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After Targeting BlockFi, State Regulators Now Set Their Eyes On Celsius

Earlier this year, crypto lending platform BlockFi started facing the heat from state regulators in New Jersey, Texas, and Alabama. Other states have joined the fold since then, as well. Celsius this week is now facing similar cease and desist demands from all three of the same states that BlockFi first faced. Let’s take a look at what we know thus far, and what it could potentially mean for DeFi moving forward. Regulators Reach: What Celsius Is Facing It’s becoming quickly apparent that Celsius is joining the fight in facing regulators in the same vein that BlockFi has. On Friday, Texas officials filed a cease and desist order against Celsius. The filing will require Celsius to show the state why it shouldn’t be ordered to stop offering it’s products to state residents. Celsius, like BlockFi, faces accusations that it is offering residents unregistered securities. The Texas hearing is scheduled for February 24. Both Alabama and New Jersey seemingly issued similar actions on the same day. New Jersey ordered the platform to stop offering select products by November 1. In a similar action, Alabama demanded that the platform show why it shouldn’t be halted from offering products within 28 days. A Celsius representative told Bloomberg that the firm is “disappointed these actions have been filed and wholeheartedly disagree with the allegations being made that Celsius has not complied with the law,” adding that the platform would not be making any immediate changes in services for clients. Celsius’ native platform token, CEL, offers more aggressive yield rates – but is not currently offered in the U.S. | Source: CEL-USD on Related Reading | Analyst Puts New Bitcoin ATH For October As Stablecoins Start Pumping Into BTC DeFi’s Uphill Battle The news comes just a couple short weeks after Coinbase released a blog post regarding an impending lawsuit from the SEC, assuming that Coinbase moved forward with it’s anticipated Lend product. Coinbase has since applied for a National Futures Association license. It remains to be seen what happens with the Lend product and SEC. Meanwhile, Celsius has quietly become a behemoth in DeFi. The platform reportedly holds over $24B in “community assets,” making it one of the biggest – if not THE biggest – crypto lender and interest-account provider. What it means for Celsius customers in the respective states taking action remains to be seen, and BlockFi could end up being a case study moving forward. However, what we’ve seen from BlockFi and regulators thus far hasn’t been much to establish a precedent. Thus far, throughout a handful of states, only new account registration has been restricted. Customers on BlockFi prior to the regulatory action have had no impact. To date, consumers have largely been left in the dark on what sort of impacts could be seen here moving forward. The optimist in this situation might say that these actions could lead to regulation that establishes good practices and frameworks for crypto lending platforms. However, the pessimistic perspective would be led to believe that more states could join the ranks and that DeFi could face increased pressure from regulators given the impact on traditional banking institutions. Either way, it seems hard to suggest that through these individual state regulators have consumer protection at the forefront. Where it leads from here remains to be seen. Related Reading | While Broader Crypto Market Holds Its Collective Breath, Whales Are Loading Up On Bitcoin Featured image from Pexels, Charts from
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Senator Elizabeth Warren Takes a Jibe at Crypto Ecosystem’s Unpredictable Gas Fees

Senator Elizabeth Warren (D-MA), known for her skepticism of the digital currency ecosystem has taken new jibes at the cryptocurrency industry, citing a number of inconsistencies that make the nascent digital trading world unhealthy for the average investor. Speaking in a Tuesday hearing of the Senate Committee on Banking, Housing, and Urban Affairs with Securities

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Cathie Wood’s Ark Invest to Buy Canadian Bitcoin ETFs

Cathie Wood’s Ark Invest has filed to change the allowance in its prospectus to permit one of its funds, the ARK Next Generation Internet ETF (ticker ARKW), to gain exposure to digital currencies through “exchange-traded funds domiciled in Canada.” This move marks a whole new opportunity being sought by Ark Invest to bolster its cryptocurrency

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Was Coinbase CEO Brian Armstrong Entitled to a Meeting With the SEC?

