A Tether USDT de-peg has sent a shockwave across the crypto market as Curve 3Pool seems to be in distress.
USDT’s value plummeted to slightly under a dollar, but issuing company, Tether, says it is ready to buy back any amount while it works on restoring the peg
Tether’s USDT traded on a discount of up to 0.25% on June 15, 2023, due to imbalances in Curve 3Pool. Curve 3Pool is one of the most popular pools for stablecoin trading in decentralized finance. Therefore, a miscalculation or imbalance of reserves can affect its stablecoins.
Tether is ready to buy back any USDT amounts to restore the peg
Tether Chief Technology Officer (CTO), Paolo Ardoino, has talked about the dip, saying that the imbalance in Curve 3Pool indicates a broader tension in the crypto market. In an interview with The Block, he expressed that Tether is a liquidity gateway in the crypto industry; when bull markets set in, they see inflows, and when a bear cycle occurs, outflows increase.
“Tether is the gateway for liquidity, inbound and outbound. So when the interest in crypto grows, we see inflows; when the sentiment on the crypto market is negative, we see outflows.”
It is not the first time that Curve 3Pool has had an imbalance. In March 2023, the pool had a similar issue where the balances of DAI and USDC stablecoins exceeded 45% of each. Also, in November 2022, after the collapse of FTX, the volatility in the pool was highly noticeable same as the Terra ecosystem collapse.
Despite the current situation looking ugly for a struggling market, Ardoino has said that the company is closely monitoring the situation and will have a remedy sooner than later. Keep watching Fintech Express for more updates on crypto and other fintech-related news and developments.
European Union has passed the first regulatory framework for the artificial intelligence industry.
The law requires generative AI systems like GPT4 to be reviewed before commercial release. It also bans real-time facial recognition.
The development sets the bloc above most world governments and powers as the industry is newly formed and highly unregulated.
EU leads the world in regulating artificial intelligence by passing the first comprehensive set of regulations. The new rules will monitor how generative AI like GPT4 is built and released commercially. It will also bring users more protection, like inhibiting live recording, detailing, and other facial recognition systems.
Artificial intelligence gets regulated in the EU
European Union spearheads Artificial Intelligence regulation worldwide as its parliament approves a landmark framework called EU AI Act. The framework becomes the first to go into effect in the West.
Artificial Intelligence (AI) has recently become a main topic, with its risks being widely spoken about by people like Elon Musk. However, just because an innovation is risky doesn’t mean it should be banned. Otherwise, it could be rebuilt illegally and overrun the world later when we are not well prepared for it.
As such, lawmakers in different places, including the U.S., have drafted bills to make AI more friendly. This approach has been slow as only the European Union has managed to pass a regulatory bill through all legal processes required to make it a law.
The bloc’s parliament voted on June 13, 2023, to adopt the EU AI Act with 499 votes in favor, 28 against it, and 93 abstentions. Though it passed through this crucial stage, it is still far from becoming law.
The next stage is for negotiators at European Union institutions like the EU executive body and 27 member states. On Monday, U.K. Prime Minister Rishi Sunak boldly pitched to make the U.K. the “geographical home” of AI safety regulation as the nation heads to holding its first global AI safety summit later in the year.
Keep watching Fintech Express for updates on AI and other technology-related news and developments.
France is trying to lure tech billionaire Elon Musk to invest in the country by building the next Tesla Gigafactory there.
The nation’s digital minister, Jean-Noel Barrot, says they have invested in electric batteries and would love to welcome EV manufacturers and specifically Musk, there.
Nevertheless, Barrot says that Twitter could face a ban in the EU if it fails to comply with the upcoming Digital Services Act.
France Digital Minister Jean-Noel Barrot hints that the country is planning to convince Elon Musk to invest in the next Tesla Gigafactory there. Barrot made these statements in an interview with a CNBC Journalist on June 14 though she also noted that if his Twitter platform does not comply with the upcoming EU Digital Services Act, it will get banned.
France to convince Elon Musk to invest in the country
In an interview with a CNBC Journalist, France’s Digital Minister Jean-Noel Barrot claimed that France had invested in electric batteries and would love to convince Elon Musk to build his next Tesla Giga factory there.
“It will be great to have a Tesla factory in France, there has been a lot of effort and energy to make sure this is possible and this can happen,” Jean-Noel Barrot told CNBC’s Charlotte Reed at the Viva Tech conference in Paris.
“We have also invested in an … entire sector of electric batteries so we will try to convince him that France is the best possible place in Europe to establish the next Tesla factory,” Barrot added.
Musk is expected to take the stage in Paris on June 15, 2023, at the Viva Tech Summit. He has been on the hunt for a new Gigafactory location, and his empire hasn’t gone unnoticed by France, who wants him to join them. He has been exploring wider networks for the Tesla market after setting up Gigafactories in U.S., Germany, and China.
When asked why Musk, Barrot praised him, saying he is a “great inventor, probably one of the greatest of the beginning of this century.”
