SEC Chairman Jay Clayton to Step Down By Years End; Will Crypto Regulations Ease?

Jay Clayton is set to step down as the U.S. Securities and Exchange Commission (SEC) chairman by the end of this year.

Clayton, who has been at the agency’s helm since May 2017, stated he would be departing six months from his scheduled exit. He was expected to step down in June next year.

Appointed by President Donald Trump and sworn in as chair in May 2017. His early departure could have accelerated by the apparent election of Joe Biden as the next president, it still remains to be seen who might replace him. Stating,

“I would like to thank President Trump for the opportunity, and the support and freedom, to lead the women and men of the SEC.”

The chair also thanked Secretary Mnuchin as well as the entire treasury for their support and assistance. He also praised other agencies in the treasury department for their close working relations.

According to a statement from the SEC, Through Clayton’s leadership, the SEC improved the capacity of businesses of different sizes to raise capital and strengthen the enforcement of programs. The report said:

“The Commission obtained orders for over $14 billion in monetary remedies, including a record $4.68 billion in fiscal year 2020, and returned approximately $3.5 billion to harmed investors.”

“In addition, during Chairman Clayton’s tenure, the Commission paid approximately $565 million to whistleblowers, including the largest single award in the program’s history ($114 million).”

The SEC also stated that Clayton was steadfast in the enforcement of different policies and regulations within the crypto space. His tenure coincides with the recent largest Bitcoin’s bull run and the 2017 ICO’s wave.

Clayton was a controversial figure in the crypto space for his hard stance that almost all the ICOs were offering unregistered securities. Notably, however, Clayton opined that Bitcoin was not a security as well as Ethereum too. Later, the SEC reaffirmed this opinion.

In his tenure, Clayton has seen the SEC institute fines on numerous crypto projects which ran ICOs. Over the last year alone, the SEC collected about $1.26 billion as fines from different crypto projects. His departure is seen as a welcome move from the crypto and blockchain community.

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Author: Joseph Kibe

Bitcoin-Friendly Ex-CFTC Chief Gary Gensler to Advise Biden on Wall Street

Former Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler will be joining Joe Biden’s presidential transition to examine financial regulators.

Gensler, a former Goldman Sachs partner, is known for implementing a new regulatory regime for swaps and has gained a reputation for standing up to Wall Street.

He is also known for his bitcoin-friendly views, which he called a “catalyst for change.” Gensler actually taught a course at MIT called “Blockchain and Money” on how Bitcoin and the technology underpinning it could be used in finance.

It has been under Donald Trump’s presidential term that the IRS added the infamousdo you own crypto” question, and the President told the Treasury to “go after Bitcoin.” Not to mention he himself isn’t a fan of Bitcoin and cryptocurrencies either.

Meanwhile, Gensler has said although many currencies face regulatory scrutiny, Bitcoin “should remain exempt” from that.

Crypto market participants feel positive about Joe Biden and that he could be good for the industry. Even cryptocurrency derivatives exchange FTX CEO Sam Bankman-Fried made the second biggest contribution to Biden.

The real winner of this election has clearly been Bitcoin as not only the price of the digital currency reached some important levels to climb to a 24-month high, but crypto-friendly faces could be seen in the government too.

Quant trader and entrepreneur Qiao Wang also noted that Trump and Treasury Secretary Steven Mnuchin have been “openly hostile towards BTC.”

Not only “a likely Republican senate to counter Dems’ aggressive regulation tendencies,” but Wang also believes, “Democrats are more likely to create inflation which is good for BTC.”

Recently we also saw Wyoming electing Bitcoiner Cynthia Lummis to the US Senate.

KeyBank NA executive Don Graves has also been tapped for the role, a longtime Biden adviser involved in reviewing bank regulators.

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Author: AnTy

SEC Raises the Crowdfunding Limit; A Better Alternative to ICO, IEO, & Venture Capital

The US Securities and Exchange Commission raised the limit on crowdfunding from $1.07 million to $5 million, making it easier for startups to raise money from non-accredited investors.

