Značka: sec

SEC rejects MicroStrategy's Bitcoin accounting practices: report

Business intelligence firm MicroStrategy reportedly acted contrary to the Securities and Exchange Commission’s accounting practices for its crypto purchases.According to a Bloomberg report, a comment letter from the SEC released Thursday showed the regulatory body objected to MicroStrategy reporting information related to its Bitcoin (BTC) purchases based on non-GAAP, or Generally Accepted Accounting Principles. The business intelligence firm has been reporting it used these methods of calculating figures for its BTC buys excluding the “impact of share-based compensation expense and impairment losses and gains on sale from intangible assets” — essentially, negating some of the effects of the volatility of the crypto market.GAAP rules are seemingly not designed for reporting the value of cryptocurrencies. However, MicroStrategy has purchased 124,391 BTC as of Dec. 30, representing more than $4.7 billion in value across several buys totaling roughly $3.8 billion since August 2020. The company reported it used non-GAAP practices to exclude “cumulative impairment losses” from the cost and based the value of its holdings on the market price of 1 BTC at 4:00 EST on the last day of each period.MicroStrategy said following a BTC purchase in July 2021 that it “believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis.” The SEC reportedly said MicroStrategy should “remove this adjustment in future filings.”Related: MicroStrategy CEO won’t sell $5B BTC stash despite crypto winterThe report came as shares of MicroStrategy fell more than 17.8% in the last 24 hours to reach a six-month low price of $375. The drop may have been affected by BTC also falling to a six-month low as the crypto asset dipped under $38,000.

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Bulls aim to turn the tide in Friday’s $580M options expiry after BTC tops $43K

Bitcoin (BTC) investors seem uncomfortable with adding positions after the most recent 40% correction from the $69,000 all-time high made on Nov. 10. In addition to the prolonged downtrend, remarks from the United States Federal Reserve on Dec. 15 about rising interest rates are also weighing on risk-on assets.The Fed signaled that it could raise its benchmark rate three times this year and there are plans to increase the pace of its asset purchasing taper. Consequently, traders are worried that these plans will negatively impact traditional and crypto markets because liquidity will no longer be “easily” available.Bitcoin price at Coinbase, USD (right) vs. China stock market MSCI index (left)Cryptoasset regulation in the U.S. has been in the spotlight and recently a member of the Securities and Exchange Commission’s Investor Advisory Committee called for the agency to open public comments regarding digital asset regulation. On Jan. 18, associate law professor J.W. Verret addressed the petition to SEC Secretary Vanessa Countryman and according to Verret, the current path the SEC is taking seems not to recognize that digital assets do not fit within the regulatory framework designed for equity investments. The professor also questioned the requirements the SEC would consider in approving a Bitcoin spot exchange-traded fund.$590 million in options expire on Jan. 21Even though Bitcoin is said to be correlated to traditional markets, BTC derivatives traders were not expecting sub-$44,000 prices, according to the Jan. 21 options expiry. Friday’s $590 million open interest will allow bears to score up to $82 million if BTC trades below $41,000 during the expiry.Bitcoin options aggregate open interest for Jan. 21. Source: Coinglass.comAt first sight, the $380 million call (buy) options vastly surpass the $210 million put (sell) instruments, but the 1.81 call-to-put ratio is deceptive because the recent price drop will likely wipe out most of the bullish bets.There is no value in the right to buy Bitcoin at $44,000 if it is trading below that price. Therefore, if Bitcoin remains below $44,000 at 8:00 am UTC on Jan. 21, only $64 million of those call (buy) options will be available at the expiry. Bears are comfortable with Bitcoin price below $42,000Here are the four most likely scenarios for Jan. 21’s $590 million options expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the active quantity of call (buy) and put (sell) contracts varies:Between $40,000 and $41,000: 30 calls vs. 3,320 puts. The net result is $132 million favoring the put (bear) options.Between $41,000 and $42,000: 170 calls vs. 2,180 puts. The net result is $82 million favoring the put (bear) instruments.Between $42,000 and $44,000: 1,480 calls vs. 1,130 puts. The net result is balanced between call and put options.Between $44,000 and $45,000: 2,980 calls vs. 630 puts. The net result favors call (bull) instruments by $103 million.This crude estimate considers put options being used in bearish bets and call options exclusively in neutral-to-bullish trades. However, this oversimplification disregards more complex investment strategies.Bulls need $44,000 to bag a $103 million profitRegulatory uncertainty and Federal Reserve monetary policies might be reasons for the recent market weakness, but a mere 5% price pump from the current $42,000 level is enough for Bitcoin bulls to profit $103 million on Jan. 21’s expiry.However, if the current short-term negative sentiment prevails, bears could easily pressure the price below $41,000 and pocket $132 million gains.Currently, options markets data slightly favor the put (sell) options, but the outcome is yet to be seen.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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SEC rejects Skybridge's application for spot Bitcoin ETF