Ephrat Livni, a DealBook business and policy reporter at the New York Times, discusses Coinbase’s fight with the SEC over its Lend product and El Salvador’s adoption of Bitcoin as[…]

The post Was Coinbase CEO Brian Armstrong Entitled to a Meeting With the SEC? appeared first on Unchained Podcast.

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As SEC Lawsuit Looms, Coinbase CEO Describes The Agency’s Behavior As “Sketchy”

The regulatory battle with DeFi is heating up. The SEC now seemingly has it’s eyes set on arguably the largest cryptocurrency exchange in the United States. The news comes after five U.S. states sent individual notices to DeFi platform BlockFi in recent weeks. This week, reports have surfaced that Coinbase is facing regulatory scrutiny over it’s upcoming, yield-generating Coinbase Lend product. Coinbase CEO Brian Armstrong had quite a bit to say about it, describing the SEC behavior as “sketchy”. Coinbase Expresses Frustration Coinbase issued a strongly-worded blog post that broke the word over the agency’s threats, titled “The SEC has told us it wants to sue us over Lend. We have no idea why.” Posted by Coinbase Chief Legal Officer Paul Grewal, the post explains that the government agency issued a Wells notice last week regarding the company’s upcoming Lend product – despite what Coinbase describes as “months of effort by Coinbase to engage productively.” A Wells notice is a regulatory letter that notifies preparation of enforcement action. The Coinbase Lend product intends to allow consumers to earn 4% APY on stablecoin USDC as a starting point for select interest-earning assets. The blog states that rather than preemptively launching the platform, the company took a proactive approach in advising the SEC regarding it’s intent first. The blog post continues on to state that despite these efforts, along with compliance with reasonable SEC requests, the agency intends to sue should Coinbase launch the Lend platform. The post closes stating that for the time being, the Lend platform will not launch until at least October, reiterating that “dialogue is at the heart of good regulation.” Unfortunately, it seems to be a one-way conversation thus far. The SEC is seemingly incentivizing an “ask for forgiveness, rather than permission” policy. As crypto’s total market cap continues to grow, regulatory question marks becoming increasingly apparent. | Source: CRYPTOCAP – TOTAL on Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course It Doesn’t Stop There Coinbase CEO Brian Armstrong took to Twitter to express some frustration as well. In a tweet thread spanning over twenty tweets long, Armstrong leads off with “some really sketchy behavior coming out of the SEC recently…” Armstrong goes on to recap the blog post in brief, with the sticking point seeming to be that the SEC is describing the lending feature as a security, without providing any sort of elaboration or specification as to how or why that would be the case. These circumstances could set a very interesting precedent moving forward on the leeway the SEC is given on how, what, and why the SEC determines what is and isn’t a security. To date, Coinbase’s efforts to be transparent and communicative with the agency don’t seem to be reaping rewards. We’ll see if that continues to be the case. As Armstrong aptly states to close out his tweet thread, “hopefully the SEC steps up to create the clarity this industry deserves, without harming consumers and companies in the process.” Related Reading | Panama To Recognize Bitcoin As Payment Alternative, Issues New Regulations Featured image from Pexels, Charts from
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Crypto Needs Regulation If It’s Going To Survive, Says SEC Boss

