The rest is politics
SEC chair attempts to avoid being drawn into crypto election debate, fails
Gary Gensler says “significant non-compliance” remains in crypto.
Loose change: Ether ETF buying, UK FCA arrests.
Micro influencers can lead to big gains for crypto-gambling operators.
Members of Congress lobby for Nigerian Binance release.
There’s a warning sign on the road ahead.
The crypto election
Keep calm and carry on: With chatter that the US Securities and Exchange Commission (SEC) is waging a “war on crypto” that could cost incumbent President Joe Biden the forthcoming election, the agency’s boss is refusing to become drawn into the debate.
“I don’t speak about elections,” SEC chair Gary Gensler said at the Bloomberg Invest Summit, when pushed on the role cryptocurrency is currently playing within politics.
Former President Donald Trump has been making a play to the crypto community, while longtime Bitcoin bull Mark Cuban has criticized Gensler’s aggressive approach to enforcement of crypto tokens and said it could prove fatal at the polls.
Kill your heroes: Gensler said he wouldn’t be drawn on political matters, but did not resist sticking the boot into a sector that has endured significant scandals in recent years from collapsed exchanges to enormous fraud and money laundering schemes.
“There’s nothing inconsistent about crypto securities and securities laws, unfortunately there are a number of people who are non-compliant with the laws,” he said.
Gensler said many popular exchanges are “non-compliant platforms” where tokens are being offered as investment contracts without adequate disclosures.
The SEC is currently suing large exchanges Coinbase and Binance for offering non-registered securities in the form of digital tokens.
“This is a field where the leading lights from a couple of years ago are either in jail, about to go to jail or awaiting extradition,” Gensler said. “That’s the field where the public has been harmed and there is significant noncompliance. We’re bringing that out in front of courts and that’s where it will play out.”
Waiting game: Gensler added, however, that progress of Ether ETFs filings is “going smoothly.” Cryptocurrency ETFs track the price of cryptocurrencies in a portfolio linked to their instruments and are available to investors via regular stock exchanges.
"I don’t know the timing, but it’s going smoothly,” he said, adding that it’s “about the asset managers making full disclosure so that those registration statements can go effective.”
“It’s something our Division of Corporation Finance handles hundreds if not thousands of times over anybody’s career,” Gensler said. “It’s smoothly functioning – it’s really up to the asset managers to make the proper disclosures.”
Ethereum futures ETFs are already available, Gensler noted, having gone live last year. Following the success of its Bitcoin counterpart, Ether ETFs are much awaited across financial markets.
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Loose change
The filth and the fury: The UK’s FCA, working with the Met Police, has conducted an operation to arrest two individuals suspected of running an illegal crypto exchange, which is believed to have handled over £1bn in various assets. The individuals were arrested and bailed while two properties were searched and several digital devices seized.
Crypto exchange providers must be registered with the FCA and comply with the UK money laundering regulations in order to operate legally in the UK.
“The FCA has an important role to play in keeping dirty money out of the UK financial system,” said Therese Chambers, executive director of enforcement and market oversight at the FCA.
Pay the Man: US Representative Matt Gaetz wants to let Americans pay federal income taxes with Bitcoin. Gaetz has proposed legislation to amend the Internal Revenue Code of 1986 that would, if passed, require the Secretary of the Treasury to create and implement a system for accepting the cryptocurrency as a payment method.
Into the Ether: Alternative ETF specialist Roundhill has announced that its Metaverse fund has initiated a position in Ether worth $27m, which it claims is the largest investment on record in the second-most-popular cryptocurrency.
The investment means METV has established a 6.8% position in Ether while it also holds a 2% position in Bitcoin via, respectively, the CI Galaxy Ethereum ETF and CI Galaxy Bitcoin ETF.
Check yo self: South Korea is toughening consumer protection rules related to crypto assets. From July 19, registered crypto exchanges will be required to regularly evaluate the tokens carried on exchanges and carry out more checks to ensure those listed are safe.