The United States Securities and Exchange Commission, or SEC, has officially disapproved the application for First Trust SkyBridge’s spot Bitcoin exchange-traded fund after several deferments.In a Thursday filing, the SEC rejected a proposed rule change from the New York Stock Exchange, or NYSE, Arca to list and trade shares of the First Trust SkyBridge Bitcoin ETF Trust. The SEC said any rule change in favor of approving the ETF would not be “‘designed to prevent fraudulent and manipulative acts and practices” nor “protect investors and the public interest.”The decision follows SkyBridge first applying to list a Bitcoin ETF on the NYSE in March 2021. The SEC twice designated a longer period to approve or disapprove the proposed rule change for the ETF in July and November before reaching its decision on Thursday.In its rejection, the SEC said that the NYSE had not met the requirements of listing a financial product under its rules of practice as well as those of the Exchange Act. Under these restrictions, exchanges seeking to list a BTC ETF need to have “a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference Bitcoin assets.” The NYSE Arca used a $10 million market order example to claim that buying and selling large amounts of Bitcoin (BTC) would have an “insignificant market impact.” The exchange also hinted at Tesla’s $1.5 billion BTC purchase in February as an example of gaining exposure to crypto through the company’s shares, arguing for the need for a different investment vehicle with exposure to BTC as opposed to “imperfect Bitcoin proxies,” which provide only “partial Bitcoin exposure paired with additional risks.”The commission rejected these claims, citing similar reasons for disapproving Bitcoin spot ETFs from asset manager VanEck in November and WisdomTree in December. To date, the SEC has not approved any ETF with direct exposure to crypto but has given the greenlight to offerings linked to BTC futures, including ones from ProShares and Valkyrie. Related: ETFs listed — What’s next for Bitcoin?A separate decision for a Bitcoin ETF application from the New York Digital Investment Group, or NYDIG, is expected by March 16. The application is still under review after being delayed on Saturday.

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The SEC has issued $2.4B in crypto-related penalties since 2013

The Securities and Exchange Commission (SEC) has issued a total of approximately $2.35 billion in penalties against participants in the digital asset marketplace since 2013 according to a Jan 19 report by Cornerstone Research.The report, SEC Cryptocurrency Enforcement: 2021 Update, found that the SEC brought a total of 97 enforcement actions worth $2.35 billion between 2013 and the end of 2021. Fifty eight of the total of 97 were actions litigations and the remaining 39 were administrative proceedings. Of the total $2.35 billion raised by the litigations, $1.71 billion was charged in litigation and $640 million in administrative proceedings. Allegations in SEC Cryptocurrency Litigations. Source: Cornerstone Research.The majority of those charged were “firm respondents only,” racking up $1.86 billion of the total $2.35 billion. Meanwhile, individual respondents were charged the remaining $490 million. Although the SEC doled out the first monetary penalty against a crypto participant in July 2013, the report points out that SEC-initiated litigation in the crypto space didn’t begin to pick up until 2017. Between 2013 and 2017, there was only a total of six SEC-initiated crypto cases. The agency launched 20 of the total 97 actions in 2021 – 14 litigation actions in U.S. federal courts and six administrative proceedings. Of the 20 total enforcement actions, 70% were related to initial coin offerings (ICOs). The report states:“Of the 20 enforcement actions brought in 2021, 65% alleged fraud, 80% alleged an unregistered securities offering violation, and 55% alleged both.”The report’s author Simona Mola wrote in a statement that the SEC’s recent crackdown on crypto may be linked to the appointment of SEC chair Gary Gensler in April 2021, noting that SEC enforcement had been “notably high” between the end of May and mid-September. “The SEC brought some first-of-a-kind actions against a crypto lending platform, an unregistered digital asset exchange, and a decentralized finance (DeFi) lender. It also imposed one of the largest monetary penalties we have seen in an ICO-related enforcement action after Telegram,” she wrote.Related: Gensler confirms SEC won’t ban crypto… but Congress couldCornerstone Research vice president Abe Chernin said that we can expect these tough measures to continue into the new year. “Given the SEC’s continued focus on this space, in 2022 we may see further scrutiny of certain market participants such as DeFi platforms.”In the last week of Dec 2021, Gensler added a new staff member Corey Frayer to help advise the agency’s oversight of cryptocurrencies. This came in the wake of news that Elad Roisman would be leaving his position as SEC board member.

