Gensler was responding to CNBC’s question on whether the SEC chair was “warming up to top-tier crypto?”

U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler reiterated his stance that bitcoin (BTC) is “not a security” but doubled down on his stated position that regulatory clarity exists for the crypto space in an interview with CNBC on Thursday.

“As it relates to bitcoin, my predecessor and I have said, that’s not a security,” Gensler said. “You now have a way that you can actually express that view — buy into that through exchange-traded products.” Such products were approved by the SEC in January, marking a monumental shift in the agency’s approach to the crypto space.

Gensler was responding to CNBC’s Joe Kernen asking whether the SEC chair was “warming up to top-tier crypto?”

“Where are you on what’s called altcoins, there’s 15 or 20 thousand of them. Where are you Joe?” Gensler asked.

Gensler refused to reveal a position on what he thought about Donald Trump’s idea “to keep the current government holdings “as the core of the strategic national bitcoin stockpile.”

“I have a view but given my role and also we are in election season so for the listening public I will stick to my chalk lines which are securities markets and chairman Powell and others can speak to that.”

Apart from bitcoin, Gensler has maintained that the vast majority of other tokens fit the legal definition of securities that are rightfully under the SEC’s jurisdiction. This position remains despite industry push back, lawsuits against the SEC and a recent hammering the SEC got for two hours during a congressional hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Asset.”

Asked by CNBC if the SEC had been regulating by litigation, Gensler once again argued that current laws give his agency the power to oversee the crypto space.

“Not liking the rules is not the same as that there aren’t rules.”

Gensler also said that he didn’t know where bitcoin will be in 20 years but that that he felt “the field is going to have a challenge building trust” which it is “already” when “there’s so many fraudsters, scammers.”

“Look at the leading lights in this field, in the crypto field just two years ago. A number of them are in jail right now, and I’m not just talking about SBF… there’s been tens of billions of dollars of losses and bankruptcies and so forth,” Gensler said on Thursday. “What innovative field in America survives without having building trust in that field and protecting investors or consumers?”

Binance founder Chang Peng “CZ” Zhao, who is currently serving a four-month prison sentence, will be a free man by the end of this week.

The post SEC’s Gensler Won’t Reveal His View on Trump’s Bitcoin Reserve, Reiterates Bitcoin Isn’t a Security appeared first on Crypto Insider.

The SEC faces a Thursday deadline for at least one of the spot ether ETF applications it’s reviewing.

WASHINGTON, D.C. — U.S. Securities and Exchange Commission Chair Gary Gensler declined on Thursday to preview his agency’s decision on ether (ETH) exchange traded funds (ETFs), though he advised observers to “stay tuned.”

Though he’d reiterated that the court decision on ETFs had caused his agency to “pivot” in its thinking, when asked by CoinDesk on Thursday about what the agency is preparing to do in response to the specific applications on this much-anticipated crypto decision, he largely demurred.

“I don’t have anything on this particular filing,” Gensler said outside an Investment Company Institute event in Washington.

“We do it within the law and how the courts interpret the law, and that’s what I’m deeply committed to,” he said, after having noted on stage at the event that the agency had responded to the D.C. Circuit Court of Appeals decision rejecting the SEC’s approach toward spot bitcoin (BTC) ETFs earlier this year.

The SEC, after weeks of limited engagement, asked exchanges supporting spot ether ETF applications to refile their 19b-4 forms with universal language earlier this week. Those forms were submitted to the SEC by Tuesday, and the exchanges began publishing them online that night. The SEC also appears to have begun engaging with the would-be issuers themselves, as companies like Fidelity and Grayscale filed updated S-1 forms this week. The SEC has to make a final decision on at least one spot ether ETF application by the end of the day Thursday.

Based on these forms, it appears the SEC is uncomfortable with the idea that ether ETF issuers might stake any assets.

Industry participants previously told CoinDesk that while the SEC’s moves this week don’t guarantee approval of the ETFs, they make it more likely that the ETFs will be approved.

“[The] DC Circuit took a different view, and we took that into consideration and pivoted,” Gensler said on Thursday.

