US Crypto Crackdown Could Stifle Innovation and Weaken Dollar

The US government’s ongoing crackdown on cryptocurrencies and crypto firms is causing concerns among industry experts, who argue that it could have a negative impact on innovation and weaken the dollar’s global position. The recent Wells notice issued to Coinbase by the SEC is just one example of the legal threats that crypto firms are facing in the US, and many believe that there could be more to come.

According to Mati Greenspan, the chief of crypto research firm Quantum Economics, US regulators have been unfriendly to crypto “since the beginning.” Some suggest that the recent collapses of crypto and startup-friendly banks, such as Silvergate, Silicon Valley Bank, and Signature Bank, are part of a larger scheme by regulators to “un-bank” the crypto sector, which has been dubbed “Operation Choke Point 2.0.”

Meanwhile, a March 20 economic report from the White House was highly critical of the merits of crypto assets, spending almost an entire chapter debunking their “touted” benefits. However, as more people begin to use crypto for cross-border remittances globally, there are concerns that a crackdown on crypto in the US could actually have the opposite effect on the dollar. By isolating the US further, it could weaken the dollar’s position as the global reserve currency.

Greenspan suggests that the White House should instead review the practices in the banking industry, rather than targeting the crypto sector. The recent action against Coinbase has been described as part of an “adversarial environment for the crypto industry” in the US, which could drive jobs, investment, and future innovation offshore to countries like Singapore, Hong Kong, and Australia.

Despite the concerns raised by industry experts, the exact reasons for the SEC’s targeting of Coinbase remain unclear. The SEC has declined to comment on the matter, leaving many in the crypto community uncertain about what the future holds for the industry in the US.


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ARK Invest Buys Coinbase Shares Despite Wells Notice

Two days previous to the announcement that the Wells notification was forthcoming, ARK Invest had already sold 160,887 of its Coinbase shares using the ARK Fintech Innovation ETF. When this transaction took place in 2023, it was the first time that any of ARK Invest’s ETFs had sold Coinbase shares. In spite of the decline in Coinbase’s share price, this transaction represented the first time that any of ARK Invest’s ETFs has ever sold Coinbase shares. It is essential to take into consideration the fact that authorities and insiders at Coinbase participate in 10B5-1 selling plans months in advance, and that this tranche of sales was carried out in line with a trading strategy that was formed on August 16.

After the publication of the Wells notice, which warned of possible enforcement action by the SEC, the share price of Coinbase has not been able to recover to its former level. This is likely due to the fact that the SEC is likely to take enforcement action. Brian Armstrong, the chief executive officer of the firm, had also sold shares in his company between March 17 and March 20, only a few days before the Wells notice and the consequent decline in share price. These sales took place between March 17 and March 20.

Following the settlement that the SEC reached with Kraken on February 9, in which it was alleged that Kraken’s staking services qualified as securities, Coinbase has repeatedly asserted that its staking products are fundamentally different from Kraken’s products. This is in response to the allegations that Kraken’s staking services qualified as securities. After the conclusion of settlement talks between the SEC and Kraken, Coinbase made its claims.

In conclusion, ARK Invest has continued to purchase Coinbase shares despite receiving information from Wells and a decline in the price of Coinbase’s shares. This is the case even if the price of Coinbase’s shares has fallen. Before the Wells notice, Coinbase executed a trading plan that it had designed on August 16 in order to sell 160,887 shares from its ARK Fintech Innovation ETF. Coinbase has made the assertion that its staking products do not constitute securities in any way.


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