Značka: regulation

Sen. Warren: Biden administration worked to stop crypto being 'dangerously intertwined' with banks

Referring to the events surrounding the collapse of FTX as “a handful of magic beans”, Massachusetts Senator Elizabeth Warren seemed to frame the “contagion” spreading through the crypto space as a partisan issue.Speaking at a Senate Banking Committee nomination hearing on Nov. 30, Warren addressed committee counsel Jonathan McKernan, who confirmed that FTX’s bankruptcy had largely not affected traditional banking institutions in the United States. The Massachusetts senator, an outspoken skeptic of cryptocurrencies, used some of her time to applaud the work of Federal Deposit Insurance Corporation, or FDIC, acting chair Martin Gruenberg, who attended as part of his nomination to assume the position as part of a five-year term.“Our banks stayed safe even as crypto imploded because many of President Biden’s regulators, like acting chairman Gruenberg, fought to keep crypto from becoming dangerously intertwined with our banks,” said Warren. “He did this despite the Trump administration’s and crypto boosters’ aggressive efforts to bring crypto and all its risks into traditional banking.”Gruenberg responded in the affirmative to one of Warren’s questions in which she claimed the banking system would have been “less safe” had firms like FTX received similar insurance from the FDIC:“The evidence is clear now. We had companies that were engaging in highly speculative activity, highly leveraged, and vulnerable to a loss of confidence in a run. They did not have direct exposures to the insured financial institutions, and as a result the failure of those firms was really limited to the crypto space, and ended up not impacting the insured banking system.”Senator Elizabeth Warren speaking at a Senate Banking Committee hearing on Nov. 30Warren went on to refer to crypto assets as “toxic” and unsuitable to integrate in traditional banking, claiming taxpayers could suffer the consequences. The senator was one of the lawmakers behind a Nov. 23 letter calling on the Justice Department to investigate the collapse of FTX and potentially prosecute individuals involved in wrongdoing, specifically naming former CEO Sam Bankman-Fried for his role in the controversy.Related: How stable are stablecoins in the FTX crypto market contagion?The ripple effects of a major exchange like FTX declaring bankruptcy amid a bear market are ongoing. Crypto firm BlockFi filed for Chapter 11 bankruptcy on Nov. 28, saying FTX owed certain financial obligations to the company. Global lawmakers and regulators have also announced intentions to investigate the events surrounding FTX and potentially create new regulatory frameworks, including those from the European Central Bank, U.S. state governments, and securities regulators in the Bahamas.

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Don't’ believe the hype — Bitcoin price rally to $17K reflects improving sentiment