Gensler also reiterated Thursday that his agency would keep working on its opposition to the crypto bill that passed the House of Representatives on Wednesday.

“We’ll continue to engage,” he said. “It’s just a field where the token operators – without prejudging any one of them – aren’t making the disclosures that investors really could benefit from and are required by law.”

“We’ve seen leaders in this field find themselves on a pathway to jail or extradition,” he added.

And when asked about Congress seeking to reverse his agency’s crypto accounting policy, Staff Accounting Bulletin No. 121 (SAB 121), he argued that the agency meant it as guidance at a time when failing crypto firms were having to treat customer assets the same as their own in bankruptcy.

“The crypto that these companies have said they took as custody actually because part of the bankruptcy estate,” Gensler said. “That’s what we were addressing back in 2022,” he added, saying it was “just” an accounting bulletin.

The post Gensler Says ‘Stay Tuned’ on U.S. SEC’s Decision on ETH ETF appeared first on Crypto Insider.

Federal and New York regulators object to a billion-dollar deal they say may be unlawful and discriminatory as they examine Voyager’s VGX token.

A $1.02 billion deal by Binance.US to purchase assets of defunct crypto lender Voyager has been opposed by New York and Federal finance regulators, who said in Feb. 22 filings it could prove discriminatory and unlawful.

The move follows increasing interventions into crypto by the Securities and Exchange Commission, whose probes into the alleged sales of unregistered securities recently caused crypto exchange Kraken to shutter crypto staking operations.

Elements of the proposed Binance.US-Voyager deal may also infringe the law, given how the plan envisages repaying Voyager’s former customers, the SEC said.

Under the deal, “the transactions in crypto assets necessary to effectuate the rebalancing, the redistribution of such assets to Account Holders, may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale, or delivery after sale of securities,” a filing by the SEC said, citing in particular the VGX token issued by Voyager.

“It is the Debtors’ burden to present credible evidence that the provisions of the Plan are feasible and not in violation of applicable law,” the SEC said. The regulator also cited media reports that Binance is bracing itself to pay penalties for past infractions of money laundering and corruption law as evidence that the deal could become “unfeasible” and “impossible to consummate.”

The deal was also opposed by New York State’s Department of Financial Services (NYDFS) and Attorney General Letitia James in two Feb. 22 filings, including allegations that Voyager was unlawfully serving customers in the state.

“Despite the fact that none of the Debtors are licensed in New York, the Department is aware of allegations and other information indicating that one or more of the Debtors may have operated and may be continuing to operate in New York in violation of Applicable Law,” the NYDFS filing said.

Voyager “onboarded New York customers and thus illegally operated a virtual currency business within the state without a license, in violation of New York laws and regulations,” depriving its customers of protection, the filing added. The plan also discriminates against New Yorkers who won’t be able to reclaim their crypto for six months while Binance.US gains approval in the state, NYDFS said.

In January, the SEC filed a limited objection to the deal, saying there wasn’t enough detail to show Binance.US could afford it. The Federal Trade Commission has also indicated it is probing Voyager, which filed for bankruptcy in July, for deceptive marketing.

Voyager had previously argued that the Binance.US deal offers the best possible outcome for creditors, and that NYDFS objections are “hypocritical” because the regulators themselves are limiting the ability to distribute crypto.

Voyager creditors themselves had until 16:00 Eastern Time on Wednesday to approve the deal, and the company’s counsel has said that with a few hours of voting left the vast majority had done so.

The post SEC Objects to Binance.US’ $1B Voyager Deal, Alleging Sale of Unregistered Securities appeared first on Crypto Insider.

Coinbase CEO Brian Armstrong said he heard rumors about a possible ban on staking providers in the U.S.

Liquid staking tokens jumped overnight as investors bet on growth in decentralized staking products amid rumors of their centralized counterparts facing a possible ban in the U.S.

The liquid staking sector jumped 5.4% on average, CoinGecko data shows, while the broader crypto market capitalization slid 3.4%.