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SEC Advisory Committee member calls agency to open for public comment on crypto regulation

Associate law professor and member of the Securities and Exchange Commission’s Investor Advisory Committee J.W. Verret is calling for the government agency to open for public comment in regards to digital asset regulation.In a petition addressed to SEC Secretary Vanessa Countryman, Verret said opening the floor to comments on digital assets could function as a Genesis Block for the SEC to reform its regulations on digital assets. Verret said he was a holder of Bitcoin (BTC), Ether (ETH), and “a number of layer 1 and layer 2 tokens readily available on top tier exchanges,” and was concerned how the SEC could potentially crack down on tokens it currently does not consider securities.“Under the SEC’s ‘strategically ambiguous’ interpretation of the Howey test regarding classification of investment contracts, I cannot be certain that the SEC will not in the future target one of my token holdings, under the guise of the Commission’s investor protection mission, in a manner that would ultimately cause me significant losses as a property owner,” said Verret. “This open call for comment is the only way to appropriately crowd source this issue and appropriately develop a digital asset regulation Genesis Block.”I filed a reg petition with the SEC to open a call for public comment re: digital asset regulation. There are nuances that SEC ignores in their speeches and “Howey” threats. Let’s crowd source this and start a genesis block for 21st century reg. https://t.co/lZQXPeqq93— Prof. J.W. Verret, JD, CPA/CFF, CVA, CFE (@JWVerret) January 18, 2022Since the 1940s, the SEC has used the Howey Test to determine whether certain assets qualify as “investment contracts” and are considered securities. Many experts consider the SEC’s 2017 DAO Report, in which it said that digital assets could indeed qualify, as one of the most significant regulatory moments for cryptocurrencies in the United States.Citing his experience as a law professor, Verret implied that the SEC’s application of the Howey Test on digital assets was inconsistent from the language used in the Supreme Court decision, potentially leading to cases that could result in the highest court overturning the 1946 case: “The SEC’s present course appears to be one designed to strategically bring cases using the Howey test as a weapon against tokens (and token trading services and technologies) which cannot reasonably be registered as securities (or securities exchanges) under the regulations promulgated pursuant to the ‘33 and ‘34 Acts, even if they wanted to and were required to do so (despite neither necessarily being true). I believe this is ultimately a losing strategy for the SEC as an institution.”According to Verret, the current regulatory path the SEC is taking seems not to recognize that “digital assets, by their very design, do not fit within the classic framework of regulations designed for equity investments in firms led by boards of directors.” The law professor also criticized SEC chair Gary Gensler’s approach of asking crypto projects to “come in and talk to us,” saying many could be concerned that “engaging with the SEC may make their project the next enforcement target of the SEC.”In his call for the SEC to open for public comment “to establish a core Digital Asset Regulation Genesis Block,” Verret suggested having the agency address investor protections around crypto, where blockchain-based tokens in decentralized projects could fall within current securities regulations, how federal securities laws might take into account “unique aspects of token offerings,” and Commissioner Hester Peirce’s proposal for a three-year safe harbor for certain crypto projects. In addition, he called for a question on what requirements the SEC will consider in approving a Bitcoin spot exchange-traded fund. Related: US lawmaker proposes safe harbor for digital tokens in new billWhile the agency has given the green light to BTC futures-linked ETFs, it has repeatedly rejected applications from companies seeking ETFs with direct exposure to crypto. ProShares launched the first BTC futures-linked ETF in the United States on the New York Stock Exchange in October, with a similar crypto investment product from Valkyrie later launching on the Nasdaq.“All five SEC Commissioners have a unique opportunity to stake this development with their own priorities via the design of the call for comment,” said Verret. “This Digital Asset Reg Genesis Block can commence an interactive process that can make securities regulation more flexible, more robust, and ultimately better protect investors.”