With a 3-2 vote on Monday, several exemptions were made to federal securities legal guidelines that require issuers to register with the SEC and publish monetary statements.

Many financial instruments are categorized as securities, and to offer security, one is either required to register, which is a time-consuming and expensive process, or fall under the exemption such as Reg A, Reg D, which now also involves Reg CF or Reg Crowdfunding.

With this rule change, companies are now provided with more flexibility.

“This means entrepreneurs can raise more money and do so more easily,” said Bruce Fenton, CEO of CEO Chainstone Labs. Adding,

“This is huge – $5 million is significant enough to attract much larger and more high quality issuers. The small business sector will be rebuilt — this is a step to accelerate that. Reg CF also sidesteps the accredited requirement- an antiquated thorn in the side of innovation.”

The change in the rules is the newest assistance to small and medium-size corporations following the expansion of accredited investors’ definition in August.

SEC Chairman Jay Clayton said the rule would “improve effectivity and facilitate capital formation,” and that it might cut back regulatory prices and burdens for corporations.

“Huge for companies from non-tech hub cities, underrepresented founders, and less sexy industries,” said Ryan Selkis of Messari.

Meanwhile, Shehan Chandrasekera, Head of Tax Strategy CoinTracker, says this brings a better alternative for crypto companies that usually goes the route of Initial Coin Offering (ICI), Initial Exchange Offering (IEO), and venture capital.

“REG Crowdfunding limit went up to 5M from 1M per SEC. A better alternative to an ICO or IEO,” he said.

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Author: AnTy

Chairman Jay Clayton: The SEC is Open to Tokenizing ETFs Despite Recent Clampdowns

The Chair of the U.S Securities Exchange Commission (SEC), Jay Clayton, has said that the agency is open to discussing tokenized exchange-traded funds (ETFs). He was speaking at a Chamber of Digital Commerce webinar held on Oct 2, where he highlighted that ‘It may very well be the case that […stocks] all become tokenized.’

Despite a struggle to stay in the loop on crypto innovations, the latest sentiments by Clayton signal SEC’s openness to its underlying potential. A tokenized ETF will allow American investors to access stock indices in the form of tokens, hence Clayton’s futuristic view of integrating traditional instruments with modern-day tech ‘tokenization.’ Clayton said in a Decrypt report,

“We’re willing to try that; our door is wide open. If you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that.”

SEC Actions Paint a Different Picture

While the SEC Chair appears to have taken an open stance towards tokenization, the agency’s recent clampdowns on crypto businesses state otherwise. Some industry players that have faced the SEC wrath this year include Abra, a crypto investment platform that offers clients stocks in tokenized versions. The firm was fined around $300,000, split between CFTC and SEC, given that both agencies were pursuing Abra.

Other than the clampdowns, SEC has rejected several Bitcoin ETFs citing that the BTC price can easily be manipulated. Clayton said,

”We got off on the wrong foot in this innovation. There was the theory that because it was so efficient because it could have had so much promise, we could toss aside some of those principles of responsibility and transparency.”

He was eager to note that the SEC has to stay true to its role by identifying product launch issuers in America’s financial markets. On this, he further mentioned that they are still in pursuit of ICO issuers who might have breached U.S securities regulations during the ICO boom in 2017. It also appears the SEC is entirely against the narrative of ‘payment networks,’ but instead views ETF’s a financing vehicle,

“What we don’t like is when someone says, ‘you know, the function is payments … Don’t pretend that it’s a payment system when it’s actually a financing vehicle.”

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Author: Edwin Munyui

SEC Takes a ‘Big Step Forward’ Regarding Broker-Dealers Trading Digital Asset Securities

In a no-action letter dated Sept. 25 from the US Securities and Exchange Commission (SEC), the agency has released guidance on the settlement of digital asset securities at alternative systems, which “could end up being significant news for exchanges, including DEXs.”

The SEC proposes a “three-step process” for ATS trading that might replace the previous four-step process that FINRA and the SEC instructed broker-dealers to follow. Dating back to the July 2019 statement from the SEC, the letter outlined the factors to be considered to allow ATS operators to facilitate the trade of digital securities.

