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Major changes in cryptocurrency regulation

by xyonent
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There have been some big changes to cryptocurrency regulation in recent weeks.

1. The Bitcoin Spot ETF was reluctantly approved after a three-judge federal appeals court unanimously ruled against the SEC’s actions. Arbitrarily, capriciouslyBut it still opens up Bitcoin holdings to institutional investors. Wisconsin buys Bitcoin ETF for pension fund.

2. In a highly unusual move, SAB 121 was overturned in the House and, even more surprisingly, in the Senate, including with the votes of many Democrats. Sub 121 An SEC staff accounting bulletin (guidance, not law) says that when banks hold crypto assets for customers, i.e., custody services, they must account for it. your Balance sheet. This guideline does not apply to the custody of other assets. Essentially, SAB 121 is It is difficult for banks to provide custody services for crypto assets Because the service would affect all kinds of risk and asset regulation for banks, this seems like regulatory overreach, as the SEC has special treatment for cryptocurrencies and is not a banking regulator.

President Biden has said he will veto it, but that is no longer a certainty. It wasn’t just the crypto lobby that opposed SAB 121, but traditional banks did too. Banks pointed to the approval of Bitcoin ETFs and, naturally, said why can’t they custody these ETFs like they do other ETFs. Senate Majority Leader Chuck Schumer (D-NY), also known as Washington’s Wall Street man, voted to repeal SAB 121. Schumer can read the room.

3. The House of Representatives: Ban the Federal Reserve System From the establishment of Central Bank Digital Currency (CBDC).

4. The House Approved a wide range of legislation Establishing regulation of digital asset markets (finally!). The vote was 279-136 in favor, with many Democrats bipartisan in support.

5. After months of no word, it’s usually a bad sign. SEC Approves Ethereum Spot ETFOn the surface, this may have seemed like a logical inevitability given the approval of a Bitcoin spot ETF, and many assumed the SEC would do everything in its power to differentiate between Bitcoin and ETH, but the SEC has tacitly acknowledged that ETH is a commodity, not a security.

Why is this happening? I believe there are three main factors. First, cryptocurrencies are becoming integrated with traditional finance. The politics around cryptocurrencies are changing as big banks get involved. Second, cryptocurrencies are becoming standardized. Ironically, the indictment of Sam Bankman Freed Zhao Changpeng And like an operator Abraham Eisenberg This may have convinced US regulators that cryptocurrencies don’t need to be destroyed and can be controlled. Nakamoto may not have been happy about this, but realistically this was the only option moving forward. After all, everyone wants to pay their mortgage. Third, Trump’s Strong support for cryptocurrencies The Biden administration is on guard: While most political issues are firmly divided along party lines, cryptocurrency remains an unresolved issue. Millions of Cryptocurrency Holders In the United States, a significant number of people are very willing to vote with their wallets, and Biden is not willing to cede the issue of cryptocurrency to Trump.

None of this means that we have stepped into crypto heaven, but a lot has changed in just a few weeks when it comes to regulation.

Full DisclosureI am an advisor to several companies in the cryptocurrency industry. Multiverse X, Blue Chip and 0L.

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