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A third of Americans to buy Bitcoin by end of 2022, says Ric Edelman

Bitcoin bull and founder of Edelman Financial Engines Ric Edelman has made some promising predictions about the future of the seminal cryptocurrency.In an interview on CNBC program ETF Edge on Jan. 10, Edelman said:“We’re already at a quarter of that number with 24% of Americans owning Bitcoin. It won’t be that much of a stretch for it to get to one-third. Bitcoin is becoming more and more mainstream. People are hearing about it everywhere–it isn’t going away.”While 2022 got off to a rocky start, In his view, governments corporations, foundations, pension funds are investing in BTC: “there is major institutional involvement.”As the author of soon-to-be-released “The Truth about Crypto,” Edelman is a long-standing crypto proponent. In 2019, he described Bitcoin as the first “genuinely new asset class” in 150 years, and back in December 2018, he recommended that investors load up on the orange coin. In a follow-up interview with CNBC yesterday, he lamented that while he has predicted a Bitcoin spot exchange-traded fund (ETF) for the past seven years, he’s convinced that by 2023, there will be spot ETF approval. Similar to U.S. Securities and Exchange Commissioner Hester Peirce’s thoughts on the matter, Edelman articulates that the SEC is running out of excuses to say no:“A lot of the concerns the SEC has have been resolved by the industry through their own maturity, innovation and development. I am confident that we will see the SEC say yes because there is no legitimate reason for them not to.”Matthew Hougan, chief investment officer at Bitwise Asset Management agreed with him in the second interview. Related: Crypto mainstream adoption: Is it here already? Experts answer, Part 1Hougan stated that there would be even more investor protections and a better product thanks to the “cumulative weight of the evidence that will force them to move forward with approval.” Consumer protection provided by an SEC-run ETF is the cherry on top of a slick product. ETF speculation aside, Edelman is clairvoyant about the banality of Nakomoto’s invention in the future. He summed it up succinctly; Bitcoin is “going to be as common in the next couple of years as any other portion of a portfolio.”

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SEC files complaint against operator of 'unregistered' $33M Crowd Machine ICO

The United States Securities and Exchange Commission (SEC) has filed a suit against Australian Craig Derel Sproule for the allegedly “fraudulent and unregistered” sale “of digital asset securities” in an Initial Coin Offering his company conducted in 2018.The SEC alleges in a Jan. 6 complaint that Sproule’s company, Metavine, Inc. which operated the ICO for Crowd Machine (CMCT) from Jan. to April 2018, sold unregistered securities, never made the project operational and “materially misrepresented how it intended to use ICO proceeds.”In total, the SEC says Sproule raised at least $33 million dollars, but that he now lacks “sufficient capital to fund continued operations.” The reason for his lack of funds goes to the core of the SEC’s case. A Jan. 6 announcement from the SEC regarding the case indicates that Sproule agreed to provisions which prohibit him, Crowd Machine and Metavine from performing any more securities offerings. They must also “permanently disable the CMCT tokens and seek their removal from digital asset trading platforms.” CMCT is currently only available for trade on HitBTC according to CoinGecko.Sproule is prohibited from becoming an officer of a public company and has been ordered to pay a $195,047 fine. Although Sproule told investors that ICO proceeds would be used to fund the development of a decentralized peer-to-peer network, the complaint states that $5.8 million of the ICO funds were sent to a South African mining operation as a loan or for equity in the company. So far, none of those funds have been recovered and Sproule has made no returns on the investment.The complaint also details how CMCT tokens were supposed to be made operational in the Crowd Computer ecosystem to pay device owners for use of their computer power and to pay software developers for writing code. However, the tokens were never made operational in the ecosystem.The SEC alleges that CMCTs are investment contracts, which are classified as securities, and that Crowd Computer and Metavine failed to register their sale with the commission: “Numerous courts have found specifically that offers and sales of digital assets like CMCTs are investment contracts, and therefore that such digital assets are “securities” under the federal securities laws.”Related: SEC chair has a new senior adviser for cryptoThe question of whether cryptocurrencies should be classified as securities or commodities has been the center of debate in certain circles for a while. SEC chair Gary Gensler urged crypto companies to “come in and talk” with him about the legal standing of crypto as they pertain to securities laws.