Around 600 tokens are at risk of being delisted.
Penalties including large fines and potential jail sentences for non-compliance have been passed into law.
Trading places
Vanishing twin: Bitcoin traders suffered a tricky week after an unexpected slump on Monday – and those with positions in Nvidia also would have been feeling doubly damaged as its price fell in tandem.
Bloomberg pointed out it was a reminder that the “hottest trades are far from one-way bets.”
Cuts both ways: The newswire quoted Chris Weston from Pepperstone as saying that “people are working out now that momentum works both ways.”
🤢 In tandem: Bitcoin and Nvidia in the doghouse
Annals of crypto gambling
Sweating the small stuff
The micro wave: Crypto-native gambling operators are increasingly searching out partnerships with gaming influencers with as little as 1,000 followers because they offer a cost-effective route “often undervalued or overlooked” by larger competitors.
Only fans: Tom Waterhouse from the eponymous VC firm said in his recent newsletter to investors that dedicated fans do not just engage with influencers or watch a 30-second betting stream. Instead, he argued, they will interact directly and communicate around the clock.
Such an influencer “could generate more revenue for every dollar than an influencer with 1m-plus followers who are less engaged,” Waterhouse said.
Waterhouse cited the example of Shuffle, a crypto business only formed in late 2023, which he suggested has rapidly expanded and claims to have already facilitated $6bn of bets. The company was founded by Noah Dummett who was formerly an employee at the Bitmex crypto exchange.
Waterhouse noted Shuffle’s early success has come from Japan, which still has a non-existent online regulatory regime but which he said was “underserved” by crypto operators as well.
Chip off the old blox
A bit on the side: New crypto-based games provider Bitblox has launched with a set of games designed to allow consumers with knowledge of the token economy the opportunity to bet on the price movements of new token offerings.
The Isle of Man-licensed provider is offering the games to gambling operators and providers.
The games involve betting on a token’s price changes in 20-second or 60-second intervals.
The games are currently available in pool betting format, but Bitblox intends to introduce fixed-odds betting to its titles in the near future.
Congressional push for Binance release
I hear that train a comin’: Members of US Congress are lobbying the Biden administration to secure the release of an American crypto executive they say is being wrongfully detained in Nigeria.
Tigran Gambaryan, a former IRS agent-turned-compliance officer for the exchange Binance, has been caged inside a Nigerian prison for nearly four months on charges including money laundering and tax evasion.
Gambaryan flew to Nigeria in February with colleague Nadeem Anjarwalla for a meeting with government officials on behalf of Binance, but both were arrested on arrival.
Nigeria’s Economic and Financial Crimes Commission later accused Binance of laundering more than $35m through its platform.
Arkansas representative French Hill, the vice-chair of the House Financial Services Committee, said he is tapping the special presidential envoy for hostage affairs in the coming days to seek his advice on the case.
Mister Congressman you can’t understand: Nigeria’s tax authority alleged Binance was operating without a remittance license and was seeking out data on customers of the exchange within the country. Anjarwalla, a British-Kenyan national, escaped from custody and is on the run, believed to be in Kenya.
Binance claimed Nigerian authorities demanded a bribe of $150m in crypto from the pair during an earlier visit in January.
Nigerian politicians dismissed the allegation as “an attempt to distract and draw attention away from the serious allegations of criminality against it” and demanded an apology.
Play by the rules: Separately, Nigeria’s securities watchdog is updating regulations that govern digital asset issuance and exchanges. The country’s Securities and Exchange Commission said it planned to amend the rules to create “a stronger framework” that addresses the challenges presented by digital asset markets.
It is introducing an Accelerated Regulatory Incubation Program, designed specifically for virtual assets service providers, which aims to help new businesses achieve compliance and scale quickly.
What we’re reading
Light and dark: “There could be real efficiency gains associated with tokenization, but the drive towards it could also take a dark turn.” The FT.
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