📈 SEC re-structure bullish?

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7 min read Jun 21, 2023

Talking points

  • 🚨 SEC set for hierarchy reshape

  • ⚔️ Binance under attack

  • 🪙 Finance giant file for Bitcoin ETF

🚨 SEC set for hierarchy reshape

The SEC has been decimating the crypto scene over the last year but it seems they are now facing an attack of their own with the chairperson at risk of being fired and a hierarchy restructure potentially underway.

United States Representative Warren Davidson has unleashed a legislative bombshell, introducing the audaciously named "SEC Stabilization Act" into the House of Representatives. Brace yourselves for a rollercoaster ride as we delve into the thrilling world of political drama and cryptocurrency intrigue!

In a statement that would make even the boldest of politicians blush, Davidson proclaimed, "U.S. capital markets must be protected from a tyrannical Chairman, including the current one." Shots fired! The main provision of this explosive bill? To bid farewell to Securities and Exchange Commission (SEC) Chair Gary Gensler. Now, that's one way to shake up the financial sector!

Davidson, never one to shy away from controversy, emphasized the urgent need for reform and stated that it was time to give Gensler the old heave-ho. "It's time for real reform and to fire Gary Gensler as Chair of the SEC," he declared with the gusto of a cowboy in a Wild West showdown. Looks like Davidson is ready to draw his legislative pistols!

But wait, there's more!

This bill is a double act, with Representative Tom Emmer taking up the co-author role. Emmer added fuel to the fire by claiming that the "SEC Stabilization Act will make common-sense changes to ensure that the SEC's priorities are with the investors they are charged to protect and not the whims of its reckless Chair." Talk about calling out the big guns!

Now, we know what you're thinking: what's in this bill, and how does it impact our beloved crypto realm?

Well, while Davidson and Emmer managed to keep the crypto chatter to a minimum in their public statements, these two lawmakers have made their pro-crypto stances abundantly clear in the past. Emmer, for instance, has unabashedly labelled Gensler a "bad faith regulator."

It is also rumoured that the bill seeks to oust Gensler from his powerful perch and redistribute authority within the SEC. The proposed changes include adding a sixth commissioner to the agency, preventing any single party from holding a majority, and even conjuring up an executive director position. It's a cunning plan to shake up the SEC's power dynamics for sure.

Either way, a reshape within the SEC hierarchy could have some major positive impacts on the crypto market especially with the incredible amount of cases that are being pursued currently - All with Gary Gensler at the helm.

While the crypto community eagerly waits to see the full impact of this legislative bombshell, one thing is certain… the battle lines are drawn, and the stakes have never been higher. Will we see Gary Gensler, who doesn’t appear to be a popular figure in the crypto space, lose his job and in turn create an SEC hierarchy adjustment?

⚔️ Binance under attack

We have seen many big financial events this year and this time it seems that Binance is the one that is under pressure and not just from one angle, you could say they are being flanked.

In a temporary agreement approved by a federal judge, the U.S. Securities and Exchange Commission (SEC) and crypto exchange Binance reached a resolution regarding the SEC's lawsuit against Binance. The deal stipulates that only Binance.US employees will have access to customer funds, and Binance Holdings officials will be barred from accessing private keys or Binance.US's Amazon Web Services tools.

The agreement also requires Binance.US to provide detailed information about its business expenses and create new crypto wallets inaccessible to global employees. While the broader lawsuit proceeds, U.S.-based customers can still withdraw their funds.

Still shaky for Binance but a big win for crypto investors. Keep on pushing fam.

The proposed agreement addresses the SEC's concerns over asset commingling and alleged securities law violations. The SEC filed the lawsuit against Binance and Binance.US for offering and trading unregistered securities, among other allegations. The agreement does not delve into the broader lawsuit but provides provisions for additional information sharing and an expedited discovery schedule. Binance.US stated that the dispute has affected its business and reputation but expressed its determination to defend against unfounded charges, emphasizing that user funds remain secure.

To add to the Binance FUD, Binance's UK-based subsidiary, Binance Markets Limited (BML), has cancelled its registration with the Financial Conduct Authority (FCA), following the regulator's completion of the cancellation request previously. This move means that no Binance entity is authorized to provide services in the UK, although Binance.com remains unaffected and available to UK consumers on a reverse solicitation basis.