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Bitcoin ETF decision delayed, SEC commissioner wonders why

The United States Securities and Exchange Commission has postponed its decision to approve NYDIG’s spot exchange-traded fund (ETF) for Bitcoin (BTC), delaying until March 16.In a notice published on Tuesday, the SEC found it “appropriate to designate a longer period within which to issue an order approving or disapproving” the ETF. Upon the news, BTC’s price didn’t flinch, remaining in its tightly coiled range under $47,000.In a promising turn of events, an SEC bigwig has been vocal in support of a spot ETF. While crypto enthusiasts are used to rejections and delays in BTC spot ETFs, SEC Commissioner Hester Peirce also wonders why it’s taking so long.In an interview with industry media, the commissioner said, “I can’t believe we’re still talking about this as if, you know, we’re waiting for one to happen […] We’ve issued a series of denials even recently, and those continue to use reasoning that I think was outdated at the time.”Related: What has been standing in the way of a pure-Bitcoin ETF?The NYDIG first proposed an ETF on Feb. 16 last year, while the most recent deadline for giving a thumbs-up was Jan. 15. If approved, it would have become the first spot Bitcoin ETF in the United States. U.S.-based investors can gain exposure to BTC through Valkyrie’s latest ETF offering or through the popular ProShares BTC futures contracts fund. However, investors still covet a way of gaining direct exposure to the asset.Across the border, Fidelity Canada launched a BTC ETF and mutual fund in December, while Brazilian and Latin American investors can tap into BTC spot ETFs. It begs the question: When will a spot ETF land on U.S. shores?With over 20 BTC-related ETFs awaiting approval or rejection in the U.S. according to ETF.com, surely 2022 is the year.

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How the Democratic Party didn’t stop worrying and fearing crypto in 2021

