Regulation

Gary Gensler Explains Why SEC Approves a Bitcoin Futures ETF

20/10/2021 by Idelto Editor

SEC Chairman Gary Gensler has shared why the U.S. Securities and Exchange Commission (SEC) decided to approve a bitcoin futures exchange-traded fund (ETF) to trade on the NYSE. Meanwhile, the Commission has not approved a spot bitcoin ETF.

Why SEC Approves Bitcoin Futures ETF

As the first futures-based bitcoin exchange-traded fund (ETF) in the U.S. debuted on the NYSE, the chairman of the U.S. Securities and Exchange Commission (SEC) explained why the regulator greenlighted a bitcoin futures ETF but not a spot bitcoin ETF.

In an interview with CNBC Tuesday, SEC Chairman Gary Gensler reiterated that his agency “should be technology neutral, but not policy neutral.” He elaborated:

What we’re trying to do is ensure to the best we can within our authorities to bring projects into the investor protection perimeter.

“Bitcoin futures have been overseen by our sibling agency, the Commodity Futures Trading Commission [CFTC], which I was once honored and proud to serve there and that’s been four years,” the SEC chief continued.

He added that one of the applications “went effective with regard to those products over at the Chicago Mercantile Exchange [CME] that our sibling agency oversees.”

Responding to a question about why the SEC has approved a bitcoin futures ETF but not a spot bitcoin ETF, Gensler noted that he will not comment on any specific application or project. However, the SEC chief clarified:

What you have here is a product that’s been overseen for four years by a U.S. federal regulator, the CFTC, and that’s being wrapped inside of something that’s within our jurisdiction called the Investment Company Act of 1940. So, we have some ability to bring it inside of investor protection.

While emphasizing that bitcoin is “still a highly speculative asset class and listeners should understand that underneath this, it still has that same aspect of volatility and speculation,” the SEC chairman concluded: “Our sister agency is overseeing this for four years and then it brings it inside an 80-year-old law here at the SEC.”

The Proshares Bitcoin Strategy ETF, ticker “BITO,” began trading Tuesday on the New York Stock Exchange (NYSE). “The fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts,” its website details, adding that it “does not invest directly in bitcoin.”

What do you think about the SEC approving the first bitcoin-based ETF and Gensler’s comments? Let us know in the comments section below.

Iran to Pilot ‘National Cryptocurrency,’ Amend Central Bank Law

19/10/2021 by Idelto Editor

The central bank of Iran is gearing up to begin the pilot phase of its digital currency project in the near future, its new head announced to representatives of local media. The monetary authority is also preparing to move forward with a plan to reform the legislation that governs its own activities.

Iran Preps Pilot for Sovereign Digital Currency

The “national cryptocurrency” of Iran will enter its pilot stage soon, the recently appointed Governor of the Central Bank of Iran (CBI) Ali Salehabadi has unveiled. Speaking to reporters after his first meeting with lawmakers, the high-ranking official said the regulator is now studying potential risks and benefits associated with the initiative. Quoted by IRIB News and the Financial Tribune, he explained:

The pilot trial will start, once the Money and Credit Council approves it.

Salehabadi, who has been heading the CBI since Oct. 6, did not provide any further details regarding the Iranian central bank digital currency (CBDC). According to the English-language business daily, the new phase of the project is likely to be in line with earlier plans for the development of a national crypto.

The report notes that three years ago the Informatics Services Corporation, CBI’s subsidiary operating the country’s banking automation and payment services network, was tasked to develop a sovereign digital currency. A CBDC prototype was designed using the Hyperledger Fabric platform, later statements by its representatives revealed.

It became clear that the digital version of the Islamic Republic’s national fiat, the rial, was being developed on a private blockchain. Unlike cryptocurrencies based on public blockchains such as Bitcoin, the Iranian state-issued coin is not going to be mined.

The public was never updated on the progress of this initial project until more recent announcements came out that a “crypto rial” plan is underway. Officials have emphasized that the Iranian crypto is going to be a digital currency circulated by the CBI and not a decentralized cryptocurrency that could be used for small, cashless transactions, the publication details.

New Commission to Prepare Amendments to Iran’s Central Bank Law

Besides the digital currency announcement, Iranian media has also learned that the central bank’s new management and members of the Majlis agreed to establish a joint commission tasked to reform the legislation concerning the CBI. Its members will be expected to quickly finalize a long-awaited plan to update the law that governs the central bank’s activities.

Governor Salehabadi also said that a special working group will be formed to clarify the positions of the bank and the government regarding cryptocurrencies. While, executive authorities in Tehran have been going after crypto investing and trading, only allowing banks and licensed moneychangers to use coins minted in Iran to pay for imports, lawmakers have opposed the restrictive policies. They believe that friendlier regulations would help Iran to circumvent U.S.-led sanctions and boost its economy.

