Investment Education

According to BlockBeats, on June 1, President Joe Biden announced on a Friday afternoon that he had signed a joint resolution of the House of Representatives, vetoing a resolution that would have abolished the Staff Accounting Bulletin 121 (SAB 121) of the U.S. Securities and Exchange Commission (SEC). SAB 121 is a controversial accounting guidance from the SEC that requires financial institutions holding customer cryptocurrencies to keep the assets on their own balance sheets. Critics of the guidance argue that it makes it very difficult for financial institutions to collaborate with cryptocurrency companies. In his veto announcement, Biden stated that he would not support any measures that 'endanger the welfare of consumers and investors.' He argued that abolishing SAB 121 would limit the SEC's ability to establish appropriate protective measures and address future issues, potentially weakening the SEC's broader powers in accounting practices. Hours before Biden's veto, banking industry groups and congressmen had sent two letters to Biden's desk, asking him to sign the resolution to overturn SAB 121.

According to PANews, Brian Nelson, the US Treasury Deputy Secretary in charge of terrorism and financial intelligence, has stated that the US Treasury has no intention of banning cryptocurrency mixing services. This announcement was made at a consensus conference. The Financial Crimes Enforcement Network (FinCEN) plans to classify cryptocurrency mixers as a 'major money laundering issue' by 2023 and requires Virtual Asset Service Providers (VASP) to report any crypto transactions involving mixers to the agency. Nelson clarified that this proposal is not aimed at prohibiting the use of mixers, but rather to increase transparency. He also expressed understanding of the crypto users' desire for financial privacy. However, he suggested that the crypto industry and the Treasury should work together to find ways to enhance privacy without supporting terrorist financing.

According to PANews, US Federal Judge Robert Shelby has ordered the Securities and Exchange Commission (SEC) to pay approximately $1.8 million in legal and takeover fees. This order is related to the regulator's civil case against Debt Box, which was dismissed on May 28. The judge pointed out that the SEC showed 'malicious behavior' in the temporary injunction to freeze Debt Box's assets. This ruling is a significant victory for Debt Box, as it means the SEC cannot continue with the current case. In July 2023, the SEC filed a lawsuit against Debt Box, accusing the company of implementing an illegal cryptocurrency scheme worth $50 million. The documents submitted by the company indicated that the commission made false statements when trying to obtain a temporary restraining order against the company. Many in the cryptocurrency field have taken this as an example of regulatory overreach.

According to PANews, PayPal Digital has been granted a limited purpose trust license by the New York State Department of Financial Services (NYDFS). This type of license is typically held by digital asset custodians and stablecoin issuers. In August of last year, PayPal launched its stablecoin, PYUSD, with Paxos Trust Company as the issuer. The acquisition of the trust license by PayPal Digital could potentially be aimed at taking over the custody of PayPal customers' crypto assets and transferring the issuance of stablecoins internally.

According to Odaily, the US House of Representatives has recently passed the bipartisan cryptocurrency bill, Financial Innovation and Technology Act of the 21st Century (FIT21). However, it is important to note that the bill has not yet become law. Policy observers have stated that the likelihood of the bill being passed in the US Senate is quite low. The White House, US SEC Chairman Gary Gensler, and several congressmen have also issued stern statements about the bill. Despite years of regulatory and corporate struggles, the crypto community views this as a victory, especially the builders behind decentralized platforms, which are often overlooked by existing legal frameworks. Under FIT21, fully decentralized digital assets will be eligible to become commodities. One of the criteria is that the issuer or so-called affiliated person cannot hold more than 20% of the tokens and project voting rights. Centralized tokens that do not meet this condition will be deemed securities. Therefore, they will fall under the jurisdiction of the SEC, while decentralized tokens will be regulated by the CFTC. Rashan Colbert, Policy Director of decentralized trading platform dYdX Trading, stated that the regulation is 'almost' clear for the crypto industry. He said, 'Industry participants may find it difficult to meet different decentralization thresholds, and this kind of back-and-forth movement between two regulatory agencies may be very troublesome in practice.' Colbert also mentioned that it is unusual for the CFTC to regulate the commodity spot market. Nevertheless, this is a big step, especially for DeFi projects. He added, 'This bill makes us more confident because we know we have clear rights to continue doing what we are currently doing, which is exactly what the industry really wants now.'

