SEC Chairman Jay Clayton Goes Out with a Bang

The parting shot leaves the crypto market red, a BTD opportunity.

  • US Securities and Exchange Commission Chairman Jay Clayton’s last day as the Wall Street top regulator was on Wednesday.
  • While exciting news to the crypto community, Clayton’s parting shot provided the industry with a red market.

On Tuesday, SEC charged Ripple and its former CEO Chris Larsen and current CEO Brad Garlinghouse, after seven years, for selling $1.3 billion unregistered securities offering in 2013.

This resulted in the price of XRP crashing 58% this week. This led to a market-wide sell-off that wiped out $62 billion since Monday when Garlinghouse first reported about the upcoming charges.

However, Bitcoin was largely unaffected, going down to only $22,700 and we are back above $23,000 already.

This crypto carnage can also be seen as a blessing in disguise as it gave investors an opportunity to buy the dips amidst the raging bull market.

Clayton had previously announced that he will be stepping down by the end of this year. In a statement posted on SEC’s website, Clayton said he submitted a letter to President Donald Trump informing him of his decision to leave the agency this week.

While Trump is likely to have ‘Crypto Mom’ Hester Peirce or Elad Roisman as acting Chairman, President-elect will be picking a permanent successor to Cayton. Biden will be sworn in as US President on January 20. Clayton, a former partner at Sullivan & Cromwell, wrote,

“It has been the honor and privilege of my professional life to serving the American people as Chairman of the U.S. Securities and Exchange Commission.”

Clayton praised the SEC for keeping the financial markets function through the coronavirus pandemic and its efforts to modernize regulations. He added,

“The absolute trust and unwavering support you and your economic team provided to me and the 4,500 women and men of the Commission has enabled us to pursue our mission to the benefit of the more than 65 million American households who invest in and depend on our markets.”

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Author: AnTy

Top US Financial Regulators Call for On-Chain Stablecoin KYC

US regulators’ parting shots keep on coming, which has “zero chance” of becoming an “enforceable rule of law any time soon.”

Top US financial regulators issued a statement calling for on-chain stablecoin KYC.

The latest statement came just a few days after the fiasco of FinCEN’s proposal to extend anti-money laundering (AML) regulation to non-custodial wallets, for which the regulator is now accepting public comments with a deadline of January 4.

Now, regulators are back with their AML rules which now target stablecoins. In a statement on Wednesday, the Treasury Department and other agencies said,

“[Stablecoins] should have the capability to obtain & verify the identity of all transacting parties, including for . . . unhosted wallets.”

The regulators want the stablecoin to be used in a way that manages risk and maintains the stability of the financial and monetary systems. Jake Chervinksy, General Counsel at Compound Finance said,

“There’s exactly zero chance this becomes an enforceable rule of law any time soon. This is just more of Secretary Mnuchin’s personal views coming out on pretty-looking stationery before his tenure ends.”

The statement is released by the President’s Working Group on Financial Markets, whose members include the Federal Reserve, the heads of Treasury, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).

In its comprehensive statement, the group says that stablecoins may be securities, commodities, or derivatives, depending on the specific qualities of a particular asset.

And when these fiat-backed cryptos are used for retail payments and at a “significant scale” in the US, “the associated risks may require additional safeguards,” the regulators said.

The group further said that the backers of stablecoins should obtain and verify the identities of all parties involved in a transaction. Also, they need to have “strong reserve management” to handle large-scale redemption.

The members also acknowledged that stablecoins have the potential to enhance efficiency, lower costs, increase competition, and foster broader financial inclusion. Treasury Deputy Secretary Justin Muzinich said,

“The statement reflects a commitment to both promote the important benefits of innovation and to achieve critical objectives related to national security and financial stability. Regulators will continue to look closely at stablecoin arrangements, and look forward to a future dialogue on these issues.”

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Author: AnTy

Is The SEC Lawsuit a Blessing in Disguise for Ripple & XRP Investors?

The Trump administration’s parting shot pushes XRP down 46% this week but small XRP addresses continue being created at a fast pace while trading is suspended on three exchanges.

A day after Ripple CEO Brad Garlingouse intimated the crypto community about the upcoming lawsuit against XRP over the sale of unregistered securities, the US Securities and Exchange Commission (SEC) did just that.

SEC has charged Ripple and its two executives, co-founder Chris Larsen and CEO Garlinghouse for raising more than $1.3 billion through “an unregistered, ongoing digital asset securities offering.”

Not just this, Ripple has allegedly distributed billions of XRP in exchange for non-cash consideration. Additionally, both Larsen and Garlinghouse “effected personal unregistered sales of XRP” totaling at $600 million.

“We allege that Ripple and its executives failed over a period of years to satisfy these core investor protection provisions, and as a result, investors lacked information to which they were entitled,” said Marc P. Berger, Deputy Director of the SEC’s Enforcement Division.

The SEC’s complaint is filed in the federal district court in Manhattan and charges the defendants with violating the Securities Act.

Immediate Effect

The legal case in itself will take years to come to a conclusion but in the immediate future, the price of the digital asset took a beating. This week, XRP has lost 46% of its value, currently trading at $0.354. XRP actually hit a new low against BTC which continues to surge higher and higher.

“Bag holders want to see .304 hold on a weekly close to establish topside HTF support,” said trader Mr. Anderson. Another trader, CryptoYoda noted,

“Tightening stops. worried about potential of XRP imploding if support doesn’t hold and the resulting repercussions in the overall markets. might be a non-event, just making sure I don’t stand on the beach when the tsunami hits.”

Since the news broke, while the number of large tier addresses is shrinking, small XRP addresses being created haven’t skipped a beat in its uptrend, as per crypto data provider Santiment.

And with this, the digital asset dropped one step and Tether retook the place of the third-largest digital asset by market cap.

In the meantime, 133,152,655 XRP (48,850,963 USD) has been transferred from the Ripple founder Jed McCaleb’s Settlement account to his wallet, noted Whale Alert.

Additionally, crypto exchange OSL has suspended all XRP trading services on its platform, effective immediately. The exchange is well known in Asia for its OTC services but isn’t much for retail exchange trading.

Two smaller crypto trading platforms, Beaxy and CrossTower have also halted trading for XRP already.

Is it Security?

After avoiding this level of intervention for years, SEC Commissioner Jay Clayton seems to be ticking off one last thing from his to-do list before his departure from the office.

“For XRP hodlers, this could be a blessing in disguise,” because the question of whether XRP is a security has been dangling over the early investors, wrote Mati Greenspan in his daily newsletter Quantum Economics.

But that is if it is not deemed security because if it is XRP will be basically “useless,” making it difficult for anyone to use it for settling transactions. Jake Chervinksy, General Counsel at Compound Finance said,

“Alleging violations through present-day is a kill shot. Charging individual executives is remarkable. This is the SEC playing hardball.”

However, Messari founder Ryan Selkis, a known XRP antagonist believes the argument of XRP being security is “silly.” However much “unethically marketed and distributed” XRP was, “that still doesn’t mean it’s a security,” he wrote.

According to Selkis, USG is going to lose because they are outclassed on legal as Ripple has a lot of money to put into action, and USD should lose because the Howey test is broken, SEC’s restrictions on non-accredited investors is outdated and un-American, and because “it’s incumbent upon industry to self-police.”

Not to mention, regulators get to fine and tax Ripple, so no gain in killing a “domestic golden goose,” he said.

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Author: AnTy