Bitcoin (BTC) price gained 6.1% between Nov. 28 and Nov. 30 after briefly testing the $17,000 support. Favorable regulatory winds might have helped fuel the rally after the Binance exchange announced the acquisition of a regulated crypto exchange in Japan on Nov. 30.Bitcoin 12-hour price index, USD. Source: TradingViewBinance shut its operations in Japan in 2018 after being warned by the Japan Financial Services Agency for operating without a license. The acquisition of Sakura Exchange BitCoin would mark the re-entry of Binance in the Japanese market.Furthermore, Gemini exchange announced new regulatory approvals in Italy and Greece on Nov. 30. The exchange was granted registration as a virtual currency operator with Italy’s payments services regulator. Gemini was approved as an exchange and custodial wallet provider in Greece.However, not everything has been positive on the regulatory front. In separate letters from Nov. 28, Ron Wyden, chair of the United States Senate Finance Committee, requested information from six cryptocurrency exchanges. The lawmaker targeted the necessity of “consumer protections along the lines of the assurances that have long existed for customers of banks, credit unions and securities brokers.”Wyden requested the six firms provide answers by Dec. 12 on safeguards of consumer assets and market manipulation. The Senate Agriculture Committee has also scheduled a hearing to explore the collapse of FTX on Dec. 1.During these events, Bitcoin has been trying to break above $17,000 for the past eighteen days, so some selling pressure clearly remains above that level. The most likely culprit is the risk of capitulation from Bitcoin miners after they’ve seen their profits squeezed by falling spot prices and surging Bitcoin mining difficulty. Cointelegraph noted that Bitcoin miners face a significant squeeze after expecting to sell accumulated BTC at a profit.Let’s look at crypto derivatives data to understand whether investors remain risk-averse to Bitcoin.Futures markets are no longer in backwardationFixed-month futures contracts usually trade at a slight premium to regular spot markets because sellers demand more money to withhold settlement for longer. Technically known as contango, this situation is not exclusive to crypto assets.In healthy markets, futures should trade at a 4% to 8% annualized premium, which is enough to compensate for the risks plus the cost of capital.Bitcoin 2-month futures annualized premium. Source: Laevitas.chConsidering the data above, derivatives traders have improved their expectations and the Bitcoin futures premium is no longer negative — meaning the demand for bullish and bearish leverage is equally balanced. Still, the present 0% premium is far from the 4% threshold for bullishness, indicating professional traders’ reluctance to add leveraged long (bull) positions.Another notable development is the long-to-short ratio improving over the past two days. To exclude externalities that might have solely impacted the quarterly contracts, traders should analyze the top traders’ long-to-short ratio. The metric also gathers data from exchange clients’ positions on the spot and perpetual contracts, which better informs how professional traders are positioned.Exchanges’ top traders Bitcoin long-to-short ratio. Source: CoinglassEven though Bitcoin failed to break $17,000 on Nov. 30, professional traders slightly increased their leverage long positions according to the long-to-short indicator. For instance, the Binance traders’ ratio improved from 1.07 on Nov. 28 and presently stands at 1.10.Similarly, OKX displayed a modest increase in its long-to-short ratio, as the indicator moved from 0.98 to the current 1.03 in two days. The metric slightly declined to 1.02 at the Huobi exchange and this shows that traders did not become bearish after the latest resistance rejection.The absence of negative price moves is a bullish indicatorTraders should not conclude that the absence of futures premium reflects worsening market conditions because the broader data from the long-to-short ratio has shown whales and market makers adding leverage longs.The Bitcoin price movement has been surprisingly positive considering the recent negative newsflow and fear relating to the potential of a regulatory crackdown and miners’ ability to withstand a more extended crypto winter.It will likely take longer for investors to regain confidence and feel that the current contagion risks are over. As a result, bears could continue to exert pressure and sustain Bitcoin below $17,000 in the short-term.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Senate Banking Committee chair calls for coordination with Treasury on crypto

Sherrod Brown, chair of the United States Senate Banking Committee, has called on Treasury Secretary Janet Yellen to work with financial regulators and lawmakers on comprehensive crypto legislation “in the wake of FTX’s implosion.”In a Nov. 30 letter to Yellen, Brown requested the Treasury secretary coordinate with regulators to address crypto based on recommendations from the Financial Stability Oversight Committee, or FSOC. The committee chair cited crypto exchange FTX’s “alarming fraud,” liquidity crunch and bankruptcy as examples of financial risks that should not “spillover into traditional financial markets and institutions.”“I ask that you coordinate with the other financial regulators to further work on the recommendations from the FSOC Report, including the development of legislation that would create authorities for regulators to have visibility into, and otherwise supervise, the activities of the affiliates and subsidiaries of crypto asset entities,” said Brown. “As noted in the FSOC Report, single regulatory agencies currently generally do not have a comprehensive view of crypto asset entities’ activities.”He added:“As the FTX failure makes clear, given crypto asset entities’ broad use of proprietary crypto tokens combined with opaque financial arrangements and the reliance on arbitrary valuation and data sources, the financial regulatory agencies should continue to find ways to enhance entity and crypto asset disclosures, market integrity, and transparency.”In October, the FSOC released a report in accordance with U.S. President Joe Biden’s executive order on crypto, aimed at exploring potential regulatory gaps and financial stability risks of digital assets. The council recommended lawmakers pass legislation to determine which “rulemaking authority” will be responsible for regulating parts of the crypto spot market — i.e., the Securities and Exchange Commission or the Commodity Futures Trading Commission. At the time, Yellen said the report provided “a strong foundation for policymakers” but did not offer a timeline for action.Related: Senate Banking Committee Democrats warn SoFi about meeting its compliance deadlineBrown’s response was the latest from U.S. lawmakers jumping in to offer their two cents on FTX’s bankruptcy and possible regulatory and legal action. On Nov. 23, Senators Elizabeth Warren and Sheldon Whitehouse penned a letter to the Justice Department to potentially prosecute individuals involved in wrongdoing at FTX as well as investigate the exchange’s downfall with the “utmost scrutiny.” Committees in both the House of Representatives and the Senate will be conducting separate hearings in December to address the collapse of the crypto exchange.