The Chairman of the Securities and Exchange Commission (SEC) has called for the crypto space to work with regulators. The Financial Times reported that Chairman Gary Gensler had asked Congress to empower his agency so they will be better able to govern the market. It is still not clear yet which agency has oversight of the cryptocurrency industry, as regulators mainly classify bitcoin as more of a commodity than it is a security. Related Reading | Deloitte Survey Shows 76% Of Finance Execs Think Physical Money Is Nearing Its End It is estimated that less than 10% of the world currently knows about crypto. But nevertheless, it is still a large enough number that has prompted regulators to start looking into ways of properly regulating these digital assets. It is no longer just retail investors who are trying to make some quick profit on highly volatile markets. Institutional investors have also thrown their hat in the ring, like in the case of Michael Saylor’s MicroStrategy. Finance Is About Trust Gensler believes that if the market is to grow, then it needs to embrace regulation. The SEC chairman explained that regulation would provide trust in the market, which is important if the market does not want to become irrelevant over time. “Finance is about trust, ultimately,” Gensler said. Gensler’s focus is mostly on trading platforms, given that this is where the majority (~95%) of activities in the crypto market are carried out. Related Reading | Here’s How Much Your $1,200 Stimulus Check Would Be Worth In Various Cryptocurrencies In 2021 Gensler had earlier suggested that crypto platforms register with the Securities and Exchange Commission (SEC). This was met with disdain from investors who do not want governmental control over cryptocurrencies. But Chairman Gray Gensler has again urged these platforms to register with regulations. “Talk to us, come in,” said Gensler. “There are a lot of platforms that are in operation today that would do better engaging and instead there is a bit of begging for forgiveness, rather than asking for permission.” Related Reading | Only In Crypto: A Croissant Breaks Down How GameStop & NFTs Will Boost Ethereum There have been crackdowns going on in the crypto space on exchanges. Most prominent of these have been the crackdowns on Binance by various countries. BlockFi locked in a regulatory showdown down with three states, and most recently, Uniswap being investigated by the SEC. Crypto Market Will Benefit From Regulation Regulation may not be an easy topic in crypto, but it does not make it any less important. Exchanges already realize that if they wish to grow in the long-term, they are going to have to work with regulators. To this end, Sam Bankman-Fried, CEO and co-founder of FTX exchange, said in an interview that he was taking regulation “extremely seriously.” The CEO believes that working with regulators will ensure the survival of the industry. Adding in that exchanges working with regulators will ensure that the rules being created do not harm the market, “killing the use for it in the first place.” Related Reading |  New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course It is still not clear where most crypto products fall when it comes to regulatory practices. But Gensler believes decentralized finance platforms fall under the purview of the SEC. “It doesn’t matter whether it’s a stock token, a stable-value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities,” Gensler said to the Aspen Security Forum. “These products are subject to the securities laws and must work within our securities regime.” Crypto total market cap finds comfortable position above $2 trillion | Source: Crypto Total Market Cap on Featured image from Reuters, chart from
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Breaking: US SEC is Reportedly Investigating Uniswap Labs

The US Securities and Exchange Commission (SEC) is reportedly investigating Uniswap Labs, the company behind the popular Decentralized Exchange (DEX) protocol Uniswap. As per a report in the Wall Street Journal, people familiar with the matter revealed that the SEC is looking into user history and how the platform is being used by investors. The

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Breaking: SEC Signs $625K Contract With Analytic Firm to Investigate Defi Market

The US Securities and Exchange Commission (SEC) has taken a major step towards regulating the Defi market, just days after SEC chair Gary Gensler said the decentralized finance markets are something they are looking into. SEC has on-boarded blockchain analytic firm AnChain.AI to help the regulatory body regulated the Defi market. The firm revealed that

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Crypto Friendly CFTC Commission Brian Quintenz Set to Leave the Agency

Brian Quintenz, one of the Republicans currently serving as a Commissioner with the Commodity Futures Trading Commission (CFTC) has unveiled his plans to leave the agency by the end of the month. According to a report by the Wall Street Journal, Quintenz said in an interview that he will leave the agency by Aug 31,

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Coinbase Gathers $4B Ahead of Possible Regulatory Tightening

Coinbase Global Inc. is preparing vigorously to face regulatory scrutiny from the Gary Gensler lead SEC. The publicly-traded company revealed Wednesday that it has managed to amass $4 billion in cash reserves as part of an effort to keep things running smoothly and streamline its services for consumers around the world. A recent surge in

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