SEC Sues Crypto Exchanges – Market Info
Over the past two weeks, the total market capitalisation exceeded €975 billion. The decrease in market capitalisation over a 14-day period is 8.02%. The price of Bitcoin has fallen by 5.16% over the last 14 days to a current value of over €23,900. Bitcoin’s dominance is currently around 47.7 %.
SEC Sues Crypto Exchanges
The US Securities and Exchange Commission (SEC) has decided to make life unpleasant for crypto exchanges operating in the United States and has declared an indirect war on them. And although the hunt for crypto exchanges in the US has been going on for several months, the agency’s intervention took on a new dimension.
Earlier last week, the US Securities and Exchange Commission charged Binance and Coinbase with knowingly and willingly violating securities laws aimed at protecting US investors. Binance and Coinbase are currently the two largest crypto exchanges operating in the United States.
As many as 13 charges have been brought against Binance and its founder, known as „CZ“, relating to the unregistered offer and sale of the cryptocurrencies BNB and BUSD (stablecoin Binance USD), offering unapproved Simple Earn or BNB Vault products and providing staking services. The crypto exchange has also been accused of offering US consumers the ability to trade up to 60 cryptocurrencies that the SEC views as securities.
Just one day after Binance’s allegations, Coinbase, the second-largest crypto exchange, came under the SEC’s crosshairs, accused by the SEC of allowing users to trade cryptoassets that are perceived by the SEC as securities. In addition, the SEC accused Coinbase of , offering clients the option of staking and that it has been operating as an unregistered exchange since at least 2019- However, the unregistered activity charge immediately raised questions on social media about how it is possible for Coinbase to operate as an unregistered exchange when the SEC personally reviewed its business in 2021 and allowed it to become a publicly traded company through an initial public offering (IPO).
However, both, Binance and Coinbase have not given up and have decided to fight for their rights and business. According to Binance’s statement, all allegations made by the SEC are false, and the exchange will vigorously defend itself against any accusations. Both companies also stated that they will work with regulators and policymakers in the US and around the world to ensure that cryptocurrency regulation promotes innovation while implementing and ensuring important consumer protections. Source
Will There Be a Restructuring of the SEC?
Earlier this week, US lawmakers Warren Davidson and Tom Emmer introduced a bill to restructure the US Securities and Exchange Commission and remove its chairman Gary Gensler.
In a statement on 12 June, the lawmakers said the bill, dubbed the ‚SEC Stabilization Act‘, would change the current structure of the financial regulator and ensure that its priorities truly protect the interests of investors. According to Congressman Davidson, America’s capital markets must be protected from a tyrannical chairman like Gary Gansler. In his words, „the time has come for real reform and the removal of Gary Gensler as SEC chairman.“
A new bill to restructure the SEC would add a new commissioner to the agency’s structure and establish a so-called office of the executive director to oversee the day-to-day operations of the Commission. However, all rulemaking, enforcement, and investigative powers would remain with the existing Commissioners, with a rotation of Commissioners in the organization every six years. The proposal would also prevent one political party from holding more than three commissioner seats at the agency, thereby protecting the US capital markets from destabilization and the influence of a single governing party.
The ongoing anti-crypto campaign by the SEC was also commented on by Republican Senator Cynthia Lummis, who reiterated the need for a positive regulatory framework for cryptocurrencies, which she said should be developed and adopted as soon as possible. Working with Senator Kirsten Gillibrand, Cynthia Lummis is spearheading an initiative to develop comprehensive regulations for digital assets in the United States. Source
Turkey Residents Turn Back to Crypto
According to the latest reports from Bloomberg, the people of Turkey have revived their interest in cryptocurrencies, in particular, the USDT stablecoin, following the renewed depreciation of the Turkish Lira (TRY) and growing concerns that the country could be at risk of rising inflation once again.
According to published reports, Turkish residents have already focused on investing in the largest stablecoin on the market – USDT – in early May, ahead of the presidential election. Turks‘ interest in hedging against domestic currency inflation increased even further after the election results were released, in which Erdogan won 52% and remained in the seat of the Turkish president. Erdogan is known for his unorthodox policy of lowering interest rates, which he believes is a guide to reducing inflation. However, monetary policy under his leadership is completely at odds with economic theory.
At the end of 2021, as world price rises began to accelerate, Erdogan ordered the Turkish central bank to cut interest rates. According to data from the Turkish Statistical Office, the annual rate of consumer price inflation reached 85% last October and slowed to a still staggering 44% in April.
