TechScape

Rishi Sunaks techno-moment has come. Unfortunately for him, it might be too late.

Last week, the US Securities and Exchange Commission (SEC) launched a pair of lawsuits against the countrys biggest cryptocurrency exchanges, Binance and Coinbase.

The lawsuit against Binance, which had been previewed in an earlier action by the CFTC, the US commodities regulator, was juicy:

The SEC complaint alleges that [CEO Changpeng Zhao] directed Binance to conceal the access of high-spending US customers to Binance.com. In one piece of evidence included in the lawsuit, the Binance chief compliance officer messaged a colleague saying: We are operating as a fking unlicensed securities exchange in the USA bro. Elsewhere in the lawsuit, Binances CCO is quoted as saying: We do not want [Binance].com to be regulated ever.

The company runs two supposedly separate exchanges: a regulated US one and an anything-goes international one. A substantial chunk of each lawsuit focuses on the allegation that the company was knowingly helping traders who should only have been allowed on the regulated exchange to skip over to the international one. A Binance spokesperson said: While we take the allegations in the SECs complaint seriously, they should not be the subject of an SEC enforcement action, let alone on an expedited basis. They are unjustified.

But its the lawsuit against Coinbase that is sending shivers through Americas cryptocurrency industry:

Since at least 2019, through the Coinbase platform, Coinbase has operated as an unregistered broker an unregistered exchange and an unregistered clearing agency, the SEC said in its complaint. Coinbase has for years defied the regulatory structures and evaded the disclosure requirements that Congress and the SEC have constructed for the protection of the national securities markets and investors.

Paul Grewal, the chief legal officer and general counsel of Coinbase, said: The SECs reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting Americas economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance.

The case against Binance is a clear allegation of clear wrongdoing: if you were to run a crypto exchange that you accept cant service American customers and then you were to secretly help American customers to trade on it, you arent going to be too stunned when regulatory action follows.

But the case against Coinbase is more fundamental. It is the SEC arguing that it is illegal to run a cryptocurrency exchange per se. Specifically, that some unknown number of crypto tokens are, in fact, regulated securities (the SEC names 13 in its suit against Coinbase, including Solana, Cardano and Polygon) and that, even if those projects are not illegal in and of themselves, helping people trade in them is.

Its a controversial assessment. During the ICO boom of 2017, the SEC took action against specific crypto projects that veered too close to the sun, and generally won on the merits: selling a token to investors that looks and acts like a unit of stock, while telling them buy this and youll get rich, is quite easy for a financial regulator to take action on.

But it is less clear that a cryptocurrency exchange where users trade tokens that arent illegal could nonetheless function as an illegal stock exchange. Nonetheless, the industry is hedging its bets and looking for an escape hatch. Enter the UK:

California-based Andreessen Horowitz (A16Z) said Britain was on the right path to becoming a leader in crypto regulation. The venture capital firms new office will open later this year and will be dedicated to investing in crypto and tech startups in the UK and Europe.

Chris Dixon, the head of crypto investing at Andreessen Horowitz, wrote in a blogpost: While there is still work to be done, we believe that the UK is on the right path to becoming a leader in crypto regulation.

The UK also has deep pools of talent, world-leading academic institutions, and a strong entrepreneurial culture.

Rishi Sunak said he was thrilled that the firm had chosen the UK, a move he said was testament to our world-class universities and talent and our strong competitive business environment.

Although the A16Z office is technically targeting the crypto and startup ecosystem in the UK, it will functionally be extremely focused on the crypto part of that mix. The companys latest UK investment is modish crypto-AI startup Gensyn, the office is led by crypto-focused investor Sriram Krishnan, and, well, theres this statement by Sunak:

As we cement the UKs place as a science and tech superpower, we must embrace new innovations like Web3, powered by blockchain technology, which will enable start-ups to flourish here and grow the economy.

That success is founded on having the right regulation and guardrails in place to protect consumers and foster innovation. While theres still work to do, Im determined to unlock opportunities for this technology and turn the UK into the worlds Web3 centre.

Its been a long time coming for the prime minister, who first tried to attach himself to cryptos rising star when he was the chancellor. In 2021, he launched a taskforce to explore a Bank of England digital currency, and a year later, he tasked the Royal Mint with creating an NFT, just as the market imploded. (The plans were dropped just under a year later).

