Law Decoded: Crypto cities, investor protection nation, Nov. 8–15

Published at: Nov. 15, 2021

As the U.S. federal government — acting through its Securities and Exchange Commission — continues to valiantly protect investors and the public interest from the grave dangers of a spot Bitcoin exchange-traded fund, one major American city after another begin embracing or at least exploring the potential of crypto and blockchain technology to improve various aspects of city finance, administration and residents’ monetary well-being. Following the lead of Miami, New York, Tampa and Jackson, Tennessee, it is now Philadelphia that is looking into the ways to implement blockchain solutions in city government.

The hope is that a series of city governments’ successful ventures into the crypto space will eventually make the federal government adopt a more “municipal” perspective.

Below is the concise version of the latest “Law Decoded” newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.

Spot Bitcoin ETF denied

Last Friday, following two deadline extensions, the SEC formally disapproved asset manager VanEck’s spot Bitcoin exchange-traded fund application that was first filed in March 2021. The regulator maintained that the applicant failed to demonstrate the existence of a “comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference Bitcoin assets,” which is essential for preventing manipulation and fraud.

In the SEC’s view, surveillance-sharing is sufficient in the case of the Chicago Mercantile Exchange’s BTC futures market but is not up to standard when it comes to spot markets that underlie the bulk of CME’s Bitcoin futures’ pricing. A recent letter from Representatives Emmer and Soto highlights the limitations of the agency’s argument well.

Commissioner Crenshaw on DeFi

In an article published in the International Journal of Blockchain Law, SEC Commissioner Caroline Crenshaw has shared her thinking on some of the regulatory issues around the domain of decentralized finance. On the most fundamental level, she believes that DeFi products may be securities and should be viewed according to applicable securities laws.

The commissioner’s key thesis comes down to the need for DeFi market participants to come forward and voluntarily comply with securities laws, specifically those around risk disclosure. She also warned that those who fail to comply could become subject to the SEC enforcement action and incur heavy penalties.

CBDC watch

People’s Bank of China governor Yi Gang discussed the plans for the digital yuan’s cross-border expansion, while the managing director of the Monetary Authority of Singapore revealed a strong retail focus of the nation’s prospective CBDC. Over in Russia, an updated timeline for the release of the digital ruble trial was revealed, with a prototype platform expected to be ready for testing by early 2022. Concurrently, Russian lawmakers have begun preparing the legislative base for the digital currency’s nationwide adoption. Meanwhile, the Bank of England gave itself ample time to consider all the pros and cons of implementing the digital pound, marking “the second half of the decade” as the earliest time for the possible launch.

Tags
Regulation
Sec
Bitcoin Regulation
Cryptocurrencies
New York
Cbdc
Usa
Related Posts
Law Decoded: Which currency is the paycheck of your city’s mayor in? Nov. 1–7
Even though crypto has long attained relevance as an independent political issue, at times it gets entangled with the broader dynamics of the political process. The notorious infrastructure bill — a major pillar of the Biden administration’s economic agenda — suddenly passed in the U.S. House last Friday despite congressional Democrats’ original agreement to vote on the party’s other legislative priorities first. Having passed 228 to 206, the bill is moving to President Biden’s desk. Along with authorization of massive spending on roads, bridges and broadband internet access, it carries a handful of consequential crypto-related provisions that remained unchanged since …
Etf / Nov. 8, 2021
Law Decoded: ‘Unhosted’ wallets are just ‘wallets,’ March 28–April 4
The European Parliament continued to keep crypto users and advocates at the edge of their seats last week as yet another piece of potentially harmful legislation — this time, a set of demanding data disclosure requirements for digital asset service providers — was rushed to a vote mere days after a near miss on banning proof-of-work-based cryptocurrencies. Unlike the relatively happy resolution of the Markets in Crypto Assets framework situation, the EU’s new Anti-Money Laundering rules retained all the crypto-hostile language as they are going into the next round of consideration, the so-called trialogue negotiations. If the rules are enacted …
Regulation / April 4, 2022
How the Democratic Party didn’t stop worrying and fearing crypto in 2021
As 2022 is kicking off, America nears the first anniversary of Joe Biden’s presidency. Following the tenure’s ambitious start, the last few months witnessed some serious tumult around the overall health of the United States economy, the administration’s handling of the COVID-19 pandemic, and the tense debate around Biden’s opus magnum — the $1.7 trillion Build Back Better infrastructure legislation plan. But even as the Democrats’ ability to maintain undivided power after the 2022 midterm elections can raise doubts, the party’s prevailing view of crypto has become more consolidated than ever. The incumbent president’s party will be setting the tone …
Regulation / Jan. 1, 2022
Law Decoded: Tangible wins, new menaces and the global crypto taxation drive, Feb. 1–7
Every global event or major political crisis these days can trigger a digital asset-related conversation. As China welcomes the world’s top athletes to the Beijing 2022 Winter Olympics, showing off ultra-high-tech facilities and sports infrastructure, some United States politicians have raised concerns over the Games’ potential to act as a booster to the digital yuan’s adoption. In neighboring Myanmar, the military government that had overthrown the nation’s elected leadership a year ago is now looking into launching its own digital currency, not to project economic influence but to improve the domestic payments system and the struggling economy more broadly. Below …
Regulation / Feb. 7, 2022
Law Decoded: Paris is always a good idea, even for talking crypto policy — April 11–18
Last week was the Paris Blockchain Week, and the epicenter of crypto policy and regulatory conversation moved to the French capital accordingly. Cointelegraph reported extensively from the ground and ran a series of interviews with some of the crypto industry’s captains who shared their thoughts on the state of regulatory affairs. For one, Binance’s Changpeng Zhao said that he was excited to see regulators embracing financial innovation and introducing crypto-friendly policies, calling it a major trend of 2022. Bertrand Perez, chief operating officer of the Web3 Foundation, opined that many policymakers, including some in the European Union, still tend to …
Regulation / April 18, 2022