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US lawmaker questions major crypto exchanges on consumer protection amid FTX collapse

Ron Wyden, chair for the United States Senate Finance Committee, has requested information from six crypto firms on consumer protection following FTX’s liquidity issues and bankruptcy.In separate letters dated on Nov. 28, Wyden targeted Binance, Coinbase, Bitfinex, Gemini, Kraken and KuCoin, requesting information on what protections the exchanges had in place if a failure like the one that happened at FTX occurred. The senator said that crypto users who had funds with FTX had “no such protections” like those at banks or registered brokers under the Federal Deposit Insurance Corporation or Securities Investor Protection Corporation.“As Congress considers much-needed regulations for the crypto industry, I will focus on the clear need for consumer protections along the lines of the assurances that have long existed for customers of banks, credit unions and securities brokers,” said Wyden. “If these protections had been in place before the failure of FTX, far fewer retail investors would be facing precipitous financial harm today.” Consumers who entrusted their assets to firms like @FTX_Official are discovering they have no protections when companies go bust. As Congress considers much-needed regulations for the crypto industry, I am laser-focused on ensuring real protections for consumers. https://t.co/QRdSUKe0A3— Ron Wyden (@RonWyden) November 29, 2022Wyden requested the six firms provide answers to questions including those on their subsidiary companies, safeguards of consumer assets, use of customer data, and guards against market manipulation by Dec. 12. The Senate Agriculture Committee has scheduled a hearing to explore the collapse of FTX on Dec. 1, and Senators Elizabeth Warren and Sheldon Whitehouse have called on the Justice Department to potentially prosecute individuals involved in wrongdoing at the exchange.Related: FTX reportedly used Alameda’s bank accounts to process customer fundsIn the other chamber, the House Financial Services Committee will conduct a similar investigative hearing into FTX on Dec. 13. Both chair Maxine Waters and committee ranking member Patrick McHenry have supported the congressional action, with McHenry calling the events around the failed exchange a “dumpster fire.”FTX’s bankruptcy proceedings, currently underway in the District of Delaware, revealed the exchange could be accountable to more than 1 million creditors. The next hearing in the bankruptcy case has been scheduled for Dec. 16.

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Ukraine-based blockchain firm blasts 'fake news' for crypto donation rumors amid FTX collapse

