Congress criticized the head of the SEC for his position on cryptocurrencies
The head of the U.S. Securities and Exchange Commission (SEC) Gary Gensler during a speech in Congress outlined the agency’s position on the regulation of the cryptocurrency market, but received criticism from Republicans.
Gensler again equated cryptocurrencies with securities
During their speech, Gensler once again pointed out that the vast majority of crypto-assets are securities. In their opinion, investors usually buy cryptocurrency with the expectation of making a profit. Therefore, given that most digital assets are securities, crypto intermediaries transact in securities and should register with the SEC.
“Mixing different functions within crypto intermediaries creates inherent conflicts of interest and risks for investors – risks and conflicts that the Commission does not allow in any other market,” the regulator’s head emphasized.
They added that Congress needs to pass securities laws to regulate investments, “whatever form they take and whatever they are called.” In particular, calling itself a platform for decentralized finance is not a reason to violate securities laws. However, few members of the crypto industry conduct their activities in compliance with U.S. laws.
“This noncompliance not only puts investors at risk, but it also puts public confidence in our capital markets at risk,” Gensler said.
Congress is unhappy with Gensler’s speech
Because of his speech, Gensler faced a barrage of criticism from Republicans in the House. According to them, the SEC rules were designed to regulate traditional markets and are ill-suited for decentralized exchanges of digital currencies.
In particular, politicians note that the regulator’s stance could weaken America’s status as a center for cryptocurrency innovation andcede that position to U.S. adversaries.
“Your approach promotes innovation overseas and jeopardizes America’s competitiveness,” committee chair House Member Patrick McHenry told Gensler.
McHenry noted that the SEC penalizes cryptocurrencies for failing to follow the regulator’s laws “when they don’t know they will apply to them.”
Gensler, however, rejected the notion that cryptocurrency trading platforms don’t know how to interpret U.S. securities laws. He also showed little sympathy for the problems faced by cryptocurrency exchanges operating in the U.S.
We previously reported that Polygon is asking the European Parliament to change the law on liability for smart contracts.
US Bitcoin supply fell over 10% in the past year
Bitcoin is increasingly active in Asia as U.S. supply share dwindles over the past two years. Bitcoin abandoned the United States during the 2022 bear market, new research suggests. In a tweet on June 8, on-chain analytics firm Glassnode revealed some surprising conclusions about who is now using Bitcoin.
BTC supply moves to Asia
The past year has seen some seismic shifts in where Bitcoin is held and traded. In its latest analysis of the BTC supply, Glassnode measured its migration around the world — notably, away from the U.S. and toward Asia. Since mid-2022, the amount of the supply held and traded by U.S. entities has decreased by more than 10%.
At the same time, Europe’s share has stayed roughly equal, translating to a redistribution from west to east.
“A clear divergence is visible in the year-over-year BTC supply change based on geographical regions. The extreme dominance of US entities in 2020-21 has clearly reversed, with US supply dominance falling by 11% since mid-2022,” Glassnode researchers commented.
“European markets have been fairly neutral over the last year, whilst a significant increase in supply dominance is visible across Asian trading hours.”
The metric used to measure the phenomenon, Year-over-Year Supply Change, is a probabilistic tool that makes assumptions over BTC supply ownership based on the time at which it moves.
“Geolocation of Bitcoin supply is performed probabilistically at the entity level. The timestamps of all transactions created by an entity are correlated with the working hours of different geographical regions to determine the probabilities for each entity being located in the US, Europe, or Asia,” Glassnode explains in its guidance notes.
TheYear-over-year Supply Change shows the U.S. share beginning to decline in March 2021 but accelerating beginning in May this year.
Coinbase CEO says U.S. must “seize” crypto opportunities
The findings come as the geopolitical landscape around crypto sees major upheaval of its own. Hong Kong began allowing exchanges to offer trading this month, while in the West, U.S. legal proceedings against major exchanges marked something of a watershed moment for the industry.
In an opinion piece for MarketWatch, Brian Armstrong, CEO of Coinbase — one of the targets of the legal action — warned that poor regulation would disadvantage the United States.
“Smart—and bespoke—regulation in the 1990s and early 2000s enabled the U.S. to define the Internet Age,” he wrote.
“Just like then, now is the time for Congress to seize the historic opportunity presented by crypto, and pass comprehensive legislation that safeguards consumers and fosters innovation.”
On the topic of Hong Kong, Armstrong added that China pushing the crypto narrative was “no surprise.”