Mining has been the one crypto-related sector that has received more clarity in terms of regulation. Iran recognized the extraction of digital currencies as a legal industrial activity in 2019 and introduced a licensing regime for entities involved in the business. And although mining farms have been blamed for electricity shortages during the extremely hot summer this year, restrictions have since been lifted for authorized crypto miners which number over 50, according to the state-run power utility Tavanir.

Do you think Iran will eventually issue its own digital currency? Share your expectations in the comments section below.

NY Attorney General Targets 5 Crypto Companies: 2 Lending Platforms Ordered to Shut Down

19/10/2021 by Idelto Editor

NY Attorney General Going After 5 Crypto Lending Platforms: Orders 2 to Shut Down

New York Attorney General Letitia James has ordered two cryptocurrency lending platforms to shut down and requested three other platforms to answer questions regarding their activities immediately. The letters to the companies published on the attorney general’s website indicate that the two platforms are Nexo and Celsius Network.

New York Cracks Down on Unregistered Crypto Lending Platforms

New York Attorney General (NYAG) Letitia James announced Monday her new efforts to crack down on unregistered cryptocurrency companies.

In New York, lending platforms must register with the Office of the Attorney General (OAG) to operate in the state or offer products to its residents. The announcement details:

Today, Attorney General James directed two of these lending platforms to immediately cease their unregistered and unlawful activities in New York and directed three other platforms to immediately provide information about their activities and products.

The notice explains that crypto lending platforms “are essentially interest-bearing accounts that offer investors a rate of return on virtual currencies that are deposited with them.” Under the Martin Act, “The nature and function of the most common virtual currency lending products or services demonstrate that they fall squarely within any of several categories of ‘security.’”

The U.S. Securities and Exchange Commission also views lending products as securities. SEC Chairman Gary Gensler recently told cryptocurrency exchange Coinbase that its Lend products were securities.

The NYAG website also published cease and desist letters to the two lending platforms in question. While the letters were redacted, the file names indicated that they were sent to Nexo and Celsius Network. Three other unnamed firms received a letter asking for information about their activities.

Nexo tweeted after the news broke: “Nexo is not offering its Earn Product & Exchange in New York, so it makes little sense to be receiving a C&D for something we are not offering in NY anyway. But we will engage with the NY AG as this is a clear case of mixing up the letter’s recipients. We use IP-based geoblocking.”

Attorney General James emphasized:

Cryptocurrency platforms must follow the law, just like everyone else, which is why we are now directing two crypto companies to shut down and forcing three more to answer questions immediately.

Last month, Attorney General James shut down the cryptocurrency trading platform Coinseed after filing a lawsuit against the company earlier this year. In February, she announced an agreement with Bitfinex, Tether, and related entities that ended their trading activity in the state of New York and imposed an $18.5 million penalty on the companies.

What do you think about New York Attorney General Letitia James taking action against unregistered crypto lending platforms? Let us know in the comments section below.

Coinbase Publishes Proposal for Crypto Regulation Pushing 4 Core Recommendations

18/10/2021 by Idelto Editor

Cryptocurrency exchange Coinbase has published its proposal for crypto regulation after “more than 75 meetings with stakeholders in government, industry, and academia,” CEO Brian Armstrong revealed. In its Digital Asset Policy Proposal, the company recommends “four core pillars to inform future U.S. regulation.”

Coinbase’s Proposal for Crypto Regulation

The Nasdaq-listed cryptocurrency exchange Coinbase published its Digital Asset Policy Proposal (DAPP) Thursday.

Coinbase CEO Brian Armstrong tweeted: “Today we’re launching our Digital Asset Policy Proposal (DAPP) which we hope will help chart a course for clear regulation of cryptocurrency and web 3.0 in the U.S. It’s critical to bring clarity to this space and ensure America remains a financial leader.” He further shared:

This is not about Coinbase — we completed more than 75 meetings with stakeholders in government, industry, and academia to help shape this proposal, and we feel it represents a consensus point of view. It’s inclusive and democratic by design.

Coinbase recently experienced firsthand the lack of regulatory clarity when it tried to launch a lending program. The company met with the U.S. Securities and Exchange Commission (SEC) to discuss the product. However, the SEC said it was a security and threatened to sue the company if it went ahead with the program. Coinbase subsequently abandoned its plan to launch the Lend product and unveiled its plan to create a proposal for crypto regulation.

The company’s chief policy officer, Faryar Shirzad, explained Thursday that the goal of Coinbase’s proposal is to “engage in the public conversation about the future of our financial system.” The company believes that the conversation should focus on “The blockchain-driven and decentralized evolution of the internet” and “The emergence of a distinctive asset class that is digitally native and empowers unique economic use cases.”

Shirzad continued:

We recommend four core pillars to inform future U.S. regulation.

