Court Pressures Binance and SEC to Reach Agreement on Asset Freeze

Binance Spars With U.S. Regulators Over Asset Freeze – The New York Times

At a hearing in Washington on Tuesday, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia asked the two sides to confer on a possible agreement over the asset freeze, arguing that they were closer to a deal than the rhetoric in their court filings suggested. Judge Jackson ordered them to continue negotiating and to submit a status update by Thursday.

She also expressed skepticism about the S.E.C.’s use of its enforcement powers to regulate the crypto world, calling it “inefficient and cumbersome.”

SEC Eyes October for Climate Disclosure Regulations Release

The SEC now aims to issue its climate disclosure rules by October, a year later than its initial goal, according to an agency agenda released Tuesday.

The Securities and Exchange Commission had previously targeted October 2022 to finalize rules stemming from a proposal for companies to report on their greenhouse gas emissions and other environmental matters. The agency is expected to face litigation over the regulations following significant pushback from business interests, Republicans and some Democrats over its plans.

DeFi Group Found Liable Under Commodities Law, but Getting It to Pay May Be Tricky

Government regulators scored a legal victory last week when a federal judge held that a decentralized cryptocurrency collective was liable for violating commodities exchange rules. The question now is how they will get the collective to pay up.

The ruling by Judge William Orrick of San Francisco was a win for the U.S. Commodity Futures Trading Commission. Together with another ruling by Orrick from December, it suggests that regulators or private plaintiffs who want to sue so-called decentralized autonomous organizations, or DAOs, have a legal basis for doing so.

What is less clear is how easy it will be to collect on a legal judgment against a DAO, whose members are often anonymous and informally organized.

In his ruling on Thursday, Orrick ordered the DAO sued by the CFTC, Ooki, to pay a $643,542 fine. He also approved the CFTC’s request for an order to take down a website associated with the group and the blockchain-based app it controls, a virtual currency trading protocol.

“I have no idea how they are going to enforce it,” said Arina Shulga, a securities lawyer at the law firm Nelson Mullins.

SEC to Weigh New Artificial-Intelligence Rules for Brokerages – Bloomberg

Wall Street’s main regulator is moving to introduce new rules for brokerages using artificial intelligence to interact with clients.

The US Securities and Exchange Commission said Tuesday that a long contemplated plan to rein in conflicts of interest associated with the technology could be introduced as soon as October. The proposal would also apply to predictive data analytics and machine learning.

Crypto: Watch Wall Street Move in After Crackdown

Mainstream finance, supervised by national monetary authorities, has long viewed the crypto industry as fundamentally unstable and socially useless. Unregulated exchanges, stablecoins resembling money-market funds and speculative altcoins (stuff other than Bitcoin and Ether) have undoubtedly pioneered many blockchain applications. Going forward, licensed financial institutions like JPMorgan Chase & Co. may as well take control of the technology. After all, tokenized customer deposits will offer all the functionalities of programmable money. So why not promote them in smart contracts, as an alternative to stablecoins like Circle Internet Financial Ltd.’s USDC?

Authorities can at times lose control of depositary institutions, as we saw with the multiple US bank failures this year. Still, the risks are largely known, which isn’t the case with digital assets. Now that the US regulators are determined to check the unbridled growth of crypto, Wall Street can move in with tokenized versions of its own traditional products — starting with the humble bank deposit

SEC Says It May Make a Recommendation on Crypto Exchange Coinbase Petition Within 4 Months

The U.S. Securities and Exchange Commission (SEC) hasn’t made a decision on whether it will respond to Coinbase’s (COIN) petition for rulemaking and its enforcement action against the crypto trading platform isn’t inconsistent with any decision on rulemaking, the regulator said Tuesday.

The SEC responded to a court order on how it was currently looking at the rulemaking petition in light of the agency’s enforcement action against Coinbase, which the regulator sued last Tuesday on allegations it was operating an unregistered securities exchange, broker and clearing agency.

Though Coinbase has argued that the SEC has decided to reject the petition, the SEC said Tuesday that it hadn’t made a decision one way or another, though agency staff think they will make a recommendation within 120 days.

Feeling the US Crypto Regulation Whiplash

Is Congress the only hope?

In the midst of the SEC’s crypto crackdown, there are glimmers of hope that Congress could be on the path to providing a clear and practical regulatory framework. As noted above, a bi-partisan bill was introduced a few weeks ago to clarify that the underlying asset of an investment contract is not a security unless it otherwise meets the definition. Barely a week ago, the Chairs of the House Financial Services Committee (overseeing the SEC) and the House Committee on Agriculture (overseeing the CFTC) released a discussion draft for a digital asset market structure proposal intended to provide a comprehensive statutory framework for digital asset regulation in the US. Without Congressional action, the SEC is expected to continue its aggressive crypto crackdown and regulation by enforcement approach. However, in a politically divided government, whether there is sufficient support for a legislative fix remains unclear.

The Tainted 19: The Digital Tokens the SEC Says Are Securities

They range from the brainchild of a winner of computer science’s most prestigious award to a crypto token supporting the biggest blockchain-based video game. But they all have one thing in common, according to the US Securities and Exchange Commission: They are all securities.

That designation of 19 tokens, laid out in SEC lawsuits against crypto exchanges Binance and Coinbase Global Inc. last week, was perceived as so potentially damaging that it caused a sharp selloff. Their combined market value has slumped by about $23 billion since just before the SEC’s lawsuit against Binance was filed on June 5. Robinhood Markets Inc. removed three of the coins from its crypto trading platform and eToro stopped allowing US clients to open positions in some of them.

Below is a rundown of the 19 tokens, who’s behind them, what blockchains they operate on, and how their prices have been impacted by the SEC labeling them securities.