In the latest process, The broker-dealer custodian can inform the customer about the execution of trades after the fact as such, customers can submit the trade orders and confirmation at the same time, which “doesn’t change much for trading in the industry,” said Brian Farber.

According to the letter, this three-step process would “reduce operational and settlement risk.” Lewis Cohen, founder of blockchain-focused law firm DLxLaw tweeted,

“In the 3-step approach, customers are never exposed to a BD/ATS, so CPR doesn’t apply. It may sound obvious, but still a big step forward.”

Moreover, enforcement action won’t be taken if the broker-dealer operator maintains a minimum of $250,000 in net capital, all applicable securities laws are followed, and an agreement between the broker and their customers states that “broker-dealer operator does not guarantee or otherwise have responsibility for settling the trades.”

This means custodial broker-dealers like Coinbase can legally exchange digital securities without the SEC pursuing enforcement action against them, provided the above-mentioned steps are followed.

According to Farber, it raises new questions such as the undefined term “custodian,” which not every holder uses. The mandate for $250k in net capital would require amending a membership agreement with FINRA. At the same time, the 2019 joint statement clearly prohibits those broker-dealers from custodial functions.

Comptroller Brian Brooks of the Office of the Comptroller of the Currency praised the move.

Drew Hinkes, an attorney at US law firm Carlton Fields also tweeted that the big picture is “It got easier to trade digital asset securities. BDs have certainty as to how to trade digital asset securities (and) Custodians are even MORE important.”

But still, there is no clear way to determine which cryptos are security and legal to trade. As such, more clarity and guidance is needed from the SEC.

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Author: AnTy

Nigeria to Regulate Cryptocurrency Trading; SEC Says Digital Assets Are Securities

The Securities and Exchange Commission (SEC) of Nigeria will start regulating trade in digital currencies to ensure investor protection and that transactions are transparent. The authorities said on Monday,

“The general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices.”

The agency said it’ is required to regulate “when the character of the investments qualifies as securities transactions.”

In the past, the West African nation declined to recognize digital currencies as legal tender. In 2018, the Central Bank of Nigeria said that cryptocurrencies, including Bitcoin (BTC), Litecoin (LTC), XRP, Monero (XMR), and Onecoin, weren’t considered money.

The Abuja-based regulator said in a statement that it views digital currencies as exchangeable securities and that the issuers or sponsors of these virtual assets “shall be guided by the commission’s regulation.”

The country is now coming to acknowledge the growing presence of digital assets, and Ayodeji Ebo, managing director at Afrinvest securities in Lagos, said, “the earlier it is regulated, the less havoc on the economy.”

“It’s another way to provide alternative assets to investors,” he told Bloomberg.

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Author: AnTy

SEC Charges Rapper T.I. & Four Others for Promoting Fraudulent ICO, FLiK

The US Securities and Exchange Commission has charged Atlanta-based rapper Clifford Harris, Jr., better known as T.I., and four others for promoting an unregistered and fraudulent initial coin offerings (ICO).

T.I. promoted FLiK tokens in 2017 to his social media followers, falsely stating that he was a co-owner of the project boasted as “Netflix on the blockchain.” The platform was advertised as a streaming media platform with products that can be purchased with digital tokens, the SEC said in a statement on Friday.

The 39-year old rapper has agreed to pay the penalty of $75,000.

As per SEC’s order, he is not allowed to participate in offerings or sales of digital-asset securities for at least five years.

The company’s founder, a film producer, named Ryan Felton, who started FLiK and CoinSpark, is meanwhile facing claims that he misappropriated the raised funds to buy Ferrari, a million-dollar home, and other luxury goods.

“Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading,” said Carolyn M. Welshhans, Associate Director in the Division of Enforcement.

The complaint alleges that Felton secretly transferred FLiK tokens to himself and gained an additional $2.2 million in profits by selling them into the market.

Previously, boxer Floyd Mayweather and music producer DJ Khaled have also been sued by the regulators for hyping the ICOs.