Everstake, a blockchain firm that partnered with the Ukrainian government to launch a donation website amid the country’s war with Russia, has pushed back against online rumors and conspiracy theories that the platform was used for politically motivated money laundering. Ukrainian government officials partnered with Everstake, Kuna and the now infamous crypto exchange FTX to launch Aid for Ukraine in March following the Russian military’s invasion. According to the platform, crypto users and Ukraine supporters sent roughly $60 million in crypto and fiat aimed at supporting Ukraine’s armed forces and other humanitarian causes. However, with FTX’s liquidity issues and bankruptcy, Sam Bankman-Fried seemingly falling from grace, and possible legal action against the firm and its executives, social media users have taken many liberties with the truth speculating over the final destination of the crypto donations.The conspiracy theories promulgated online falsely claim that due to its association with FTX and Bankman-Fried’s previous political donations, Aid for Ukraine’s funds ended up being funneled to the United States Democratic Party. An Everstake spokesperson branded such rumors as Russian propaganda, which was spread by North Carolina Representative Madison Cawthorn’s Twitter account, and “biased media, like Fox News and Russia Today.” According to Everstake, the false claims do not “correspond with reality” given that the majority of the funds already went towards helmets, bulletproof vests, and night vision technology for Ukraine’s military, as the country’s Deputy Prime Minister Mykhailo Fedorov reported in August. The spokesperson added that the situation with FTX “does not affect the operation of Aid For Ukraine,” as the platform only used the exchange “a few times” to convert crypto donations to fiat in March and had no funds stored on FTX at the time of its collapse.“Every time Russia is defeated on the battlefield, it starts looking for another way to cover up its military failures in the media by spreading fake news based on made-up assumptions,” said Everstake CEO Sergey Vasylchuk. “This time, they decided to use the collapse of FTX to spin yet another tale about money laundering. It is obvious that Western support of Ukraine hurts Russia as it leads to its losses on the battlefield. We know for a fact that every donation was spent for the benefit of Ukraine.”A fundraising crypto foundation @_AidForUkraine used @FTX_Official to convert crypto donations into fiat in March. Ukraine’s gov never invested any funds into FTX. The whole narrative that Ukraine allegedly invested in FTX, who donated money to Democrats is nonsense, frankly ‍♂️— Alex Bornyakov (@abornyakov) November 14, 2022One of the kernels of truth within the rumor surrounds Bankman-Fried admitting to being a “significant donor” for political candidates in the U.S. 2022 midterm elections, but with the majority of his contributions going towards Democrats. On Nov. 29, the Texas Tribune reported that Texas gubenatorial candidate Beto O’Rourke — a Democrat who lost his race against incumbent Greg Abbott — returned a $1 donation from SBF prior to election day.”I wish I could have pulled that off,” Bankman-Fried jokingly said in a Nov. 16 interview with Tiffany Fong addressing the rumors. “I was helping Ukraine launder funds for the Democratic Party? […] I wished I was part of an international conspiracy that interesting.”Speaking to Cointelegraph, Vasylchuk said that Ukrainian government officials had been forced to respond to “serious people” inquiring about the online rumors. The Everstake CEO speculated that recent shakeup at Twitter amid Elon Musk taking over as CEO had further opened the doors for conspiracy theories to run amok on the platform, like the one related to FTX and Ukraine’s crypto donations.Related: Ukraine-based blockchain firm announces ‘we’re still hiring’ amid market downturn, war“Society is blind to stop the spread of lying and propaganda,” said Vasylchuk. “We see how propaganda can influence like in Russia — [they fooled] millions of people. At the same time, I see them turn to [fooling] Americans, and social media can do the same. So, I’m really scared. I’m scared for the information and scared how it’s easy to manipulate or to force people to believe some type of this information.” He added:“This information was similar to information like ‘Ukraine developed battle mosquitoes which will bite Russians’ […] I was thinking that American society is much more mature than it is in [Europe], and the people are actually able to feel the reality, the obvious bullshit, but unfortunately not.”Vasylchuk reported that crypto donations through Aid for Ukraine had tapered off in recent months. Many crypto users are expected to send cash and tokens to various organizations as part of Giving Tuesday, or Bitcoin Tuesday, on Nov. 29.