The UK had already been benefiting from the regulatory uncertainty in the US before last weeks actions, with crypto founders viewing it as a comfortable middle-ground between the risk of remaining in the US and the upheaval of relocating to a fully low-touch regime like the UAE. But a one-two punch of a gleefully optimistic prime minister in Britain and the long-awaited arrival of a true crackdown in America could be the impetus needed to spark a substantial relocation.

Of course, there is one problem: Sunaks regime is not long for this world. You would need a higher risk appetite than even your typical angel investor to bet on him staying in power past 2024, and Labour is somewhat less enthusiastic about cryptocurrencies. The gamble, from those in the space with whom Ive spoken to, is less that Sunak will be able to pass friendly laws in the 18 months he has left in office, and more that when hes replaced as prime minister, a crypto clampdown will be extremely low on the list of priorities of whoever replaces him.

A programming note

Im heading off on parental leave next week, to see my son through to his first birthday. I wont be fully absent youll hear from me about once a month for the rest of the year but Ill be joined by a rotating cast of guest writers from around the Guardian and beyond, led by my partner in tech, our global technology editor Dan Milmo.

If you want to read the complete version of the newsletter please subscribe to receive TechScape in your inbox every Tuesday.

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TechScape: The US is clamping down on cryptocurrency is the UK next? - The Guardian

When a UK parliamentary committee proposed last month that cryptocurrency be regulated as gambling, it didn't take long for the Treasury to reject the idea.

But the fact thatit was suggested at all is revealing, says Gavin Brown, associate professor in financial technology at the University of Liverpool.

"[The committee] didn't really understand the technology," he says.

And in this, they aren't alone despite cryptocurrencies, digital currency designed to offer an alternative payment method to traditional money, now being over a decade old.

"I see that all the time. I'll get a taxi in London and the taxi driver will know ten times more [about cryptocurrency] than the CEO of a multinational bank I'm about to visit," Brown says.

"We still see that disparity of knowledge, and not just from people on the street, but also from people who are actually making the policies who should know better."

That's because crypto is"powerful stuff",he says.

The largest ever Bitcoin transaction was for just over $US1 billion ($1.5 billion), which, to move without a bank, carried a transaction fee of $US3.56 ($5.35).

"And it cleared and settled in minutes," Brown says.

He argues that ignorance of cryptocurrency is risky.

"Western Anglo-Saxon economies are stuck between a rock and a hard place, because it's not going away and it's a constant threat."

There are thousands of different cryptocurrencies Bitcoin is the biggest and trying to regulate them is anything but simple.

Larger crypto companies are centralised, meaningthey are traditional companies with shareholders or a board of directors.

But the same is not true of cryptocurrencies, which are decentralised.

"The problem we have with things like Bitcoin, is that it's not really controllable or ban-able in a traditional sense because [it] doesn't have a CEO, a head office, any employees, an email address, doesn't file any accounts, doesn't have any buildings, has no AGM, has no shareholders," Brown says.

"Literally, Bitcoin is an idea. It's a computer program that's being run globally all over the world at the same time."

In some senses, that elusiveness is exactly the point.

"[Cryptocurrency] has been deliberately constructed in a way that is anti-state, and almost naturally beyond the reach of regulators," Brown says.

It's one of "a ton of downsides [associated with it], like nefarious use by criminals", he says.

John Reed Stark, a lawyer in Washington DC specialising in the intersection of law and technology, told ABC's Four Corners last year that "horrific crimes from ransomware attacks, and terrorism, and evading sanctions during war time drug dealing [and] sex trafficking" are crimes that are "now a lot easier to do because of cryptocurrency".

Natasha Gillezeau, SXSW Sydney production lead and former Australian Financial Reviewtech journalist, says"people need to understand how serious [cryptocurrency] is".

"We have to understand how much of a marketing and advertising push that crypto [companies have]done in the last few years," she tells ABC RN's Download This Show.

"We're talking sports stadiums [sponsored by] crypto.com, we're talking outreach to influencers We're actually in a different point in the cycle of how much the marketing and advertising industry has legitimised it.