One of the most significant factors pushing the Turkish population towards cryptocurrencies is the significantly depreciating national currency, which recently reached a record low against the US dollar. Currently, 1 lira (TRY) is equal to US$0.042, while in early 2020, one lira was worth approximately US$0.15. This means that the lira has lost up to 72% of its value against the US dollar in three years.
Cryptocurrencies, and the USDT stablecoin especially, represent a safe haven for the people of Turkey, as it allows them to preserve their wealth amidst a worrying inflationary environment. Stablecoin USDT is an asset pegged to the US dollar at a 1:1 ratio, providing investors there with a relatively safe and, most importantly, easy way to protect there wealth. Also giving cryptocurrencies a more prominent position relative to other assets is the fact that domestic regulators have restricted the purchase of dollars and even gold against the Turkish lira.
The growth in interest in USDT is confirmed by data from analytics platform Kaiko, which showed that USDT trading volume on Turkey’s largest crypto exchange BtcTurk rose by as much as 56% after Erdogan’s victory.
According to Dessislava Aubert, an analyst at Kaiko, the last time the Turks showed similar interest in the USDT stablecoin was in 2020. Source
China Issues Tokenized Digital Notes
A subsidiary investment bank of one of China’s four largest banks, Bank of China (BOCI), announced the issuance of 200 million Chinese yuan ($28 million) worth of digital structured securities issued on the Ethereum blockchain. In doing so, BOCI became the first ever Chinese financial institution to issue a tokenized security in Hong Kong.
This groundbreaking step in the merger between the crypto and traditional financial worlds was made possible through a partnership with UBS, a leading investment banking firm. The product was specifically designed for clients in the Asia-Pacific region.
UBS is actively expanding its tokenization efforts in various areas, including structured finance products or repo financing. Just recently, the company issued $50 million worth of tokenized fixed-rate securities on a so-called permissioned (private) blockchain.
The development of cryptocurrency adoption in China is in line with Hong Kong’s growing expansion into the blockchain industry, which is expanding its position in the cryptocurrency world and has recently restored access to crypto exchanges for retail users. Hong Kong also issued an HK$800 million (US$102 million) green bond in February 2022, tokenized on the Goldman Sachs GS DAP tokenization protocol, offering an annual yield of up to 4.05%. Source
Inflation in the US Continues to Fall
According to data released on Tuesday by the Bureau of Labor Statistics, consumer prices in the US rose at the slowest annual pace in May since March 2021.
The Consumer Price Index (CPI), a key inflation indicator that measures price changes for a representative basket of goods and services, increased 4% year-over-year. This represents a decline from April’s 4.9%, and the May data was also better than expected by experts, who had been expecting annual inflation of 4.1%. On a month-on-month basis, prices increased by 0.1%, while economists had expected a 0.2% rise.
This is the 11th consecutive month in which inflation has slowed. This development is certainly welcomed by US residents and investors alike and is a relief from the shock of persistently high inflation that the US has faced over the past two years. Last year, at this time, the inflation measured by the CPI was up to around 8.6%.
Even though inflation is still above the Fed’s inflation target, the central bank is unlikely to raise interest rates at its June meeting. Rates have risen as many as 10 times in a row, and the 5 percentage point overall increase is the highest and fastest pace of rate increases in decades. Thus, the Fed is now likely to wait and see whether the actions taken will be sufficient to ensure even a further decline in inflation without the need for intervention.
The price of BTC rose by just over 1% after the news was released, temporarily breaching the $26,400 mark. However, Bitcoin returned to its previous levels after a while as investors await the Fed’s decision regarding interest rates, which will at least partially outline the next trend regarding the direction of monetary policy in the US. Source
Interesting Fact: A Individual Miner Mined a BTC Block
Crypto competitors were surprised this week by a very funny and interesting news. A small bitcoin miner with an Antminer S9 mining device and a computing power of only 17 TH/s managed to mine a block on the Bitcoin network, for which he collected a reward of 6.25 BTC.
The miner managed to mine the 275th block in the history of the Solo CKPool, according to Dr. Con Kolivas, CGMiner software engineer and Solo CKPool maintainer, and he did it despite calculating that with the computing power at his disposal, he would have mined a block on average once every 450 years.
According to Blockchain.com, the current difficulty of mining is 51.23 trillion hashes. The mining difficulty is a parameter that determines how hard it is to mine the next block, i.e. how many hashes a miner must generate to find and solve a valid block. The difficulty is adjusted every 2016 blocks (approximately every two weeks) and can go up or down, depending on the current hash rate of the network. SourceINVEST WITH FUMBI