Firstly, “We need a new and digitally-native framework for how we regulate digital assets – one that doesn’t encumber innovation, inclusion, and financial empowerment for all sectors of society,” he stated.

Secondly, Coinbase’s chief policy officer detailed:

End-to-end crypto services must sit within a single regulator. Its authority would include a new registration process established for marketplaces for digital assets (MDAs).

In addition, Coinbase suggested instilling consumer confidence “by providing robust customer protection.” Shirzad noted, “This can be achieved through enhanced transparency processes, including tailored disclosures to inform purchasers of digital assets.”

The fourth point is to “promote interoperability and fair competition.” Coinbase believes that “To realize the full potential of digital assets, MDAs must be interoperable with products & services across the cryptoeconomy.” Shirzad added that “This can empower and protect a thriving consumer and developer ecosystem.”

Coinbase said that anyone wanting to comment on its crypto regulatory proposal can do so on Github.

What do you think about Coinbase’s crypto regulatory proposal? Let us know in the comments section below.

New SEC Filings Give the Impression US Regulators Approved a Bitcoin Futures ETF

17/10/2021 by Idelto Editor

The price of bitcoin jumped over 8% during the last 24 hours after a number of documents stemming from the U.S. Securities and Exchange Commission’s (SEC) web portal indicated that the Proshares Trust exchange-traded fund (ETF) could be listed as soon as next week. Proshares filed a post-effective amended prospectus on Friday that shows the firm’s intention to launch on Monday, October 18 on NYSE Arca.

Bitcoin’s Price Spikes as Strong Signals Suggest Bitcoin Futures ETF Could Launch Next Week

The crypto community watched the price of bitcoin (BTC) jump awfully close to the crypto asset’s all-time high on Friday afternoon. During the late afternoon trading sessions, BTC tapped a daily high of $62,945 per unit at around 5:30 p.m. (EST). The reason for this increase is likely due to a number of documents filed with the Securities and Exchange Commission (SEC) seeming to strongly indicate a bitcoin ETF is launching soon.

The first signal was from James Seyffart, an analyst at Bloomberg Intelligence who tweeted about Bloomberg’s data team “adding the Proshares Bitcoin Strategy ETF to the terminal.” Seyffart further added: “[The] ticker will be $BITO. 95 bps — less than half $GBTC’s 2% fee. This thing is going live next week. Either Monday or Tuesday.” Sharing this Form 8A document, the Bloomberg Intelligence analyst continued:

Also should add that [Valkyrie Funds] has filed their 8A which essentially registers a security for trading on [an] exchange. Nothing from Proshares on that front yet. So Valkyrie [is almost] certainly going to begin trading next week as well if I had to guess.

Proshares Trust Post-Effective Amended Prospectus

In addition to Seyffart’s commentary on Twitter, Proshares filed a post-effective amended prospectus for its ETF on Friday. The amended documents note that the Proshares bitcoin ETF intends to launch on October 18, 2021, and the filing also notes the ticker will be called “$BITO.” While the Proshares ETF could be the first to be listed as an approved bitcoin ETF by U.S. regulators, it will deal with bitcoin derivatives.

The Proshares ETF will be a bitcoin futures-based product and analysts are doubtful a BTC spot market ETF will get the green light by the SEC this year. There’s been a lot of confusion about whether the SEC actually approved a bitcoin ETF on October 15 and there’s speculation signals could change. Seyffart’s Friday afternoon commentary on Twitter also shares a tweet he wrote on October 8 when he stated:

The SEC has pulled the rug on approval so many times before, I can’t help but wonder what’s around the corner. We (and all the potential issuers) are basically Charlie Brown trying to kick a football.

Speculation Concerning Valkyrie ETF

People are still skeptical because the U.S. regulator has rejected bitcoin ETFs in a vocal manner, but hasn’t said anything officially about approving a crypto exchange-traded fund. Others have also shared documents concerning Valkyrie’s bitcoin exchange-traded fund, as many have been speculating about its approval.

Still, a few individuals have said the 8A document concerning Valkyrie’s Bitcoin Strategy ETF does not necessarily mean guaranteed approval.

“The SEC has not approved Valkyrie’s Bitcoin Strategy ETF…yet,” the Twitter account Bitcoin Archive told its 539,600 followers. “This is a notice from Nasdaq to the SEC saying they have approved the securities and awaiting a decision from the SEC. That is all.”

Vaneck’s Gabor Gurbacs responded to Bitcoin Archive’s tweet and said: “Good catch. There are so many approvals so people no longer [know] when an actual approval is. LOL.” Bitcoin Archive replied to the Vaneck executive and said: “Bloomberg guys think it’s 99% certain Mon/Tue, but we don’t have confirmation until [the] SEC says so.”

What do you think about the new SEC filings that give the impression the U.S. regulator approved a bitcoin futures-based ETF? Let us know what you think about this subject in the comments section below.