Tokens of market leader Lido jumped by 9% before retreating on Thursday. Rocket Pool’s RPL and Stader’s SD tokens rose 10% in the past 24 hours.

Liquid staking refers to the exchange of staked ether for tokenized versions of ether that can be used in decentralized finance (DeFi) applications. Uses range from using these tokens as collateral for loans or margin trading to earning yield.

As CoinDesk reported Thursday, Coinbase CEO Brian Armstrong tweeted he heard rumors that the U.S. Securities and Exchange Commission would like to ban retail investors from engaging in cryptocurrency staking.

The value of staked assets was about $42 billion in the fourth quarter of 2022, with annualized staking rewards of $3 billion, according to a report from Staked, a non-custodial staking service provider. That figure was not limited to just retail investors.

Prominent traders on Crypto Twitter hypothesized the flow of these funds into DeFi alternatives such as Lido and Stader, which may explain the immediate price bump for related tokens.

The rumors come ahead of next month’s highly anticipated Shanghai upgrade on Ethereum, which will allow investors to withdraw their ether staked on the Ethereum blockchain – as staked ether cannot be withdrawn or freely traded currently.

The post Ether Liquid Staking Tokens Jump on Rumors of SEC Ban for Staking Providers appeared first on Crypto Insider.

“I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen,” Brian Armstrong tweeted Wednesday.

Coinbase CEO Brian Armstrong says he’s heard rumors the U.S. Securities and Exchange Commission would like to ban retail investors from engaging in cryptocurrency staking, the income-generating technique at the core of running blockchains including Ethereum.

“I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen,” he tweeted Wednesday.

While Armstrong’s suspicions may come as a surprise to many in the industry, SEC Chairman Gary Gensler has previously stated that cryptocurrencies that allow staking could be classified as securities under the Howey test – even though ether has been designated as a commodity by the SEC’s sister regulator, the Commodity Futures Trading Commission (CFTC).

After a Congressional hearing in September 2022, Gensler told reporters that, though he wasn’t referring to any token in particular, staking was “another indica that under the Howey test, the investing public is anticipating profits based on teh efforts of others.”

A significant amount of money is staked. The value of staked assets was about $42 billion in the fourth quarter of 2022, with annualized staking rewards of $3 billion, according to a report from Staked, a non-custodial staking service provider. That figure was not limited to just retail investors.

The post Coinbase’s CEO Cites ‘Rumors’ the SEC May Ban Crypto Staking for Retail Customers appeared first on Crypto Insider.

Having proof of reserve reports is not enough information for an investor, according to Paul Munter, the SEC’s acting chief accountant.

The U.S. Securities and Exchange Commission (SEC) is increasing its scrutiny of audits of cryptocurrency companies in an effort to warn investors who may feel assured by audits such as proof-of-reserve reports, according to a Wall Street Journal report that cites a senior SEC official.

“Investors should not place too much confidence in the mere fact a company says it’s got a proof-of-reserves from an audit firm,” said Paul Munter, the SEC’s acting chief accountant. Having such a report “is not enough information for an investor to assess whether the company has sufficient assets to cover its liabilities,” he added.

In the aftermath of FTX’s collapse, as many as nine crypto exchanges across the world announced they would publish transparency reports or Merkle tree proof-of-reserves to reassure spooked investors. A merkle tree proof-of-reserves is a cryptographic data structure that maintains privacy, but allows users to verify the stability of their holdings on exchanges, thereby creating trust.

The SEC is warning both investors and audit firms that if it finds troublesome “fact patterns,” the watchdog will consider a referral to the division of enforcement, according to Munter.

The development assumes significance as questions have been swirling regarding Binance, the largest crypto exchange by trading volume, that did release a report of its proof-of-reserves but withdrew it two days later when the auditing firm it had hired, Mazars, announced it was no longer working with crypto firms.

According to the WSJ report, Binance was looking for another audit firm after it was dropped by Mazars. Binance “reached out to multiple large firms, including the Big Four (Deloitte, EY, KPMG and PwC), who are currently unwilling to conduct a [proof-of-reserves] for a private crypto company,” the company said.