As 2022 is kicking off, America nears the first anniversary of Joe Biden’s presidency. Following the tenure’s ambitious start, the last few months witnessed some serious tumult around the overall health of the United States economy, the administration’s handling of the COVID-19 pandemic, and the tense debate around Biden’s opus magnum — the $1.7 trillion Build Back Better infrastructure legislation plan.But even as the Democrats’ ability to maintain undivided power after the 2022 midterm elections can raise doubts, the party’s prevailing view of crypto has become more consolidated than ever. The incumbent president’s party will be setting the tone of the regulatory discussion for at least three more years, so a thorough look at the fundamental premises and potential directions of its emerging crypto stance is in order.The narrative arcThe path that mainstream Democrat thinking on crypto has traveled over the last three years is perfectly captured by an anecdote featuring two crypto-related public statements made by a Clinton. One is by the 42nd U.S. president, Bill Clinton, then 72, who said at Ripple’s Swell Conference in October 2018 that the “permutations and possibilities” of blockchain were “staggeringly great”. Three years later, speaking at the Bloomberg New Economy Forum in Singapore, Bill’s wife and ex-presidential candidate Hillary Clinton, though calling the cryptocurrencies an “interesting” technology, warned about their power to undermine the U.S. dollar and destabilize nations — “perhaps starting with small ones but going much larger.”This startling difference in opinion within the power couple reflects the recent evolution of the Democratic party, itself — from a “third way,” business, tech and finance-friendly centrism of its 1990’s generation to the newfound statism with a heavy emphasis on redistributional justice and big government projects. By current standards, the former first lady sounded rather balanced in comparison to her party comrade Senator Elizabeth Warren, who has famously lashed out at the crypto market after the volatility outburst in early September: Advocates say crypto markets are all about financial inclusion, but the people who are most economically vulnerable are the ones who are most likely to have to withdraw their money the fastest when the market drops. […] High, unpredictable fees can make crypto trading really dangerous for people who aren’t rich.Warren berated crypto on numerous occasions, calling it a “fourth-rate alternative to real currency” that is “unsuitable as a medium of exchange;” a “lousy investment,” that “has no consumer protection;” and a tool that makes many illegal activities easier.Beyond Senator WarrenThe negative sentiment is largely shared by Senator Sherrod Brown, which is arguably even more unsettling given his status as chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. Brown’s opening statements at Congress hearings have never been amicable towards crypto. Their overall spirit can be summarized in the introduction that opened the July hearing entitled “Cryptocurrencies: What are they good for?”All of these currencies have one thing in common — they’re not real dollars, they’re not backed by the full faith and credit of the United States. […] And that means they all put Americans’ hard-earned money at risk.Brown blamed the “cottage industry of decentralized financial schemes” for an attempt to create “a parallel financial system with no rules, no oversight, and no limits,” calling it “a shady, diffuse network of online funny money,” with nothing democratic or transparent about it. The lawmaker repeatedly rejected the notion that crypto could be an alternative to legacy money — last time at a December Congress hearing:Stablecoins and crypto markets aren’t actually an alternative to our banking system. […] They’re a mirror of the same broken system – with even less accountability, and no rules at all.It’s not all dark, though. One figure that represents a more moderate, if not pragmatic approach to crypto — Congresswoman Maxime Waters — would also play a major role in any future outcome for the industry. As a chairwoman of the House Committee on Financial Services, she initiated the Digital Assets Working Group of Democratic Members with a mission to ensure responsible innovation in the cryptocurrency and digital asset space and “meet with leading regulators, advocates, and other experts on how these novel products and services are reshaping our financial system.”Related: Lines in the sand: US Congress is bringing partisan politics to cryptoSen. Waters has publicly recognized that “Americans are increasingly making financial decisions using digital assets every day,” and affirmed that her Committee will explore “the promise of digital assets in providing faster payments, instantaneous settlements and lower transaction fees for remittances.” What’s it all about?The good news is that underneath the redoubtable oratory, there is a keyword: regulation. It is clear, at this point, that a China-style total war on crypto isn’t an option in the U.S. Therefore, what drives the heated activity of congressional committees and federal agencies in recent months is a clear intention of the Democratic establishment to sort out the rules of the game before the next presidential election. Part of this effort of the Biden administration is the launch of the President’s Working Group on Financial Markets, a superhero team composed of the SEC, CFTC, OCC, FDIC and Federal Reserve System executives, with the secretary of the Treasury Department leading the group. So far, the key product of the Working Group is a 26-page report on stablecoins, which advises Congress to designate some stablecoin-related activities — such as payment, clearing and settlement — as “systemically important” (which would inevitably lead to a tighter oversight) and limit stablecoin issuance to insured depository institutions, i.e., banks.As in the pre-Biden era, the main problem lies with the core classification of digital assets. The PWG report failed to propose a novel interpretation and give precedence to a single regulatory body, thus perpetuating a situation where a variety of regulators oversee different types of crypto-related activity.In October, Rostin Behnam, the chairman of the Commodity Futures Trading Commission and a member of the Democratic Party, claimed that as much as 60% of digital assets can be classified as commodities, which amounts to proposing that the agency become the lead U.S. cryptocurrency regulator. He also further stated that his agency, as well as the Securities and Exchange Commission, would likely need “a regulatory structure for both securities and commodities.” How exactly that would help the ongoing patchwork approach to regulation is still a mystery. The Democratic causeThere are several reasons to believe that the largely proclamatory activity of 2021 will be followed up by some real action in the following year. The first is the general idealistic mindset of U.S. Democrats. For example, the drive to aggressively regulate Big Tech is part and parcel of this mindset. While President Barack Obama and some regulators worked alongside Google and Twitter to facilitate the growth of internet businesses, Joe Biden’s administration came to power amid the wave of popular anxiety over international cyberattacks, personal data leaks, Meta’s crisis mismanagement and the overall outsize influence on the political process accumulated by tech goliaths. While Meta and Google have been fighting federal and state regulators in courts over allegations of anticompetitive conduct for a while, Biden’s team also pledged to hold tech companies to account for toxic speech they host and strengthen policing anti-competitive practices. However, in 2021, we haven’t witnessed any significant policy steps in this direction. Neither of the two major legislative proposals — Amy Klobuchar’s bill, which ​​would bar big tech platforms from favoring their own products and services, and a bill by House Democrats that seeks to remove some protections afforded tech companies by Section 230 of the Communication Decency Act — has become law. The second reason behind the Democratic rush to put crypto within the regulatory perimeter is pragmatic: The Biden administration and its allies on Capitol Hill need money. Biden’s first-term agenda relies heavily on ambitious Roosveltian infrastructure projects. While the $1.2 trillion Infrastructure Investment and Jobs Act managed to get bipartisan support and was signed into law on November 5, the Build Back Better Act, which now hangs by a thread after Democratic Sen. Joe Manchin had announced his opposition to the current draft, would cost nearly $2 trillion. By some estimates, should it make it to the president’s desk, the spending program would increase the deficit by $360 billion over 10 years, making it urgent to raise more tax revenue. This is what makes a thriving crypto industry an important battlefield for Democrats, who see the possibility of harvesting some cash from it and an urgency to prevent tax evasion via digital tools. What’s next?There’s no doubt that the Biden administration will continue to pursue a strict regulatory agenda in 2022. We will see more Congressional hearings next year, but even more consequential negotiations will be taking place behind closed doors, where Democrats will have to finally decide whether the SEC, CFTC or any other body should dominate crypto oversight. Despite Sharrod Brown’s recent “with or without Congress” remarks, it is also hard to believe that Republicans will let their opponents single-handedly decide the fate of the industry.

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