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This simple Bitcoin options strategy allows traders to go long with limited downside risk

Bitcoin (BTC) bulls were hopeful that the Nov. 21 dip to $15,500 would mark the cycle bottom, but BTC has not been able to produce a daily close above $17,600 for the past eighteen days. Traders are clearly uncomfortable with the current price action and the confirmation of BlockFi’s demise on Nov. 28 was not helpful for any potential Bitcoin price recovery. The cryptocurrency lending platform filed for Chapter 11 bankruptcy in the United States a couple of weeks after the firm halted withdrawals.In a statement sent to Cointelegraph, Ripple’s APAC policy lead Rahul Advani said he expects the FTX exchange bankruptcy to lead to greater scrutiny on crypto regulations.” Following the event, several global regulators pledged to focus on developing greater crypto regulation.Unfortunately, there is no way to know when investors’ sentiment will improve and trigger a new bull run. Despite this, for traders who believe BTC will reach $20,000 by Dec. 30, there is a low-risk options strategy that could yield a decent return with limited risk.How pro traders use the bullish Iron Condor strategyBuying Bitcoin futures pays off during bull markets, but the issue lies in dealing with liquidations when BTC price goes down. This is why pro traders use options strategies to maximize their gains and limit their losses. The bullish skewed Iron Condor strategy can maximize profits near $21,000 by the end of 2022 and it limits losses if the expiry price is below $18,000. It is worth noting that Bitcoin traded at $16,168 when the pricing for this model happened.Bitcoin options Iron Condor skewed strategy returns. Source: Deribit Position BuilderThe call option gives its holder the right to acquire an asset at a fixed price in the future. For this privilege, the buyer pays an upfront fee known as a premium.Meanwhile, the put option allows its holder to sell an asset at a fixed price in the future, which is a downside protection strategy. On the other hand, selling this instrument (put) offers exposure to the price upside.The Iron Condor consists of selling the call and put options at the same expiry price and date. The above example has been set using the Dec. 30 contracts, but it can be adapted for other timeframes.As shown above, the target profit area is $18,350 to $24,000. To initiate the trade, the investor needs to short (sell) 2 contracts of the $20,000 call option and two contracts of the $20,000 put option. Then, the buyer must repeat the procedure for the $22,000 options, using the same expiry month.Buying 5.8 contracts of the $18,000 put option to protect from an eventual downside is also required. Lastly, one needs to purchase 5.3 contracts of the $24,000 call option to limit losses above the level.Related: Kraken settles with US Treasury’s OFAC for violating US sanctionsThis strategy yields a net gain if Bitcoin trades between $18,350 and $24,000 on Dec. 30. Net profits peak at 0.485 BTC ($7,860 at current prices) between $20,000 and $22,000, but they remain above 0.10 BTC ($1,620 at current prices) if Bitcoin trades in the $18,350 and $23,600 range. The investment required to open this Iron Condor strategy is the maximum loss, hence 0.103 BTC or $1,670, which will happen if Bitcoin trades below $18,000 on Dec 30. The benefit of this trade is that a wide target area is covered while providing a 475% return versus the potential loss.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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ECB president reiterates calls for 'MiCA II' in response to FTX collapse

Christine Lagarde, president of the European Central Bank, or ECB, has once again called regulation and supervision of crypto an “absolute necessity” for the EU in the wake of the collapse of crypto exchange FTX.At a Nov. 28 hearing of the Committee on Economic and Monetary Affairs of the European Parliament, Lagarde cited Facebook’s Libra as an example of the ECB’s involvement which was “helpful to stop some of the players” from engaging with crypto firms. However, she said the situation with FTX — involved with crypto assets as opposed to stablecoins — was more about the “stability and reliability” of the exchange and the ECB needed to step up as a global regulator to address people’s increasing interest in digital assets. “At least Europe [on the road to crypto regulation] is ahead of the pack,” said the ECB president. “But as I said previously, it’s one step in the right direction. This is not it — there will have to be a MiCA II, which embraces broader what it aims to regulate and to supervise, and that is very much needed.” Introductory statement by President Christine @Lagarde at the hearing of the Committee on Economic and Monetary Affairs of the European Parliament https://t.co/GKnkOJHh9p— European Central Bank (@ecb) November 28, 2022The Markets in Crypto Assets bill, or MiCA, is awaiting final approval following legal and linguistic checks by EU lawmakers. The European Parliament economics committee accepted the MiCA framework in October following trialogue negotiations between the EU Council, the European Commission and the European Parliament. Many expect the policy to go into effect starting in 2024. Lagarde referred to MiCA II — presumably additional legislation building on the work lawmakers did for the original bill — in June. At the time, the ECB president said the framework “should regulate the activities of crypto-asset staking and lending, which are definitely increasing.”Related: European Central Bank addresses guidance on licensing of digital assetsEuropean Parliament economics committee member Stefan Berger, one of the proponents of the MiCA framework, also cited the downfall of FTX in advocating for crypto regulation on Nov. 9:“The FTX case makes it clear what dangers a completely unregulated crypto market and crypto exchanges without licenses entail. We still have a large number of crypto asset service providers whose concept is not understandable. MiCA addresses exactly this problem. With a global MiCA, the FTX crash would not have happened.”The ECB is currently conducting the two-year investigative phase of its digital euro project, exploring the use of online payments validated by third parties. Some officials within the EU expect to see legislation related to a digital euro in 2023.

