It’s been a fun decade watching cryptocurrencies build from nothing into an unregulated $1.2 trillion industry, but even the Wild West was eventually tamed.
And so it is that the SEC has been trying to subdue crypto. This week, it announced that it was suing Coinbase (NASDAQ: COIN) for its unregistered crypto-staking service and for selling unregistered crypto securities to the public.
SEC Chairman Gary Gensler said in a statement:
We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions.
Coinbase’s alleged failures deprive investors of critical protections, including rule books that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC.
Coinbase shares sold off 17% before bouncing back. The stock is down from a high of $315, which it hit in 2021, to $51 yesterday.
Coinbase’s lawyers replied that the lack of clear rules for crypto make it impossible to comply and that Coinbase would continue to do what it was doing.
I’ll See You in Court
Earlier in the week, the SEC sued Binance, the world's largest crypto exchange, as well as another exchange called Gemini, charging them both with the same crime of not being regulated.
The SEC is moving across the board to reel in the crypto industry. According to The Wall Street Journal:
The solution, Gensler says, is for crypto exchanges to break themselves apart, separating their order-execution, brokerage, and clearing functions. The resulting structure would better resemble how Wall Street operates, with stock exchanges, brokers, and clearing firms functioning as separate businesses that follow rules tailored to their operations and risks.
Crypto exchanges respond by saying coins aren't equities, and they aren’t Wall Street, and coin developers can’t provide financial disclosures like a public company. In any case, it will be fought out in the courts. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
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This should be good for unregulated, decentralized coins like Bitcoin, which you can keep in your personal wallet. In fact, BTC was up 3.68% against the dollar yesterday to $26,695.
For those conspiracy theorists out there, it should be noted that this attack on the crypto markets coincides with the release of FedNow.
FedNow is a money service created by the Federal Reserve for large banks in the U.S. It will allow individuals and businesses to send and receive instant payments 24 hours a day, seven days a week. Banks will use it as a platform from which to build products, and it is expected to lower transaction costs by 80%.
Many people see FedNow as the groundwork for a centralized digital dollar, which brings up all sorts of Orwellian possibilities for a tyrannical government to manipulate. FedNow started as a pilot program in April with a full launch slated in July. You can read more about it on the FedNow website or you can check out my free presentation here.
All the best,