The SEC chairman continues his charge against supposedly decentralized exchanges and ponzis.
There is no second best
In an interview with New York Magazine, Gensler clarified things. “Anything other than bitcoin” is a financial (security) security and falls under the jurisdiction of the SEC, he said.
After long making half-statements to give exchanges a chance to repent, the SEC Chairman finally confirmed his view:
“Bitcoin aside, you can always find a website and a group of entrepreneurs [derrière les cryptomonnaies et autres tokens]. Their legal entities may hide in an offshore tax haven or in a foundation armed with lawyers responsible for complicating matters on the jurisdictional level. […] But basically, if there is an entity behind it and the public anticipates profit, these are securities. »
Others will say more simply that you can’t invent digital scarcity twice…
Gensler tackles exchanges
This Thursday, the chairman of the SEC rejected the idea that exchanges could be qualified and safe depositories for investment advisers. The SEC proposes to oblige the latter to turn to qualified custodians for the custody of Bitcoin.
“To be clear: just because an exchange claims to be a qualified custodian doesn’t mean it is”did he declare.
“Given the way exchanges and lending platforms (Celsius, Nexo, Voyager, etc.) work, investment advisers cannot see them as qualified custodians”Gensler said.
The recent setbacks of Binance (and especially FTX) are not unrelated to this hardening of tone. As such, do not miss our article: Binance weakened again.
The SEC’s proposed rule would require registered investment advisers (RIAs) not to go through exchanges. It will probably be unveiled in Cynthia Lummis’ new bill:
As a reminder, your bitcoins do not really belong to you when they are on an exchange. To take control, you need to transfer them to your own wallet (Electrum, Samuraietc).
You will then need to secure your “seed”, i.e. a series of 12 words that your wallet will generate for you. This seed will allow you to replenish your wallet (and recover all your BTC) if you lose access to your PC or smartphone.
Staking in the crosshairs of the SEC
Even the “second best” Ethereum has suffered the wrath of the SEC since the transition to Proof of Stake and the launch of “staking”…
The US regulatory arm recently sued Kraken for the exchange to halt its “Staking-as-a-Service” program and fined it $30 million.
Indeed, since the transition from “proof-of-work” (PoW) to “proof-of-stake” (PoS), it is possible for an ETH holder to become a network validator. On the condition all the same of having 32 ETH.
Setting up a validation node, however, requires relatively advanced technical knowledge (and 32 ETH…). Faced with this barrier, exchanges and other companies such as Lido offer the famous “staking-as-a-service”.
And there are many who enjoy these services which bring in about 4% per year without doing anything. In particular the founders of Ethereum who obtained 20% of the ETH for free. Not to mention the Ethereum ICO participants who got 50% of the supply for a pittance.
These arrangements, however, are not to the liking of the SEC, which stated in the Kraken case:
“Kraken sells its staking-as-a-service through which the exchange stakes ETH on behalf of investors. Staking is a process by which investors lock up their ETH with a validator in order to be rewarded by creating new ETH. When investors place ETH with staking-as-a-service providers, they lose control and take on the risks associated with these platforms, with very little protection. »
For the SEC, and like platforms offering “Yield” like Gemini Earn, Voyager and Celsius, the « staking-as-a-service » violates the securities rules.
Difficult to blame the policeman of the US markets when you know that it is impossible to withdraw your ETH once stakeds…
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