"I've been in conversations with people who have said, 'We target people deliberately on Facebook and Instagram, that we know have gambling problems, with crypto ads because they're more likely to flip than others'."

While Gillezeau doesn't see the UK's gambling regulation proposal as the best solution to the problem, she believes it does recognise "the human effects of cryptocurrency".

"Probably what these British MPs [who raised the proposal] are speaking to is that there are certain segments of society that have been affected and blasted the last few years with crypto-specific advertising, they've lost a lot of money and this is a response," she says.

If crypto trading was designated as gambling, platforms could face additional licensing rules, requirements to protect vulnerable users, stake limits and closer control of advertising.

Brown can also appreciate some of the motivation to align cryptocurrency use with gambling regulations such as these.

"[Cryptocurrency]has the power to defraud, it has the power for people to lose significant amounts of wealth, it kind of feels a bit like gambling as well. And therefore, by taking that kind of ultra prudent label of gambling and just pinning it on it, it's quickand it plays to that downside risk agenda."

It also allows regulators to dip in to, and "just repurpose" ready-made law.

"But that misses a trick," Brown says.

"These new types of technology are not gambling, they're very different to gambling, actually. There is no house and punter. In fact, it's much more nuanced than that."

Here in Australia, in mid-2022around one million people owned cryptocurrency. In the UK, 5.2 million people or one in nine have either used or owned cryptocurrency.

"It's come that far in 13 years," Brown says.

"Go forward another 10 years. What happens if that number [in the UK] is 30 million or 40 million?

"What happens if every British person or every Australian person wakes up and says, 'I'm a bit sick of inflation, I'm sick of interest rates, I'm sick of my government or whoever controlling money in a certain way. I want a different type of money'.

"Well, guess what? There is this alternative type of money and all you need is an internet connection to access it."

The more a population uses alternative currency, the more difficult it becomes to control its economy, Brown says.

"If people aren't using that [traditional] currency, you're completely emasculated. That right hand of your two-handed approach is gone."

After presenting on cryptocurrencies to the UK Treasury six years ago, Brown was asked, "If people start using this [cryptocurrency], who pays for schools? Who pays for roads? Who pays for defence?"

"This is dangerous", the person said.

And Brown agrees.

"For so long cryptocurrencies and digital assets have been kept at arm's length our fingers in the ears, 'let's hope it'll go away, let's hope it'll disappear'.

"Nation states would like it to go away, but it's just not going away.

"The challenge we have, especially for countries like the UK and Australia, is because financial services are such an important part of the economy, we can't afford to get left behind."

Governments must have an effective digital strategy, he says. And while crypto itself might be extremely difficult to regulate, the same is not true of the people and companies who interact with it.

"If someone says, 'Hey, we're a cryptocurrency bank', well, guess what? I can regulate you as a bank of a digital asset.

"If someone says, 'I'm a prime broker', or 'I want to be a custodian of Bitcoin', or 'I want to be a financial adviser of digital assets', we can regulate those people because they are companies and individuals in a traditional sense.

"And that's a much more pragmatic thing to do."

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Labelling cryptocurrency as 'gambling' shows lack of understanding and misses the solution, expert says - ABC News

By Pete Schroeder

WASHINGTON, June 13 (Reuters) - A key House Republican lawmaker said Tuesday that he intends to hold a committee vote on a comprehensive bill to establish a regulatory framework for cryptocurrency products in the coming weeks.

Representative Patrick McHenry, chairman of the House Financial Services Committee, said he expects to put a bill forward for the panel to consider after lawmakers return to work on July 11.

"I intend for this committee to mark up some form of this legislation when we return from the July 4 recess," he said at a hearing Tuesday.

McHenry has been leading an effort by some Republicans in Congress to pass a bill establishing clear rules for the crypto industry. A discussion draft put forward earlier this month by McHenry and others would clarify responsibilities for overseeing crypto products by regulators, and would give a pathway for crypto companies and exchanges to register with those agencies.

Crypto firms have been clamoring for such clarity from Congress, particularly as the Securities and Exchange Commission has taken a harder line, arguing most major crypto products are securities that must be registered and suing major exchanges.