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US House committee sets Dec. 13 date for FTX hearing

The United States House Financial Services Committee has announced it will be holding a hearing to investigate the events around the collapse of crypto exchange FTX.In a Nov. 28 announcement, House Financial Services Committee chair Maxine Waters said lawmakers had scheduled a hearing aimed at exploring the collapse of FTX for Dec. 13. The hearing, expected to be “Part I” in perhaps a series of hearings around the impact of a major crypto exchange declaring bankruptcy, was first announced on Nov. 16 but not scheduled. Following the fall of FTX, the urgent need for legislation has never been greater. @FSCDems anticipated this need & have already been working for several months under the leadership of Chairwoman Waters, w/ RM McHenry, to craft bipartisan legislation.: https://t.co/RyttaaSqX7— U.S. House Committee on Financial Services (@FSCDems) November 16, 2022The House committee said in its previous announcement that it expected to hear from individuals and companies involved in the events that led to FTX filing for bankruptcy under Chapter 11 in the District of Delaware, including former CEO Sam Bankman-Fried, Alameda Research, and Binance. Though Bankman-Fried was reportedly still based in the Bahamas at the time of publication, New York Times journalist Andrew Sorkin said on Nov. 24 the former CEO intended to give an interview in New York City on Nov. 30 during a conference.The U.S. Senate Agriculture Committee has also scheduled a hearing on “Lessons Learned from the FTX Collapse” for Dec. 1, in which Commodity Futures Trading Commission chair Rostin Behnam will appear as a witness. It’s unclear if Bankman-Fried will also speak to the committee should he remain in the country following his New York itinerary.Related: BlockFi files for bankruptcy, cites FTX collapse for its troublesFTX has been a target for lawmakers and regulators around the world following the firm filing for bankruptcy on Nov. 11. The Australian government reportedly said its Treasury department planned on implementing regulations aimed at improving investor protection in 2023, while the Monetary Authority of Singapore has faced scrutiny for not warning investors about FTX.

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Kraken settles with US Treasury's OFAC for violating US sanctions

