Highlights from Gensler’s Crypto Regulation Conference and All Key Crypto Developments This Week

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It’s been a busy week for cryptos regulatory and business adoption, but the highlight was the August 3 speech by SEC Chairman Gary Gensler, who set out his perspective. on crypto at the Aspen Security Forum. Below are the best takeaways (from Steven Alexopoulos of JPM):

Gensler pointed out that the crypto space is currently the Wild West where we don’t have enough investor protection. Gensler said the SEC is seeking to maximize regulatory protection in the crypto markets and called on Congress to give the agency more reach and resources to oversee the crypto industry.

Gensler has strongly emphasized the need for increased regulatory oversight of crypto platforms, including crypto trading platforms, lending platforms, as well as other decentralized finance (DeFi) platforms.

A key test used to determine if something will fall under SEC regulation is the Howey test. The test evaluates an asset with the following elements: investing money in a joint venture with a reasonable expectation of profit to be gained from the efforts of others.

Gensler predicts that there will be more deposits regarding crypto ETFs under the Investment Companies Act, which offers significant protections to investors. He looks forward to the staff’s review of these crypto ETF deposits, especially if these are limited to bitcoin futures contracts traded by CME (Bloomberg followed up on this “Gensler Gets Wish as Bitcoin Futures ETF Filings Land “).

On Stables, Gensler maintains a similar stance and noted that they can also be securities and investment companies. Gensler said the SEC will apply the comprehensive investor protections of the Investment Company Act and other federal securities laws to stablecoins.

The SEC is also seeking comments on crypto custody arrangements by brokers and regarding investment advisers.

Paul Brody, Global Blockchain Leader at Ernst & Young, responded to Gensler’s speech by saying it signals bullish momentum for DeFi on the blockchain ecosystem. Some other takeaways here.

Besides Gensler, other notable developments included recent moves in the OCC, a comprehensive bill to regulate the crypto market, an interesting decision by the Singapore central bank, and of course, the tax treatment of crypto such that envisioned in the Biden Infrastructure bill:

US Infrastructure Bill, August 2: The US Infrastructure Bill includes language that will impact the cryptocurrency industry. The bill would require “brokers” to report information about a digital asset transaction, such as specific prices, to the IRS. As defined in the bill, a broker is a person who is “responsible for regularly providing any service that transfers digital assets on behalf of another person.” In addition to developments in the infrastructure bill, a bipartisan group of lawmakers introduced an amendment that would explicitly exempt crypto miners, developers, and custodians from the IRS provision (for more information, see “#DontKillCrypto Trends As Ted Cruz Warns Of ‘Dangerous’ Provisions In Infrastructure Invoice “)

Digital Asset Market Structure and Investor, Protection Act, August 2: US lawmaker Don Beyer (D-VA) recently introduced a comprehensive bill to regulate the crypto market. The “Digital Asset Market Structure and Investor Protection Act” would allow the Secretary of the Treasury to veto the creation of stablecoins, order regulators to define rules for decentralized finance and possibly create a charter for crypto exchanges, among others. measures. It would also define what kinds of cryptocurrencies could be securities, which can be treated as commodities, and strengthen the collection of tax data for reporting purposes. Support for the bill and its timetable for adoption are unclear.

Monetary Authority (Central Bank) of Singapore, August 3: The Monetary Authority of Singapore (MAS) has granted its first “in principle” approval to a virtual asset service provider for a major payment institution license under From the independent reserve of the Payment Services Act, the recipient of the approval is a cryptocurrency exchange and the approval will allow it to operate as a regulated provider of digital payment token services. Several candidates were in the final stages of consideration to obtain a license to operate as digital payment token service providers, MAS told parliament.

Office of the Comptroller of the Currency, August 5: The New York Times reported that the Biden administration approved Saule Omarova to head the office of the Comptroller of the Currency. If appointed, Ms Omarova could call for increased oversight of the crypto and banking sector. She previously expressed that crypto allows banks to conduct business outside of regulators’ perspective.

Fed Governor Waller on Stablecoins, August 5: In a speech to AEI on the practical use of central bank digital coins, Fed Governor Christopher Waller said he prefers stablecoins to the CBDCs. He believes central bank digital currencies (CBDCs) are highly useless and reduce the market power of banks.

On the corporate side, it has also been a busy week, with the launch of a bitcoin fund by JPM for private bank clients, with ETF giant Invesco filing a bitcoin strategy ETF with the SEC which will invest primarily in contracts. bitcoin futures – as stated by Gary Gensler. vision – as well as having exposure to other bitcoin funds such as Grayscale Bitcoin Trust; there was also news from Grayscale who hired David LaValle, former CEO of custom index provider Alerian to be its global ETF leader, as he tries to convert his $ 22 billion bitcoin trust into an ETF, and finally Valkyre Digital Assets – an asset manager – offers a Dash denominated trust that provides exposure to Dash as well as a return on staking; the closed fund will be offered on over-the-counter markets accessible to retail investors.

Finally, regarding the latest crypto adoption news, we learn that technology-focused online retailer Newegg Commerce will accept Litecoin payments, becoming the first merchant to accept Litecoin as a payment method on the BitPay platform; Quiznos restaurant chain announced that it has partnered with Bakkt Holdings, which is the digital marketplace behind the Bakkt app, which will allow Quiznos customers to pay in bitcoin at certain locations; Burberry and Louis Vuitton have also made the news: Burberry will soon release an NFT character set called “Sharky B” while a Louis Vuitton game will offer 30 NFTs; the marketing teams around other big fashion brands have also exploited the buzz around NFTs; Last but not least, Google is re-allowing crypto ads after the company released new policies. Policies place restrictions on advertisers with the requirement that they be a money services business registered with FinCen, and as a state-registered money issuer, federally chartered bank, or chartered bank. of state.

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