by Samuel Mbaki | Jun 14, 2023 | Follow up, Regulation
Key Points
- A U.S. Court has asked Binance.US and the Securities and Exchanges Commission to negotiate and prevent a total asset freeze.
- United States District Judge Amy Berman Jackson threw away the request from SEC to freeze Binance.US assets, saying it was unnecessary.
U.S. Judge asks Binance.US and SEC to reach a pact
Binance.US wins in court as U.S. District Judge Amy Berman Jackson orders SEC to negotiate and not freeze the exchange’s assets. Judge Berman has asked the two entities to reach a compromise claiming that extreme measures like the freezing of Binance.US assets are not necessary.
The SEC filed a complaint against the exchange on June 5, alleging that the exchange was acting as an unregulated securities broker in the U.S. It stated that the exchange had been exposing American citizens to unregistered and unregulated securities that could harm them in their process of investing.
The SEC quoted several instances where the exchange executives had incriminated themselves, accepting that they are an unregulated securities exchange. The regulator also flagged several bank transfers between Binance.US and the international exchange branch, saying their accounting is tied.
As such, the SEC expressed that Binance could take away funds from the U.S. platform; thus, they should be frozen to avoid funds flight. However, Judge Berman Jackson now sees no need for ‘extreme’ measures like that to be taken.
“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general,” Jackson said at a June 13 hearing.
Judge Berman Jackson added that she wouldn’t decide on SEC’s motion for the temporary restraining order against Binance.US until the two parties had worked through their issues.
An update for the two parties’ negotiations has been scheduled for a hearing on June 15. Keep watching Fintech Express for updates on crypto regulation and other fintech-related developments.
by Samuel Mbaki | Jun 13, 2023 | Follow up, Regulation
Key Points
- U.S. lawmakers have filed a motion to restructure SEC and reduce the power bestowed on the chairman position.
- Senator Warren Davidson wants the SEC restructured to do away with the chair position as it could be involved in market manipulation.
- Senator Davidson also wants current SEC Chair Gary Gensler fired.
U.S. lawmakers have filed a bill to restructure SEC
With market manipulation possibility in mind, U.S. lawmakers have filed a bill to allow the restructuring of the SEC to do away with the chairman position. Senator Warren Davidson and Rep. Tom Emmer were responsible for introducing the “SEC Stabilization Act” into the House of Representatives, according to his June 12 announcement.
The bill aims to fire the currency Securities and Exchange Commission (SEC) Chair Gary Gensler and do away with that position forever. The bill is backed by community cries that SEC chairpersons could be involved in market manipulation by forcing special asset classes like crypto to bend to their will without first introducing binding laws.
In a statement, Davidson said:
“U.S. capital markets must be protected from a tyrannical Chairman, including the current one. That’s why I’m introducing legislation to fix the ongoing abuse of power and ensure protection that is in the best interest of the market for years to come. It’s time for real reform and to fire Gary Gensler as Chair of the SEC.”
Davidson had been working on the bill since January this year following observations that SEC chair Gary Gensler had been showcasing too much power over markets. The bill will redistribute power between the Chair and commissioners whilst removing Gary Gensler from office. It will also add a sixth commissioner to the agency, allowing any party to hold a majority on the commission and also introduce an executive director position.
SEC chairman criticized for indirect market manipulation
The crypto market has been having bad faith with SEC chairman Gary Gensler and accuses him of market manipulation. They have been noticing that he introduces new lawsuits in questionable intervals as they coincide with green zones, which results in the market’s collapse.
Gary Gensler was also caught saying that the U.S. doesn’t need any more new crypto assets, which sent shock waves across the crypto markets. SEC also mentioned around 67 crypto assets in all their crypto lawsuits claiming they are securities. As a result, some of these assets have lost value by as much as 19%, a move that has been heavily criticized and branded as possible market manipulation.
Rep Tom Emmer, the co-author of the bill, claimed that the SEC Stabilization Act is necessary as investors will be shielded from reckless leadership.
“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.”
Though Davidson and Emmer never mentioned crypto assets in their statements or bill, they are pro-crypto and known to be critical of Gensler’s officiating. Emmer, for instance, had called Gary Gensler a “bad faith regulator” before while Senator Davidson campaigned for crypto and served as the vice chair of the House Financial Services Committee’s new Subcommittee on Digital Assets, Financial Technology, and Inclusion.
Following the SEC’s recent actions companies like Robinhood, Coinbase, and Bittrex have been forced to rethink their U.S. market strategy. Others like Animoca Brands have also left the U.S. with many more expected to follow as they are avoiding colliding with the regulator over trading assets that the regulator sees as securities.
The new bill comes at an opportune time when the crypto community is on the verge of hitting back at the SEC for unfavorable regulation. However, only time will tell how the courts will rule and the ruling’s influence on the industry’s future.