Now this may seem like another big loss for Binance but it doesn’t actually change anything from their UK standpoint.

It is worth mentioning that Binance previously encountered regulatory issues in the United Kingdom when the FCA ordered the exchange to halt all regulated activities in the country in 2021. Since then, Binance was a struggle for any services for all customers in the UK.

So, this cancelled registration which was enforced by Binance themselves, does not actually mean anything. Although it does question what their plan is for the UK especially as there were rumours of them forming a hub there.

We guess that is off the cards for now atleast…

But that isn’t the end of the Binance news as they are also now being investigated by French authorities, according to reports in France.

Following Binance's departure from the Netherlands due to its failure to secure a license from the Dutch central bank, the company has now come under investigation for its anti-money laundering procedures.

French authorities recently conducted an on-site visit to Binance's offices, and the company has confirmed its cooperation and commitment to complying with regulatory requirements.

With the growing popularity of cryptocurrencies as a trading asset, concerns about their volatility and associated risks have prompted regulators worldwide to increase scrutiny on crypto exchanges, aiming to enhance transparency in the industry.

However, CZ the CEO of Binance came to their defence quickly and labelling it as FUD.

We guess we wait and see for these outcomes.

But it seems that Binance has a plethora of different problems on its agenda right now at the worst possible time. Can they mount the defence they need or will they have to throw down the white flag and concede to these allegations?

Only time will tell, but for the good of the crypto community, let’s hope that Binance is not guilty of these as it could have a catastrophic impact on the markets, especially with them being the biggest centralized crypto exchange in the world.

🪙 Finance giant file for Bitcoin ETF

BlackRock, the behemoth asset manager, has thrown its hat into the ETF ring with its iShares Bitcoin Trust application to the U.S. Securities and Exchange Commission (SEC).

Buried deep within the pages of the Nasdaq filing, on page 36 to be exact, lies the secret sauce that BlackRock hopes will win over the SEC. It's a little something called a "surveillance-sharing agreement." In essence, this agreement would enable Nasdaq, where the proposed ETF would be listed, to collaborate with a Bitcoin spot trading platform operator, sharing crucial information about trading activity, clearing activity, and customer identification. It's like having an extra set of vigilant eyes keeping watch for any shenanigans in the market.

Graeme Moore, the Head of Tokenization at the Polymesh Association, believes that this surveillance-sharing agreement is a game-changer. He notes, "The SEC is very concerned with market manipulation related to Bitcoin prices, and has cited this in almost, if not all, previous rejections." According to Moore, the SEC's skepticism stems from their view that unregulated exchanges like Coinbase cannot be trusted to prevent fraudulent and manipulative acts. However, with the proposed "Spot BTC SSA" agreement, BlackRock aims to put those concerns to rest.

But not everyone is convinced that this agreement is necessary. Dave Weisberger, the CEO & Co-Founder of CoinRoutes, argues that the SEC already has access to ample data without needing an agreement of this nature. He points out that exchanges like Kraken, Coinbase, ItBit, Lmax, and Bitstamp have public data feeds that could provide the SEC with comprehensive information on trades and orders. Weisberger contends, "The SEC could clearly get all this data or hire someone to feed it to them."

It's worth noting that the SEC has previously emphasized the importance of surveillance-sharing agreements. In a notice back in January, the agency stated that an exchange listing Bitcoin-based ETPs could fulfill its obligations by demonstrating a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying Bitcoin assets. Clearly, this agreement has caught the SEC's attention before, and BlackRock is betting on it to sway their decision this time around.

So, what does all this mean for BlackRock's Bitcoin ETF aspirations?

Well, with its colossal presence in the asset management realm, the company's size alone is enough to turn heads. However, it's the inclusion of the surveillance-sharing agreement that truly sets this proposal apart. While previous attempts by Grayscale, VanEck, and WisdomTree were met with rejection, BlackRock hopes to ride the waves of this innovative agreement straight to SEC approval.

As the crypto community eagerly awaits the SEC's decision, one thing is certain: the world of ETFs is about to get a whole lot more interesting. Will BlackRock's iShares Bitcoin Trust be the one to break the ETF curse and finally usher in a new era of mainstream adoption?

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