The post SEC Increases Scrutiny of Audits of Cryptocurrency Companies: WSJ appeared first on Crypto Insider.

The legal brief filed Tuesday argues that the SEC’s logic for denying Grayscale’s application to convert the Grayscale Bitcoin Trust to a spot Bitcoin ETF is “flawed” and “inconsistently applied.”

Grayscale Investments called the the U S. Securities and Exchange Commission’s (SEC) June decision to reject its application to convert its flagship Grayscale Bitcoin Trust (GBTC) into a spot bitcoin exchange traded fund (ETF) “arbitrary, capricious, and discriminatory” in an opening legal brief filed as part of its lawsuit against the regulator.

Grayscale filed suit against the SEC on June 29th, asking the U.S. Court of Appeals for the District of Columbia Circuit to review the regulator’s decision, which the SEC has published earlier in the day.

Grayscale is a wholly-owned subsidiary of Digital Currency Group, the parent company of CoinDesk.

Grayscale is far from the only company whose spot bitcoin ETF application has been rejected – over the last year, the SEC has denied over a dozen similar applications from other major players in the crypto space, including WisdomTree and Ark21Shares, citing a lack of investor protections and the potential for fraud and manipulation.

WisdomTree’s latest application was rejected the same day Grayscale filed its brief.

While the agency has repeatedly rejected bitcoin spot ETF applications, it has approved several bitcoin futures ETFs, making a distinction between the offerings that Grayscale’s lawyers say is “arbitrary” and “outside the Commission’s authority.”

In the brief, the attorneys argue that, because Bitcoin futures and spot Bitcoin both generate their price based on overlapping indices, the spot price of Bitcoin in both spot and futures ETFs are subject to the same risks – and therefore, approving one and denying another is unfair.

“The Administrative Procedure Act and Exchange Act require rules and regulations to be applied without favoritism for one type of product or another,” said Craig Salm, Grayscale’s Chief Legal Officer, in a press statement.

The SEC’s response is due Nov. 9.

The post In SEC Lawsuit, Grayscale Calls Spot ETF Rejection ‘Arbitrary, Capricious, and Discriminatory’ appeared first on Crypto Insider.

U.S. Senator Pat Toomey (R-Pa.) sent a letter accusing the securities agency of failing to give regulatory clarity that could have prevented some of the recent industry damage.

Sen. Pat Toomey accused the Securities and Exchange Commission (SEC) of dragging its feet on instituting oversight of crypto firms as some of those companies collapsed, taking investors’ cash with them.

“Had the SEC responded to calls for clarity on how it would apply existing securities laws to novel digital assets and services, things could have been different,” Toomey, who is the ranking Republican on the Senate Banking Committee that oversees the regulator, wrote in a letter to SEC Chair Gary Gensler. “Companies could have adjusted product offerings accordingly, preventing investor losses today, and the SEC would have been free to focus enforcement efforts on the worst actors.”

Toomey referenced firms that “often promised enormous, seemingly unsustainable interest rates to depositors, and at least one business allegedly engaged in risky practices,” and he further singled out Celsius’ lending that left billions of dollars of customer funds in limbo. Despite requests from the senator and other lawmakers – and crypto firms themselves – the SEC has declined to offer sufficient clarity about what digital assets meet the definition of securities, Toomey said in the Tuesday letter.

Gensler has routinely said the definitions already provided by legal precedent make it clear that most digital tokens are securities, and the exchanges where they’re traded should register with his agency.

Toomey, who has been taking up the crypto cause repeatedly during his final months in office, asked several enforcement-related questions of the agency and requested details about its findings on managing the so-called Howey test that defines securities. The letter calls for a response by Aug. 9.

In May, the senator made a different argument that crypto firms should be allowed to collapse and that firms melting down is a natural part of the financial system.

“It’ll probably take some failures in this space in order for the market to figure out what works,” he’d said as algorithmic stablecoin terraUSD (UST) floundered.

