qualified custodians” on behalf of their customers’ digital assets.

This might, in turn, have an effect on the many hedge funds, private equity companies, and pension funds who collaborate with cryptocurrency startups.

Those individuals who were quoted said that on February 15 a five-person SEC panel would decide on whether or not the plan will advance to the next level.

In order for the remaining members of the SEC to cast an official vote on the proposal, they will need to achieve a majority vote of three votes out of five. If the idea is accepted, it will be revised based on the input provided wherever required.

People who are aware with the situation have said that it is not obvious what particular modifications the United States Financial Watchdog is seeking. This is despite the fact that the SEC has been deliberating on what should be necessary to be a certified custodian of cryptocurrencies since March 2019.

According to Bloomberg, if the deal is confirmed, some cryptocurrency businesses may be required to relocate the digital asset holdings of their customers to another location.

According to the study, these financial institutions may be exposed to “surprise audits” on their custody ties or other ramifications. This information was included in the report.

After a story published on January 26 by Reuters said that the SEC may soon investigate Wall Street financial advisors over how they’ve given cryptocurrency custody to their customers, the news of the vote proposal that will be held on Wednesday comes as a surprise.

The Securities and Exchange Commission (SEC) has been quite busy in recent days dealing with Paxos Trust, the issuer of the Binance USD (BUSD) stablecoin. The SEC is of the opinion that Paxos Trust issued the cryptocurrency in the form of an unregistered security.

Paxos said that they were willing to “vigorously litigate” the matter if it came to it.


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Silvergate Capital Corp. is the second-most-shorted stock

According to the most recent Short Interest Reporting dated February 9, the cryptocurrency bank Silvergate Capital Corp. is the second-most shorted company in the United States, with nearly 72.5% of its shares being shorted. This information was gathered from the market on February 9.

The Financial Industry Regulatory Authority (FINRA) is responsible for the collection and publication of short interest positions for all equity securities twice per month. When investors and traders take a short position, it indicates that they anticipate a price decline for a particular asset, such as a share of stock. A short seller is someone who bets that the price of a securities will go down.

At the time of this writing, Silvergate stock (SI) had dropped by more than 87% during the course of the previous year. The latest financial report for Silvergate, as well as the legal fights the business is now engaged in about its ties with the defunct companies FTX and Alameda Research, have contributed to the pessimistic outlook on the stock.

The bank made the announcement on January 17 that the common shareholders would be responsible for a net loss of one billion dollars in the fourth quarter of 2022. According to a report published by the United States Securities and Exchange Commission (SEC), Silvergate experienced significant withdrawals of deposits during the period. As a result, the company was compelled to seek funding from wholesale sources and sell debt securities in order to keep its liquidity.

It has been claimed that Silvergate obtained a loan of $3.6 billion from the Federal Home Loan Banks System in the United States in order to minimize the consequences of a spike in withdrawals that occurred after the closure of the cryptocurrency exchange FTX in November.

The bank is being investigated and sued in the United States for allegedly providing assistance to FTX in its fraudulent operations, which include lending to users and commingling their cash. The corporation is being accused of “furthering FTX’s investment scam,” and stockholders are asserting that Silvergate violated the 1934 Securities Exchange Act. An examination of the bank’s involvement in FTX enterprises is now being carried out by the Justice Department.

According to Silvergate, Alameda signed up for a banking relationship with the institution in 2018, which was before to the release of FTX. According to the company’s statements, proper due diligence was performed at the time and continued monitoring of the issue was also performed.

Recently, in response to the issue at the bank, Moody’s Investors Service downgraded the ratings of Silvergate Capital and its bank to “junk,” with a negative outlook for both entities.


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SEC Probes Investment Advisers Offering Crypto Custody Without Proper Qualification

The United States Securities and Exchange Commission (SEC) has begun an investigation into traditional financial advisors on Wall Street to determine whether or not these advisors grant custody of digital assets to their customers without having the necessary qualifications. The purpose of this investigation is to determine whether or not these advisors grant custody of digital assets to their customers.

According to an article that was published by Reuters on January 26, which cited “three sources with knowledge of the matter,” the investigation that is being conducted by the SEC has been ongoing for a few months, but it appears to have picked up speed after the collapse of the cryptocurrency exchange FTX.

According to the sources, the Securities and Exchange Commission (SEC) has never disclosed to the general public the inquiries that it is presently doing since the investigations that it is currently conducting are confidential.

According to a report by Reuters, the majority of the work that the SEC is putting into this investigation is focused on determining whether or not registered investment advisors have complied with the laws and regulations regarding the custody of client cryptocurrency holdings. This is the primary focus of the SEC’s investigation into whether or not registered investment advisors have complied with the laws and regulations regarding the custody of client cryptocurrency holdings. The SEC is conducting an investigation into registered investment advisers to see whether or not they have complied with the rules and regulations that govern the custody of client bitcoin assets. This is the major focus of the inquiry.

To be able to continue to comply with the custodial protections outlined in the Investment Advisers Act of 1940 and to be able to provide custody services to customers, investment advisory firms are required to be “qualified” under the legislation. This qualification is a prerequisite for providing custody services. This regulation is in place to ensure that consumers of investment advice businesses have access to safe and secure custody services.


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Bitcoin surges toward $39K as stocks volatility keeps Wall Street on edge

Bitcoin (BTC) kept investors guessing with tech stocks as Wall Street opened on Feb. 4, circling $38,000.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Stocks continue volatility

Data from Cointelegraph Markets Pro and TradingView followed a ranging overnight period for BTC/USD, bulls hoping for clearer validation of recent gains.

After 15% daily gains the day before, Amazon (AMZN) continued its uptrend on Feb. 4, jumping 10% at the open, while embattled Meta (FB) dipped further.

In what has become an increasing focus of attention among analysts, curiously volatile tech stocks thus showed few signs of steadying at the opening bell.

Bitcoin, after losing $800 in the hour beforehand, thus recouped all of those losses and more, underscoring its positive stocks correlation.

“No more posting about stocks, returning to telling you how boring Bitcoin is instead,” Wolf of All Streets Podcast host Scott Melker joked to Twitter followers, revealing that he had bought FB at Feb. 4’s prices. 

The overall state of market, however, did not pass him by.

Melker was not alone, with other commentators even likening the “good-news-is-bad-news” paradox to an episode of The Simpsons.

When it came to BTC, however, popular trader and analyst Pentoshi doubled down on his new, more positive stance on the outlook.

“IMO this larger green area will be a spot where big players buy back + close short positions. Has historical value,” he said about a target area between $31,000 and $36,500.

“Think it’s a tremendous buying opp. I bought 100 $BTC at 37.2 and 400 more yesterday, and will kektinue on spikes down.” 

BTC/USD chart with green target zone. Source: Pentoshi/ Twitter

Levels above and below set

Meanwhile, after almost exactly two months of downtrend, Bitcoin is “almost done,” another more bullish analyst believes.

Related: Bitcoin bulls may ignore Friday’s $730M options expiry by saving their energy for $40K

Identifying a zone to reclaim overhead, Twitter account Anbessa urged patience while keeping an eye out for a higher timeframe bull signal to emerge.

As Cointelegraph reported, signals began appearing in late January regarding a possible exit from the multi-month cycle of losses totaling almost 50% from all-time highs.