Gary Gensler: Crypto market is like 1920s stock market, full of ‘fraudsters’
Gensler argued that securities laws helped prevent stock market scams once they were passed in the 1930s and can benefit the crypto market of today.
In a June 8 speech at the Piper Sandler Global Exchange & Fintech Conference, United States Securities and Exchange Commission (SEC) Chair Gary Gensler compared the current crypto market to the 1920s U.S. stock market, saying that it is full of “hucksters,” “fraudsters” and “Ponzi schemes.” Just as Congress cleaned up the stock market by enacting securities laws, the current SEC can also clean up the crypto market by applying these laws, he argued.
In the talk, Gensler praised the Securities Act of 1933 and Securities Exchange Act of 1934, claiming that these laws allowed the U.S. securities markets to “thrive” over the next 88 years. He argued that the “crypto securities markets” of today should also benefit from these laws, as they are not “less deserving of the protections” the laws provide.
Pointing to a court ruling against Telegram Open Network, Gensler argued that crypto asset securities are not exempt from securities laws even if they have utility.
“Some promoters of crypto asset securities contend that their token has a function beyond simply being an investment vehicle,” Gensler stated. “As the courts in the Telegram case and others have said, however, some additional utility does not remove a crypto asset security from the definition of an investment contract.”
This means that crypto security exchanges must comply with securities laws, including the requirement to separate “the exchange, broker-dealer and clearing functions,” Gensler stated. In his view, this separation “helps mitigate the conflicts that can arise with the commingling of such services.”
Gensler denied that this separation isn’t possible, saying that separating these three functions simply requires work.
The SEC head argued that the current crypto market is rife with scams that have arisen because of the industry’s lack of compliance with securities laws, stating:
“With wide-ranging noncompliance, frankly, it’s not surprising that we’ve seen many problems in these markets. We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were put in place. Hucksters. Fraudsters. Scam artists. Ponzi schemes.”
The solution, in Gensler’s view, is to make sure that crypto securities issuers comply with the law. This is because these scams are “more likely to happen in markets whose issuers and intermediaries fail to comply with foundational laws.”
As chair of the SEC, Gensler has been heavily criticized within the crypto industry, especially since the SEC filed lawsuits against crypto exchanges Binance and Coinbase. Critics say he has an overly expansive view of the SEC’s regulatory authority and is driving innovation out of the U.S.
Binance vs. SEC: How low can BNB price go?
BNB is clinging on to its short-term bullish bias amid the Binance-SEC fiasco, but a 30% price decline is still on the cards.
The market capitalization of BNB has dropped by more than $7 billion since June 5, when the United States Securities and Exchange Commission (SEC) filed a lawsuit against Binance.
BNB price eyes technical bounce
The impact of the SEC lawsuit on Binance has been substantial so far, with BNB down nearly 15% week-to-date.
On June 6, the SEC requested the U.S. District Court for the District of Columbia to freeze Binance’s U.S. assets worldwide. The order, if passed, will likely force the exchange to repatriate “fiat currency and crypto assets deposited, held, traded, and accrued by customers” at its U.S. platform.
Meanwhile, Binance’s U.S. entity halted trading for several pairs, including Bitcoin, Tether and BUSD.
Theoretically, these events risk stirring people’s BNB buying sentiment, given it has been incorporated as a utility token in the Binance ecosystem.
However, technicals paint a potentially different picture, at least in the short term. The BNB/USD pair looks prepared for a short-term bounce, given it trades around a critical support level and its daily relative strength index (RSI) has entered the “oversold” region below 30.
In this case, BNB price will likely eye its descending trendline resistance point near $280 as its next upside target in June, up around 7% from current price levels.
On the other hand, BNB’s decisive close below its multimonth ascending trendline support means that $240 should be watched as a potential downside target in June. Down around 10% from current price levels, this level appears out of the rising wedge breakdown scenario (purple).
Binance’s BNB token to $180 in 2023?
Independent market analyst TraderSZ believes BNB could drop toward the 2022 low of $180 owing to the ongoing Binance-SEC battle. Interestingly, the ongoing breakdown of a descending triangle pattern for BNB price suggests the same.
Descending triangles are typically viewed as bearish continuation patterns in a general downtrend. They typically resolve when the price breaks below their lower trendline support with the price dropping by as much as their maximum height.
As a result, BNB risks falling toward its triangle target of around $180 in 2023, down around 30% from current price levels.
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