SEC’s Gensler On How Securities Laws Apply to Cryptocurrencies

Ripple Nets Legal Victory In Quest To Access SEC’s Documents Relating To Classification Of Cryptoassets As Securities

Gary Gensler is back, and guess what? Crypto users might have to brace tighter for what he has in store for them in 2022. Speaking to CNBC earlier last week, the SEC chairman vowed to deal with the crypto “wild west”, stepping up 2021’s regulation efforts through the enactment of laws and scrutiny structures. Gensler […]

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SEC Chair Gensler Discusses How Securities Laws Apply to Crypto Tokens — Won’t Say if Ethereum Is a Security

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has explained how securities laws apply to cryptocurrency tokens as he outlined the commission’s priorities in regulating the crypto space. “Our role at the SEC is to ensure that the public still gets basic protection,” he stressed. SEC Chair Gary Gensler on Cryptocurrency […]
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Institutional Investors Say SEC Having More Power to Regulate Crypto Will Boost Prices

Institutional Investors Say SEC Having More Power to Regulate Crypto Will Boost PricesInstitutional investors are optimistic about the U.S. Securities and Exchange Commission (SEC) having more power to regulate the crypto market, a recent survey shows. They believe that if the SEC is granted extra powers, the prices of cryptocurrencies will be positively impacted. What Institutional Investors Think About Crypto Nickel Digital Asset Management, a regulated European […]
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Crypto regulation is coming, but Bitcoin traders are still buying the dip

The premium on CME Bitcoin futures dropped to zero, but data shows pro traders are still bullish.

Looking at the Bitcoin chart from a weekly or daily perspective presents a bearish outlook and it’s clear that (BTC) price has been consistently making lower lows since hitting an all-time high at $69,000.

Bitcoin/USD on FTX. Source: TradingView

Curiously, the Nov. 10 price peak happened right as the United States announced that inflation has hit a 30-year high, but, the mood quickly reversed after fears related to China-based real estate developer Evergrande defaulting on its loans. This appears to have impacted the broader market structure.

Traders are still afraid of stablecoin regulation

This initial corrective phase was quickly followed by relentless pressure from regulators and policy makers on stablecoin issuers. First came VanEck’s spot Bitcoin ETF rejection by the U.S. Securities and Exchange Commission on Nov. 12. The denial was directly related to the view that Tether’s (USDT) stablecoin was not solvent and concerns over Bitcoin’s price manipulation.

On Dec. 14, the U.S. Banking, Housing and Urban Affairs Committee held a hearing on stablecoins focused on consumer protection and their risks and on Dec. 17, the U.S. Financial Stability Oversight Council (FSOC) voiced its concern over stablecoin adoption and other digital assets. “The Council recommends that state and federal regulators review available regulations and tools that could be applied to digital assets,” said the report.

The worsening mood from investors was reflected in the CME’s Bitcoin futures contracts premium. The metric measures the difference between longer-term futures contracts to the current spot price in regular markets.

Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is also known as backwardation and indicates that bearish sentiment is present.

Bitcoin CME 2-month forward contract premium versus Coinbase/USD. Source: TradingView

These fixed-month contracts usually trade at a slight premium, indicating that sellers are requesting more money to withhold settlement for longer. Futures should trade at a 0.5% to 2% annualized premium in healthy markets, a situation known as contango.

Notice how the indicator moved below the “neutral” range after Dec. 9 as Bitcoin traded below $49,000. This shows that institutional traders are displaying a lack of confidence, although it is not yet a bearish structure.

Top traders are increasing their bullish bets

Exchange-provided data highlights traders’ long-to-short net positioning. By analyzing every client’s position on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.

There are occasional discrepancies in the methodologies between different exchanges, so viewers should monitor changes instead of absolute figures.

Exchanges top traders Bitcoin long-to-short ratio. Source: Coinglass.com

Despite Bitcoin’s 19% correction since Dec. 3, top traders at Binance, Huobi, and OKEx have increased their leverage longs. To be more precise, Binance was the only exchange facing a modest reduction in the top traders’ long-to-short ratio. The figure moved from 1.09 to 1.03. However, this impact was more than compensated by OKEx traders increasing their bullish bets from 1.51 to 2.91 in two weeks.

Related: SEC commissioner Elad Roisman will leave by end of January

The lack of a premium in CME 2-month future contracts should not be considered a ‘red alert’ because Bitcoin is currently testing the $46,000 resistance, its lowest daily close since Oct. 1. Furthermore, top traders at derivatives exchanges have increased their longs despite the price drop.

Regulatory pressure probably won’t lift up in the short term, but at the same time, there’s not much that the U.S. government can do to suppress stablecoin issuance and transactions. These companies can move outside of the U.S. and operate using dollar-denominated bonds and assets instead of cash. For this reason, currently, there is hardly a sense of panic present in the market and from data shows, pro traders are buying the dip.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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SEC chair’s regulatory agenda fails to include clarity on crypto, says Hester Peirce

“The Agenda — through its silence on crypto — signals that the market can expect continued questions around the application of our securities laws to this area of increasing investor interest,” said two SEC commissioners.

Hester Peirce, a commissioner for the United States Securities and Exchange Commission known by many in the space as Crypto Mom, is pushing back against the regulatory body’s agenda for not including clarification on digital assets.

In a Monday joint statement, Peirce and SEC Commissioner Elad Roisman said they were “disappointed” in the failure of chairperson Gary Gensler’s regulatory agenda to include items aimed at helping companies raise capital, furthering investor protection, undoing recent rules passed by the commission and providing clarification on crypto. According to the two regulators, Gensler’s uncertain stance on digital assets may create problems for firms looking to operate in the space.

“Rather than taking on the difficult task of formulating rules to allow investors and regulated entities to interact with digital assets, including digital asset securities, the Agenda — through its silence on crypto — signals that the market can expect continued questions around the application of our securities laws to this area of increasing investor interest,” said Peirce and Roisman. “Such silence emboldens fraudsters and hinders conscientious participants who want to comply with the law.”

The pair added that the proposed regulatory framework is deferring amendments related to audit trails of information around trades — presumably including crypto — and the people behind the transactions. According to Peirce and Roisman, deferring action on these protections “leaves investors’ data vulnerable.”

Related: SEC Commissioner: DeFi must address transparency and pseudonymity

Gensler, who has served as SEC chair since April, has made numerous public statements advising crypto firms to “come in and talk” regarding any concerns over token projects that may qualify as securities. Cointelegraph reported in August that Gensler hoped to introduce crypto-related policy changes surrounding token offerings, decentralized finance, stablecoins, custody, exchange-traded funds and lending platforms.

As a major regulator for financial products in the United States, the SEC has been blamed by many for impeding the launch of exchange-traded funds, or ETFs, linked to cryptocurrencies. Although the regulator has recently approved ETFs with exposure to Bitcoin (BTC) futures from investment managers ProShares and Valkyrie, it has yet to give the green light for another crypto ETF.

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