Keep watching Fintech Express for updates on regulations and other fintech-related developments.
by Samuel Mbaki | Jun 13, 2023 | Regulation
Key Points
- Ripple CEO Bradley Kent Garlinghouse hints that the crypto community should eagerly await Hinman documents.
- SEC and Ripple court battle takes a new twist as judge orders release of documents that could tip the case in Ripple’s favor
Ripple CEO positive about Hinman’s documents
On June 13, 2023, Ripple CEO Bradley Kent Garlinghouse tweeted, assuring the crypto community that upcoming Hinman’s documents are worth the wait. He hinted that the documents could play a huge role in tipping the case in Ripple’s favor and concluding it.
Its only one day left for the Hinman documents to get unsealed, and the crypto community is already showing uproars and eagerness to see them. The SEC had been fighting for the court to lock the public out of seeing the documents for over 18 months.
With only a day left to the unsealing date, Ripple executives CEO Brad Garlinghouse and Chief Legal Officer Stuart Alderoty see it as worth the wait. The documents concern SEC messages on a 2018 speech by former director William Hinman. In the speech, Hinman says that cryptocurrencies such as Bitcoin and Ether may start as securities but become commodities when sufficiently decentralized.
Ripple advocates and investors believe that the imminent unsealing of documents will be instrumental in providing further insight into the legal status of Ripple’s XRP token. The timing of the unsealing of these documents couldn’t be more opportune as it comes at a time when the SEC is pressing on with crackdowns against crypto exchanges for trading crypto assets that stand as securities.
Keep watching Fintech Express for more updates on crypto and other fintech-related developments.
by Samuel Mbaki | Jun 13, 2023 | Banking
Key Points
- China’s Central Bank slashes its seven-day reverse repurchase rate by 10 basis points from 2% to 1.9%
- Onshore Chinese Yuan devalues by 0.25% to 7.1618 against the U.S. dollar
- Further monetary easing lies ahead of China as Central Bank cut deposit rates
People’s Bank of China revises monetary policies as the economy takes a hit
China is in for an easier time as the People’s Bank of China (PBOC) reverses key monetary policies. The bank cut a key short-term policy following disappointing data from the economy after the nation failed to rise as expected following the Covid-19 reopening.
PBOC has slashed its seven-day reverse purchase rate by 10 basis points, taking it from 2% to 1.9%. According to a press release by the bank, the move in jects 2 billion Chinese yuan ($279.97 million) through its seven-day repos.
This move marks the first time the Chinese government has made such a policy since August 2022. It comes ahead of the PBOC’s medium-lending facility interest rate decision that is slotted for June 15, 2023. The bank’s loan prime rate is also scheduled for release on June 20.
“Now we are going to see the Chinese [monetary] policy will become more supportive,” Atlantis’ Chief Investment Officer Yang Liu told CNBC’s “Street Signs Asia.”
“Basically what the Chinese government is [expected] to do [is] to try very hard to prop up the domestic consumption, especially in the private sector,” she said.
Keep watching Fintech Express for more updates on banking and other fintech-related news and developments
by Samuel Mbaki | Jun 12, 2023 | Cryptocurrencies
Key Points
- Tether has minted another $1B worth of USDT
- Tether CTO says that the money is necessary to facilitate chain swaps
- The new 1B USDT coins take the total tally of the coins minted by Tether in 2023 to over $16B
Tether CTO says the newly minted $1B is for chain swaps
Tether CTO Paolo Ardoino has taken to Twitter to clarify why the issuer has minted a billion USDT. He says the new coins will facilitate chain swaps and won’t mix with the issued market cap.
Tether CTO Paolo Arddoin said that the amount is authorized but not issued. Therefore, the amount will be spent as an inventory for the next period of issuance requests and chain swaps.
A chain swap is a process where traders can transfer digital assets from one blockchain to another. For instance, you can swap USDT on the Ethereum network to Binance or Tron networks. This trader allows investors to access perks from different networks supporting the coins they hold.
Regarding the development, Tether CTO Ardoino explained that the company periodically works alongside different crypto platforms to help rebalance the liquidity of USDT across various blockchains. For instance, a platform could see a growing demand for USDT on the Tron network than the Ethereum network, necessitating a rebalance of the available USDT balances to serve the clients right.
By now, Tether has minted over $16B in 2023. It remains the world’s largest stablecoin and is pegged to the dollar. The stablecoin also brags a market capitalization of $83B, which takes its dominance out of reach of many crypto assets.
In other news, Tether has been spending part of its profits investing in Bitcoin with green mining plants set up in Uruguay and purchasing Bitcoin Bonds of El Salvador.
Keep watching Fintech Express for more updates and news on crypto, blockchain, and other fintech-related fields.