The United States Treasury Department’s Office of Foreign Assets Control, or OFAC, has announced a settlement with crypto exchange Kraken for “apparent violations of sanctions against Iran.”In a Nov. 28 announcement, OFAC said Kraken had agreed to pay more than $362,000 as part of a deal “to settle its potential civil liability” related to violating the United States’ sanctions against Iran. The U.S.-based crypto exchange will also be investing $100,000 into sanctions compliance controls as part of the agreement with Treasury. “Due to Kraken’s failure to timely implement appropriate geolocation tools, including an automated internet protocol (IP) address blocking system, Kraken exported services to users who appeared to be in Iran when they engaged in virtual currency transactions on Kraken’s platform,” said OFAC. In a statement to Cointelegraph, Kraken chief legal officer Marco Santori said the exchange had “voluntarily self-reported and swiftly corrected” its actions to OFAC:”Even before entering into this resolution, Kraken had taken a series of steps to bolster our compliance measures. This includes further strengthening control systems, expanding our compliance team and enhancing training and accountability.”The United States has imposed sanctions on Iran that prohibit the export of goods or services to businesses and individuals in the country since 1979. However, Kraken had allegedly been violating these controls since 2019 by allowing a reported more than 1,500 individuals with residences in Iran to have accounts at Kraken — giving them the means to buy and sell crypto. According to a July report from The New York Times, then CEO Jesse Powell — who in September announced he would step down — suggested he would consider breaking the law, through not specifically mentioning sanctions, if the benefits to Kraken outweighed any potential financial or legal penalties. The crypto exchange also reportedly allowed access to crypto for individuals in Syria and Cuba, countries sanctioned by the United States.Related: Crypto exchange Kraken freezes accounts related to FTX and AlamedaIn September 2021, the U.S. Commodity Futures Trading Commission ordered Kraken to pay more than $1 million in civil monetary penalties for allegedly violating the Commodity Exchange Act by offering “margined retail commodity transactions in digital assets” to ineligible U.S. customers from June 2020 to July 2021. Kraken’s incoming CEO, Dave Ripley, said in September he did not see a reason to register with the Securities and Exchange Commission as “there are not any tokens out there that are securities that we’re interested in listing.”

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Block Earner CEO calls for licensing clarity after being sued for crypto products

The CEO of fintech firm Block Earner has lashed out over the “lack of clarity” in Australia’s financial licensing regime after his company was sued by the country’s financial services regulator for providing unlicensed crypto-based investment products.The Australian Securities and Investment Commission (ASIC) announced on Nov. 23 local time that it started civil legal proceedings against the company because it offered three crypto-linked fixed-yield earning products without an Australian Financial Services (AFS) license.ASIC stated that the products should have been licensed as they were “managed investment schemes” where investors contribute money that is pooled together for an interest in the scheme.The products, named “Crypto Earner”, “USD Earner” and “Gold Earner,” offered yields through users depositing Australian dollars that would be converted to Bitcoin (BTC), Ether (ETH), USD Coin (USDC) or PAX Gold (PAXG) depending on the product according to Block Earner’s website.The crypto-assets are then lent to borrowers on Decentralized Finance (DeFi) protocols Aave (AAVE) and Compound Finance (COMP) to generate yield for the product.ASIC Deputy Chair Sarah Court aired her concern that Block Earner offered the products without “appropriate registration” or an AFS license that she claimed left “consumers without important protections,” adding:“Simply because a product hinges on a crypto-asset, does not mean it falls outside financial services law.”In an emailed statement to Cointelegraph Block Earner CEO and co-founder, Charlie Karaboga, said although the firm “[understands] the backdrop” it was a “disappointing outcome.”He said it welcomes regulations, claiming the firm “spent considerable resources building regulatory infrastructure” to be able to offer services “under existing guidelines provided by ASIC.”Related: FTX Australia’s license suspended as 30K Aussies left in the lurchKaraboga took aim at the unclear regulatory environment for crypto in the country and said the “lack of clarity […] creates friction between regulators and innovators,” adding:“In an ideal world, we would build these products in a regulatory sandbox with more clarity around licensing regimes. In the future, we look forward to working with ASIC and other regulators in this space.”According to Karaboga, Block Earner had filed for a credit license and advised ASIC it would apply for an AFS license for its upcoming products as “the licensing requirements are clear.”ASIC has previously given a warning to crypto-asset providers in the country after it took action against the creators of the Qoin token.It said its “key priority” is targeting “unlicensed conduct and misleading promotion of crypto-asset financial products” after it alleged the Qoin token creators were “misleading” its users.