According to Odaily, US banks have expressed concerns over potential inflation risks due to robust spending in the service sector, a tight labor market, and fiscal uncertainty. Despite the PCE inflation index gradually nearing its target, the resilience of US economic growth and a positive output gap make any monetary easing seem premature. This supports the view that the easing cycle may begin in December. The impact and uncertainty surrounding the US elections could be another reason why the US may not want to lower interest rates prematurely. The US banking sector's perspective on the economic situation provides a crucial insight into the potential future of the country's financial landscape. The concerns raised about inflation risks and the reluctance to lower interest rates prematurely highlight the challenges faced by the US economy. The potential start of an easing cycle in December could signal a shift in monetary policy, which will have significant implications for the US and global economies.

According to BlockBeats, Grayscale has submitted a revised version of Form 19B-4 for its Mini Ethereum Trust Fund on May 24. The submission of the revised form indicates the company's ongoing commitment to ensuring compliance and transparency in its operations. The Mini Ethereum Trust Fund is one of the many investment products offered by Grayscale, aimed at providing investors with exposure to Ethereum in a secure and regulated manner. The details of the revisions made in the Form 19B-4 have not been disclosed yet. However, it is expected to provide more clarity on the fund's operations and management. The submission of a revised form is a common practice in the financial industry, often done to update information or make necessary changes based on regulatory requirements or changes in the fund's operations. It is important to note that the submission of a revised form does not necessarily indicate any significant changes in the fund's operations or strategy. It is merely a regulatory requirement that ensures the fund's operations are transparent and in line with the regulatory standards. The Mini Ethereum Trust Fund, like all of Grayscale's products, is designed to provide investors with a secure and regulated way to gain exposure to the cryptocurrency market. The submission of the revised Form 19B-4 is a part of Grayscale's commitment to maintaining this standard of transparency and compliance.

According to Odaily, the US House of Representatives has passed a bill that prevents the Federal Reserve from creating a Central Bank Digital Currency (CBDC). This move comes amidst the growing global interest in digital currencies and their potential impact on traditional financial systems. The bill, if signed into law, would effectively bar the US central bank from entering the digital currency space, a sector that has seen significant growth and innovation in recent years. This decision could have far-reaching implications for the future of digital currencies in the United States and could potentially influence the stance of other countries on this issue. It is important to note that this bill still needs to be approved by the Senate and signed by the President to become law. The outcome of these next steps could significantly shape the future of digital currencies in the United States.

Bloomberg analyst Eric Balchunas has speculated that the Securities and Exchange Commission (SEC) will likely make an announcement around 4pm today concerning cryptocurrency regulations. Reflecting on past trends, including a spot bitcoin announcement at 3:45pm and others slightly after 4pm, Balchunas suggests that an update from the SEC could come around the same time. However, he admits that anything is possible in the dynamic and unpredictable world of cryptocurrency. This news has the potential to cause significant reactions within the crypto market, depending on the nature of the SEC's decision.

According to Blockworks, the US House of Representatives is set to vote on a significant cryptocurrency market structure bill, the Financial Innovation and Technology for the 21st Century Act (FIT21 Act), this week. The bill, which has already passed through the House Agriculture and Financial Services Committees, is expected to be voted on May 22. The bipartisan legislation has 11 co-sponsors, including Democrats Henry Cuellar of Texas, Wiley Nickel of North Carolina, and Ritchie Torres of New York. The proposed law establishes joint rulemaking powers between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill notably gives the CFTC control over digital commodities markets, including exchanges and broker-dealers. It also clarifies how digital assets are classified, stating that the existence of an investment contract alone does not make a token a security. This distinction could impact several ongoing legal disputes between token issuers, crypto exchanges, and the SEC. The co-sponsors of the bill believe that about 70% of all crypto tokens should be classified as commodities rather than securities. However, the bill has faced opposition from some House Democrats who argue that it limits the SEC's power too much. Rep. Jonathan Jackson, D-Ill., proposed an amendment last summer to remove a section of the bill that allows firms who have filed a 'notice of intent to register' to be exempt from certain SEC enforcement actions. Agriculture Committee Chair Glenn Thompson, R-Penn., argued that the 'notice of intent' allows firms to operate in a limited capacity while the potentially lengthy registration approval process is underway. The bill also allows the CFTC to issue enforcement actions against firms who have completed the 'notice of intent' process. Despite the opposition, the bill is likely to pass in the House due to the Republican majority and expected support from some Democrats. Its fate in the Senate, however, is less certain. This vote comes shortly after the US Senate passed Joint Resolution 109, which seeks to invalidate the SEC’s Staff Accounting Bulletin (SAB) 121. The resolution is now awaiting the President's approval, although the Biden Administration has indicated that the President will veto the legislation.