But the prospects for the draft measure remain unclear. Democrats on the panel say they are considering the measure but have concerns. Representative Maxine Waters, the top Democrat on the committee, said Tuesday she worried that allowing crypto exchanges to receive provisional registration could enable bad actors.

And in the Senate, which must also pass any crypto legislation, key lawmakers like Senators Sherrod Brown and Elizabeth Warren have expressed even more skepticism about crypto products. (Reporting by Pete Schroeder)

Excerpt from:
U.S. House panel to vote on cryptocurrency bill in coming weeks: lawmaker - Yahoo Finance

Binance, one of the world's largest cryptocurrency exchange platforms, will no longer be available for trading activities to owners of digital currencies in the Netherlands starting next month. De Nederlandsche Bank (DNB) did not grant Binance a license to operate in the country. New users from the Netherlands can no longer register on the platform, and after July 17, users will only be able to withdraw assets from their accounts.

Last year, Binance was already fined over 3.3 million euros by DNB because due to operating without a legally required registration with the DNB. The central bank pointed out that Binance had a very large number of customers in the Netherlands.

The million-euro fine imposed on Binance spanned from May 2020, when the registration requirement was introduced, until at least December 2021. DNB, citing legal considerations, refrained from disclosing whether another fine was pending or the reasons behind Binance's non-compliance. "In general, you can impose a fine again in such a case, a spokesperson said.

Registration, which some other dozens of crypto providers in the Netherlands have, is crucial notably for combating money laundering and terrorist financing.

The exchange stated that existing Dutch users will be notified via email with detailed information regarding the impact on their accounts and current assets. Binance advised users to withdraw all their assets from their accounts. While expressing disappointment over the situation, the company said it will maintain a productive and transparent relationship with Dutch regulators.

Binance remarked that it has acquired licenses in other European Union countries, such as France and Spain. However, the platform has been banned in the United States since 2019, leading to the establishment of Binance.US as a subsidiary to ensure compliance with regulations. Despite this, Binance.US has also faced bans in six states. Earlier this month, the company and its founder Changpeng Zhao came under scrutiny from the Securities and Exchange Commission (SEC). The American financial regulator questioned the true independence of Binance.US from its parent company.

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Cryptocurrency exchange Binance leaves the Netherlands after ... - NL Times

Home Journal SECs Legal Battles, BlackRocks Cryptocurrency Accumulation, and Tethers Resurgence A Perfect Storm Brewing in the Crypto Market?

A series of seemingly unrelated events have sparked a wave of speculation and intrigue. These events, when viewed collectively, suggest a massive shift in the crypto market may be on the horizon.

The U.S. Securities and Exchange Commission (SEC) has been launching lawsuits targeting various crypto entities. Simultaneously, BlackRock, the worlds largest asset manager, has been quietly amassing a significant amount of cryptocurrency during a period of market uncertainty, commonly referred to as the fud period.

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Adding to the intrigue, BlackRock recently announced its intention to file for a Bitcoin Exchange-Traded Fund (ETF) using Coinbase as its platform. This move comes amidst increasing pressure from Hong Kong on banks to accept crypto clients. Furthermore, the decade-old controversy surrounding Tether (USDT) has resurfaced, adding another layer of complexity to the situation.

These events are not mere coincidences, but rather signs of a brewing storm a potential bull market of unprecedented scale. Market observers warn not to be fooled by the current market volatility, but instead to seize the opportunity to accumulate assets.

The average retail investor is now more informed and has access to more tools than ever before, including social media platforms that provide real-time market insights. Those who are selling their assets in the current market are often labeled as uneducated. Anyone pushing against the current market trend is accused of being influenced by market makers.

The narrative concludes with a series of updates, including one announcing BlackRocks official filing for a Bitcoin ETF, and another addressing recent regulatory scrutiny in France.

This narrative paints a picture of a crypto market in flux, with regulatory pressures, market manipulation, and savvy investors all playing their part. As the dust settles, one thing is clear: the world of cryptocurrency remains as unpredictable and exciting as ever. Whether these predictions will come to fruition remains to be seen. However, this narrative serves as a reminder that in the world of crypto, it pays to stay informed and always be ready for the next big shift.

CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com

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SEC's Legal Battles, BlackRock's Cryptocurrency Accumulation, and ... - Captain Altcoin