Twitter could get an EU ban.
Barrot’s comments on wanting to lure Musk to France did not come without the topping of a possibility of a Twitter ban. Last month Barret also warned that Twitter could get banned in the country as it still does not comply with the EU’s upcoming Digital Services Act that goes into effect this August.
The Digital Services Act will force Tech giants like Twitter to police illegal content and disinformation more aggressively or risk multi-billion dollar fines.
“There will be huge scrutiny by the EU commission … on the actions Twitter is going to take to meet these new obligations. If Twitter fails to comply with these obligations , Twitter will face sanctions of up to 6% of global sales … In case those failures to comply are not … corrected, they will face an obligation to leave the EU.”
Barrot also topped up her comments, saying:
“In the past couple of weeks, what we’ve seen is not reassuring as to the ability of Twitter to comply with these new rules.”
These developments come at a time when Elon Musk is working hard to bring free speech to Twitter. However, it doesn’t go without his words that free speech is valid only when it abides by the laws. What will transpire next remains to be seen?
Hinman documents were released on June 13 showing contempt from SEC to smother the crypto industry
EX SEC Director Bill Hinman said that some crypto assets could evolve into commodities
The information recorded in Hinman documents calls the industry irrelevant sparking outrage from law practitioners and the crypto industry
SEC regarded as the wrong regulator for the crypto industry
What are Hinman documents?
Hinman documents are internal messages from regulators tied to SEC on ex-director Bill Hinman’s infamous 2018 speech. The documents include emails, his speech and messages pointing to discussions about the crypto industry, regulation approaches and its relevancy in the U.S.
What are the contents of Hinman documents?
It’s been around five years since Bill Hinman gave a speech about the crypto industry and SEC regulation. He touched on SEC’s lawsuit against Ripple which was not very well received by the crypto community. As such, the SEC conducted follow-ups behind the scenes and wanted Hinman documents hidden from the public.
However, on May 16, 2023, a US Judge in the case against Ripple ordered the Hinman documents to be released to the public.
In Hinman’s speech, he claimed that the fact that some tokens achieve decentralization as they gain users makes them commodities and no longer securities. As such, he deemed it, not a fit for the SEC to “register and regulate” such assets.
An internal comment regarding his speech reads
“The fact that tokens on a sufficiently decentralized network are no longer securities- and no longer required to register with all the benefits to investors of registrations- seems to point out to what might be considered the “regulatory gap” that exists in this space.”
The comment continues “In other words, this speech acknowledged that there is an “other” category-its not a security because there is no controlling group {At least in Howey sense} yet, like many other things (medication, credit cards) there may need be a regulation to control customer purchases”
This comment acknowledges the fact that tokens on sufficiently decentralized networks are not securities as they do not satisfy Howeys factors.
1/ It’s been 5 years since Bill Hinman gave his infamous speech – and through the SEC’s lawsuit against @Ripple (and 7 court orders), we can finally share what happened behind the scenes through the now public emails / drafts of the speech. pic.twitter.com/sx2TpW0TYe
The unsealed Hinman documents show that in this sense, truly decentralized crypto assets not satisfying Howeys factors, make the SEC liable for ignoring multiple warnings about poor regulation with no basis in law. As such, their actions are just but unlawful and here to create confusion showing greed and ill intentions by the regulator.
When Hinman served as the Head of SEC’s Corp Fin, he gave his infamous speech declaring that its ‘common sense’ when crypto assets attain sufficient decentralization it transitions into being a commodity as there no longer is a controlling group. Though he claimed that his speech was his own opinion, the SEC Chair of the time, Jay Clayton publicly pointed to the speech.
The speech also remained on the regulator’s website which shows that it acknowledges its contents. As such, the SEC has continued to pressure crypto assets that are already decentralized and use them to “scare” the markets.
Even with a change in regime in 2021, the SEC has continued to push its agendas of crypto “having no relevancy in the U.S.” as current Chair Gary Gensler has continually said. Gary Gensler has been in the limelight for trying to smother crypto in favor of a digital dollar.
In an interview with CNBC after suing Binance and Coinbase in the US, Gary Gensler said that the U.S. doesn’t really need any more digital currencies as the dollar is already there. In his own words, he said
“We don’t need more digital currency… we already have digital currency, it’s called the U.S. dollar,” Gensler said. “We have not seen, over the centuries, that economies and the public need more than one way to move value.”
What Senior SEC officials said to Hinman as he drafted his speech
Upon the unsealing of Hinman documents, information has surfaced that several senior SEC officials talked to Bill Hinman as he prepared his speech. The Head of Trading and Markets (T&M) commented saying that some of his deliberations were wrong but he ignored
“Because the list of factors is so extensive – and appears to include things that go beyond the typical Howey analysis – we have concerns this might lead to greater confusion on what is a security.”
T&M directly asked Hinman to tie his new factors as “more closely and explicitly to the Howey analysis.” As usual, Hinman ignored the warnings.
