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Gensler to speak on Crypto September 21st


CryptoPitbull
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39 minutes ago, princesultan said:

“Rules are extremely clear”

Imagine actually being able to say that with a straight face? Think of the kind of person you need to be…

I know......but I don't think he can come out and really say anything other than that because of the litigation going on. Anything else could be used against them. 

I don't have a good feeling about what he will say tomorrow. It is either another rehearsed interview, or I have a feeling he will announce thay they will be cracking down more on DeFi since this whole Coinbase thing got stirred up. I don't like that he keeps trying to speak to the masses.

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If anyone is listening, he did legitimize Ripple's business model. He basically said that there are legitimate innovations around blockchain and DLT. He said that there are legitimate competitors in the payments space that are disrupting legacy systems. Granted, Ripple is far from the only one, but I think these people speak in very careful terms. Sometimes but not always in coded terms when they know who is listening in the audience. 

I think there was something along the lines of an olive branch there...although he could be speaking specifically for Lubin/Consensys/JPM and not have Ripple in mind AT ALL. But I think we all know that Ripple is at the very front of his mind these days. 

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Absolutely nothing of value here IMO.  Claims that the SEC has robust authority to regulate via enforcement and wasn't even pleading with congress to offer more clear guidance.  I know so many would have paid lots of $ including me for him to be put on the spot and asked this exact line of questioning.

 

1. "Is ETH presently a security"?  

2. If not now, was it ever a security?

3. If it isn't currently but was previously how would the next ETH starting today be allowed to flourish?

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I heard him legitimize it too, but he still hinted that nearly everything is a security. I don't think that will work with Ripple's business model. He also kind of changed his tune about the definition of a security relying on an entity for the expectation of profits. He started saying a "few" entities. WTF. 

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15 minutes ago, CryptoPitbull said:

He also kind of changed his tune about the definition of a security relying on an entity for the expectation of profits. He started saying a "few" entities. WTF.

I'm sure I have a bias from following the lawsuit and all of the DAI research, but when I heard him say that, my thought was ethereum's core developers + Consensys. 

Ethereum may well be too big to fail now due to the manipulation and corruption that got it into Hinman's speech...but I think the ongoing development of Eth2.0 by a central group of developers (coordinated by Consensys which may as well be owned by the Eth Foundation) is not something overlooked by Gensler. Gensler knows beyond a shadow of a doubt that ether did not deserve the status it received under the previous administration. 

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Gensler was always a big fan of Ripple, but he always personally felt that their sales could be investment contracts. He also always said that Ethereum has a bigger reason to be called a security. I think if he was in charge, a lawsuit may have still gone out at some point, but it would have hit both Ripple and Ethereum, and it would have hit Ethereum much worse. Also, they wouldn't have alleged that XRP itself is a security. That allegation was nasty.

Stablecoins are a much bigger issue for the Treasury (hence Yellen's involvement) than anything else. Stablecoins have the ability to undermine the Treasury's power and the dollar. I expect conversion to and from Fiat into stablecoins to be highly regulated. I expect this to be regulated at two levels: 

  • At the issuer level with KYC/AML and possibly money transmission licenses
  • At the exchange level

Whether these levels are centralized or decentralized wouldn't matter. They will expect KYC/AML etc. to be done, in person or automatically. The industry will innovate to comply. 

I personally think XRP has always been in a superior position regulation-wise, for one reason. There are no rewards. There is ample clarity on worst-case-scenario distribution from the big whale  - a maximum of 1B XRP per month. That's a fraction of daily volume at this point. I have other thoughts around this, but I'll keep this short, for now.

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From the WSJ today - 

Source: https://www.wsj.com/articles/banks-oppose-strict-basel-rules-targeting-crypto-currencies-11632228967

Quote

 

Forum for lenders including JPMorgan and Deutsche Bank argues rules would push crypto trading into unregulated corners of the financial system

The biggest U.S. and European banks oppose strict new rules that would require them to set aside a dollar in capital for every dollar of bitcoin they own, a group of trade associations representing the lenders told the top global standard setter for banking regulation.

The Basel Committee for Banking Supervision, a group of global central bankers and regulators, proposed the new rules in June. The Global Financial Markets Association, a forum for banks including JPMorgan Chase & Co. and Deutsche Bank AG, and five other industry associations pushed against

them in a letter published Tuesday, arguing that the most traded cryptocurrencies, including bitcoin, shouldn’t face such strict capital requirements.

Bank regulators have said they are concerned about consumer protection, money laundering and terrorist financing threats from the use of cryptocurrencies. But the trade associations said that the proposed new rules are counterproductive because they would prevent banks from holding cryptocurrencies, which would be forced into unregulated corners of the financial system.

“We find the proposals in the consultation to be so overly conservative and simplistic that they, in effect, would preclude bank involvement in crypto asset markets," the associations wrote in the letter to the Basel Committee.

A spokesperson for the Basel Committee didn’t immediately respond to a request for comment.

The committee said in June that banks should apply a 1,250% risk weight to bitcoin, which it said is “similar in effect to the deduction of the asset from capital." If a bank holds $100 of bitcoin exposure, it would give rise to risk- weighted assets of $1,250, which when multiplied by the minimum capital requirement of 8% results in setting aside at least $100, the committee said.

The committee, which includes the Federal Reserve, the European Central Bank and other major central banks, doesn’t enforce rules itself but sets minimum standards that regulators around the world agree upon and implement locally.

The trade associations said that such a high risk weight wasn’t necessary for bitcoin and other heavily traded cryptocurrencies, such as ether.

The associations also said the Basel Committee’s definition of stablecoins, whose value is pegged to the U.S. dollar or other currencies, stipulated such

narrow price fluctuations that it risked them falling under the same capital requirements applied to bitcoin.

The associations said allowing a 0.25-percentage-point difference in price between stablecoins and their underlying asset, rather than the proposed 0.1 percentage point, would encompass more assets. The world’s largest stablecoin by market value, tether, moved 0.1 percentage point above or below the U.S. dollar’s value 124 times last year, according to the associations’ analysis. Rival stablecoin USD Coin broke from that range on 15 occasions.

The letter was signed by the Financial Services Forum, the Futures Industry Association, the Institute of International Finance, the International Swaps and Derivatives Association and the Chamber of Digital Commerce, as well as the Global Financial Markets Association.

 

 

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