Toomey has also previously cautioned against aggressive investor-protection moves by the SEC. Last year, in defense of digital trading technologies, the lawmaker urged the agency “to proceed cautiously and avoid the temptation to pursue paternalistic regulations that restrict investor freedom under the guise of investor protection.”

The post Top GOP Senator Slams SEC for Ignoring Crypto Inferno appeared first on Crypto Insider.

The investigation predates last week’s insider trading lawsuit, according to the report.

The U.S. Securities and Exchange Commission (SEC) is reportedly probing crypto exchange Coinbase, a publicly-traded company it oversees, on suspicion it allowed U.S. persons to trade unregistered securities.

Bloomberg reported Monday that the regulator was investigating some of the tokens listed on the exchange. The SEC alleged last week that seven cryptocurrencies listed on Coinbase were securities in an unrelated insider trading case brought against a former product manager at the exchange.

SEC Chair Gary Gensler has previously also said he believed that Coinbase should register as a national securities exchange, given some of the cryptocurrencies it has listed.

Coinbase, for its part, has criticized the SEC for not providing clear rules for defining how cryptocurrencies might be deemed securities. The exchange’s Chief Policy Officer, Faryar Shirzad, said existing securities laws may not fit cryptocurrencies.

CEO Brian Armstrong’s stated goal of listing every token the exchange legally can appears to have had its drawbacks: According to two people Bloomberg spoke to, the SEC gave coinbase’s practices a closer look amid the increase in token listings.

Coinbase’s asset directory page featured over 200 tokens at press time Monday.

Spokespeople for the SEC and Coinbase did not immediately return requests for comment.

The post SEC Probing Coinbase for Allegedly Listing Securities appeared first on Crypto Insider.

The SEC rejected Grayscale’s application to convert its Grayscale Bitcoin Trust to an exchange-traded fund earlier Wednesday.

Grayscale Investments has sued the U.S. Securities and Exchange Commission (SEC) barely an hour after the regulatory agency rejected its application to convert its flagship Grayscale Bitcoin Trust product to an exchange-traded fund (ETF).

The SEC rejected Grayscale’s application earlier Wednesday, citing concerns about market manipulation, the role of Tether in the broader bitcoin ecosystem and the lack of a surveillance-sharing agreement between a “regulated market of significant size” and a regulated exchange, echoing concerns the regulator has expressed for years in rejecting other spot bitcoin ETF applications.

In the filing, Grayscale simply asks the U.S. Court of Appeals for the District of Columbia Circuit to review the SEC’s order.The investment firm announced it was prepared to sue the SEC in the event of a rejection earlier in 2022, saying it would file a proceeding tied to the Administrative Procedures Act. To that end, Grayscale tapped former Solicitor General Don Verrilli, who has experience in APA proceedings.

“Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation – and we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot Bitcoin ETFs from coming to the U.S. market,” Grayscale CEO Michael Sonnenshein said in a statement Wednesday.

Essentially, the company will argue that the SEC has to allow products that are like other products already trading, in this case bitcoin futures ETFs.

Verrilli told reporters earlier in June that the SEC’s approval of futures ETFs indicate the underlying market must be seen as reliable.

“This is a place where common sense has a really important role to play. You’ve got a situation now in which you have certain kinds of exchange traded funds, one that is focused on bitcoin futures, and the SEC has approved that, the SEC is given it the seal of approval,” he said. “In order to do so it had to make a determination that that giving this approval was consistent with the securities laws, and in particular, that that there wasn’t a sufficient underlying risk of fraud and manipulation.”

To date, only a handful of bitcoin futures ETFs have been approved to trade. Spot bitcoin ETFs trade based on the price of bitcoin itself, while futures-based ETFs trade based on the price of CME’s bitcoin futures product (which in turn is tied to an index). Bitcoin ETF proponents argue that the futures markets are still based on the underlying spot bitcoin price, while the SEC notes that CME’s futures market is regulated by the Commodity Futures Trading Commission (CFTC), a fellow federal agency.

The post Grayscale Sues SEC Over Bitcoin ETF Application Rejection appeared first on Crypto Insider.