7/T&M directly asked Hinman to tie his newly invented factors “more closely and explicitly to the Howey analysis.” Again, Hinman ignored the suggestion. pic.twitter.com/uVZQYcmGV8
The Office of General Counsel (OGC) and T&M called a factor invented by Hinman irrelevant and uncalled for. However, Hinman went ahead and kept it in the speech.
T&M and OGC noticed that Hinman has skipped over the threshold jurisdiction question of “whether a digital asset meets the legal standards of a security.” However, Hinman as usual skipped it to ask if SEC oversight on the asset class could be beneficial, completely disregarding the present “regulatory gap.”
On June 4, 2018, Hinman wrote that he did not see the need to regulate ETH as a security and was on the verge of calling Vitalik Buterin to confirm their standing.
Regarding the mention of Ether in the speech, OGC warned that it would be difficult for the U.S. SEC to touch on the asset in the future. Now the current SEC chairman, Gary Gensler has hinted at ETH being a security as OFAC threatened to introduce censorship on the chain. He did this despite knowing the controversies behind Hinman documents and his agency being reckless in the past. As a result, the markets were affected resulting in claims of market manipulation being in play.
Though ETH Chain censorship hasn’t happened, something more controversial has, the SEC has charged crypto stakers like Coinbase and Kraken in the U.S. for facilitating the staking of ETH and other crypto tokens. It even asked Kraken to close down its staking operations in the country on top of a $30M fine earlier this year.
Is it market manipulation or hate? One thing is SEC is not the best regulator for the crypto industry
The deliberations from Hinman documents show that poor leadership has led SEC regulation down this dark alley. As such, more light should be shed on the SEC and an investigation against all those who backed Hinman including the ones who have been using flawed regulatory approaches on the crypto industry.
Could we be seeing market manipulation or is it pure hatred that is pushing SEC to smother the crypto industry when other regions like the Eurozone, Russia, UAE and Hong Kong are slowly coming to terms with the innovation? You tell me!
But what is evident is that SEC has no regard for playing fair in crypto regulation as the head already “does not see the need for any more crypo assets in the U.S.” forgetting that it’s not up to him to see the need for it. It’s up to citizens to have financial freedom and regulators stepping up to match their needs by providing security in their investments but not dictating what they go for!
Warning: This is an opinion piece and does not in any way show the stand of Fintech Express regarding SEC or any other crypto regulatory approaches. Read and research more to make your own deliberations.
Ripple vs. SEC case has been going on for the last 18+ months over claims that XRP is a security
EX SEC Director William Hinman made a speech in 2018 claiming that some assets like BTC and ETH start as securities, but they evolve into commodities
SEC has been trying to keep the documents sealed, but Judge Torres denied their motion on May 16, 2023
The documents were released on June 13, 2023, for public access
Ripple vs. SEC: Hinmans documents
Hinmans documents are internal SEC messages concerning a speech given by former director William Hinman detailing that some crypto assets evolve from being securities. Hinman said that some assets become commodities as soon as decentralization disqualifies them as securities.
The SEC has been working to keep these documents hidden from the public as it continues to crack down n crypto platforms for trading ‘securities.’ In the case against Ripple, Judge Torres denied their motion to hide the Hinmans documents in May 2023, saying that the public has the right to know what transpired.
What should you expect from Hinmans documents?
We expect to see emails and comments made by Hinman, SEC staff, and Valerie Szczepanik concerning his speech on crypto assets evolving their asset classes as decentralization sets in. You can expect to see drafts and quotes from his speech in the documents. The documents are expected to bear minimal redactions.
Will the documents refer directly to the XRP token?
Though Ripple CEO Brad Garlinghouse says these documents are worth the wait, they are not certain to have XRP token mentions. However, as the SEC was investigating XRP, which at the time was among the top 3 coins in the world, it is possible that it mentioned or, rather, SEC incriminated itself in the process of handling the token.
Why are the Hinmans documents important to the crypto industry?
The crypto industry has been under a regulation attack by the U.S. SEC, with over 67 assets accredited as Securities. Most of these ‘securities’ are highly decentralized, which will most likely disrupt what the SEC is doing currently and may result in a major shift of their regulator power over the crypto industry.
If these assets are reclassified as commodities, the SEC will be in for a wild ride as the legal status of cryptos changes, and they have been knowing it for a long time but ignoring it and going ahead to charge trading platforms in the U.S. The legal proceedings with Riplle may also shift greatly.
What is the likely impact of Hinmans documents on the Ripple vs. SEC case?
Once the Hinman documents are released, Ripple will have a 25% outright chance of winning the case as they lean heavily in their favor. On the other hand, the SEC will have around a 5% outright chance of winning the case.
These documents are important to this case as they will influence the decisions and efforts made by the SEC to regulate Ripple and other future cryptocurrency-related investments. The documents may bear comments that suggest that XRP Ripple does not satisfy all elements of the Howie Test, making it not a security for purposes of the Federal Securities Laws.
Keep watching Fintech Express for updates on this and other fintech-related developments.