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US lawmakers ask DOJ hold FTX execs accountable 'to the fullest extent of the law'

Two Democratic members of the United States Senate have called on the Justice Department to investigate the collapse of FTX and potentially prosecute individuals involved in wrongdoing.In a Nov. 23 letter to U.S. Attorney General Merrick Garland and Assistant Attorney General Kenneth Polite, Senators Elizabeth Warren and Sheldon Whitehouse requested the Justice Department launch an investigation into crypto exchange FTX’s downfall with the “utmost scrutiny.” The lawmakers cited the impact the collapse of a major firm in the crypto space had had on related companies — lending companies including Genesis and BlockFi halting trading — and funds which FTX retail investors may not recover.The senators specifically called out former FTX CEO Sam Bankman-Fried for his role in the controversy, including his deleted tweet that funds were “fine” at the exchange and attempts to downplay concerns about the firm’s liquidity issues. Warren and Whitehouse echoed characterizations of FTX’s management from the firm’s bankruptcy proceedings, which referred to Bankman-Fried and others as “inexperienced and unsophisticated.”“The fall of FTX was not simply a result of sloppy business and management practices, but rather appears to have been caused by intentional and fraudulent tactics employed by Mr. Bankman-Fried and other FTX executives to enrich themselves,” said the letter. “We urge the Department to center these ‘flesh-and-blood victims’ as it investigates, and, if it deems necessary, prosecute the individuals responsible for their harm.”Related: US Sen. Elizabeth Warren says crypto will ruin economy — Community respondsIt’s unclear if the Justice Department intends to launch an investigation into FTX, but global financial regulators and lawmakers have taken action following the exchange’s collapse. In the Bahamas — where Bankman-Fried and many FTX executives were based at the time of publication — financial investigators and the Bahamas securities regulators were reportedly investigating possible criminal misconduct. Turkey’s Financial Crimes Investigation Agency also announced on Nov. 14 it had launched an investigation into individuals and entities associated with FTX.

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Approving a spot crypto ETF is 'all about political power' — Perianne Boring

Perianne Boring, founder and CEO of blockchain advocacy group Chamber of Digital Commerce, placed the lack of approval of a Bitcoin exchange-traded fund in the United States squarely on Securities and Exchange Commission chair Gary Gensler, suggesting politics played more of a role than economics.Speaking to Cointelegraph at the Texas Blockchain Summit in Austin on Nov. 18, Boring said the events surrounding FTX’s collapse may have “emboldened the regulation by enforcement approach” from the U.S. Securities and Exchange Commission and Treasury, with Republican lawmakers likely to focus on oversight using their House majority in the next Congress. According to the Chamber of Digital Commerce CEO, passing any kind of legislation — including bills on crypto, blockchain, and stablecoins — will be “incredibly difficult” in a divided government, making the possibility of executive orders and regulation by enforcement more likely.“In the House side, we’re going to see increased oversight efforts, but I don’t think crypto is actually going to be the priority,” said Boring. “Oversight hearings […] they’ll have subpoena authority, they have the authority to administer oaths, so they could bring in different people within the agencies to scrutinize their approach to digital assets.”The Chamber CEO suggested the seeming lack of urgency from Congress could delay the passage of crypto-related legislation, while a Bitcoin (BTC) exchange-traded fund, or ETF, was in the SEC’s hands:“It’s been a decade since the first spot Bitcoin ETF was put forward […] We still don’t have one, but we have a futures Bitcoin ETF. So, how does this make sense? It’s all about political power, so it really comes down to chairman Gensler.”Did you know the industry has been trying to bring a spot #bitcoin ETF to market since 2013? Almost 10 years in the making and we still don’t have one. Begs the question: why? Our report breaks this down and more https://t.co/QdnstH1rpa— Perianne (@PerianneDC) October 7, 2022Related: Chamber of Digital Commerce says ‘the time has come’ for the SEC to approve a Bitcoin ETFBoring clarified that Gensler prioritized oversight of crypto exchanges prior to the SEC approving any spot crypto investment vehicle. Under the SEC chair, the financial regulator has turned down or delayed decisions on numerous applications for spot crypto ETFs, including from Grayscale, Bitwise, VanEck, and ARK 21Shares. Grayscale filed suit against the government agency in June following its latest ETF rejection.

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