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Author: AnTy

Hong Kong Regulator to Grant Fidelity-backed OSL Digital the First Crypto Exchange License

The Securities and Futures Commission (SFC) of Hong Kong will be issuing a license to cryptocurrency firm OSL Digital Securities, reported Reuters.

OSL, a unit of Fidelity-backed BC Group, became the first firm in November last year to apply for a digital license under the market regulator’s new rules allowing cryptocurrency exchanges to opt into regulation.

The company revealed in its exchange filing on Friday that the financial regulator has agreed in principle to grant the license.

The final approval, however, is subject to certain conditions, which “you’d expect from a conservative regulator in a financial hub,” said BC Group CEO Hugh Madden.

OSL and some of its competitors to welcome the regulation as it would enable the regulated institutions to reduce their risk by engaging with other regulated risks.

In the first half of 2020, BC Group made a net loss of 90.8 million yuan ($13.13 million). Besides its crypto business, which accounts for the company’s bulk of revenue, it also provides business parks and advertising services.

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Author: AnTy

SEC Contracts with DARPA Funded CipherTrace to Track BNB & Binance Chain

The US Securities and Exchange Commission (SEC) is now taking a special interest in Binance Chain and the native token of the leading spot exchange Binance BNB among other tokens on its blockchain.

Binance Chain hosts about 189 tokens along with the 10th largest cryptocurrency by market cap of $3 billion BNB and underlies Binance DEX, a decentralized exchange.

“This is a significant step to have more BinanceChain token listings on fiat exchanges. Working for our ecosystem projects,” said Changpeng Zao, Binance CEO.

As per the public records, SEC has chosen CipherTrace Inc. for this task to which the agency intends to award a fixed-price contract on a single source basis. The contract will be awarded by SEC by today for a period of one year with four options of one year each to extend the contract. It states,

“CipherTrace Inc., is the only source that can reasonably meet the SEC’s requirement in accordance with FAR Part 13.106-1(b).”

Founded in 2015, the blockchain analytics company was initially funded by the US Department of Homeland Security and DARPA, an agency of the US Department of Defense responsible for the development of emerging technologies for the military use.

CipherTrace is the only forensics and risk intelligence tool that can support Binance Coin (BNB) and all other tokens on the Binance network, reads the notice.

CipherTrace partnered with Binance in November 2019 to bring anti-money laundering (AML) tracing tools to Binance Chain.

At the time, Dave Jevans, CipherTrace CEO said, as the crypto ecosystem matures, regulators demand better transparency and compliance.

The technology will enable regulators to browse Binance blockchain and identify high-risk addresses, said Binance adding, CipherTrace will improve its blockchain’s AML controls.

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Author: AnTy

China’s Supreme People’s Court Releases Guidelines On Protection Of Digital Assets As Property

China’s Supreme People’s Court and the National Development and Reform Commission (NDRC) released a joint statement on the expansion of property rights around various items, including virtual property, data, and digital currencies.

The guideline released on July 22 aims at improving the socialist market to offer a stronger protection stance for private ownership of property. This document opens up regulation and legal protection for new classes of property such as digital assets, virtual currencies, and data.

The new laws focus on seven major areas, including property protection, market order, fair trade, and livelihood guarantee, He Xiaorang, a member of the judicial committee, said. The new guidelines further aim at “protecting private enterprises’ properties from illegal seizing or freezing as well as preventing wrongful rulings by public or judicial systems.”

Despite the mention of digital assets and virtual currencies, the guideline did not define fully what constitutes a digital currency. However, with the digital yuan (CBDC) development in place, the current changes point to the government setting up a solid regulation structure before its launch.

China: Digital assets as property

China’s efforts in developing a CBDC are well beyond what most of the nations across the globe have considered. The government passed its first crypto law in November 2019, aiming at standardizing the application and management of passwords. The law, adopted earlier in the year, protects cryptographic intellectual property rights and promotes the progress and innovation of cryptography and public/private key technology.

Digital assets have been classified as property in a couple of instances across China too. A court judge in April declared Ethereum (ETH) as property in a legal theft case presented. Notwithstanding, back in 2018, another judge ruled on Bitcoin being treated as virtual property across the country.

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Author: Lujan Odera