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Gensler's Bruised Ego & Coinbase CEO's Hush-Hush Huddle

The SEC's chair has chimed in on Ripple's landmark win against the regulator, while Coinbase CEO meets with US House Democrats, new stablecoin Ethena raises funding, and a U.S. presidential candidate to wage war against CBDCs.

July 18, 2023

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Following Ripple's knockout punch against the U.S. Securities and Exchange Commission (SEC), SEC chair Gary Gensler is left licking his wounds, stating, "I'm both pleased and disappointed."

Last week, a US judge has ruled that Ripple Labs Inc did not violate federal securities law by selling its XRP token on public exchanges. Dating back to a 2020 lawsuit, the SEC had accused Ripple of conducting an unregistered securities offering worth $1.3 billion by selling XRP. On Thursday, the judge in the Southern District of New York ruled that it XRP “not necessarily a security on its face.”

Gensler further elaborated, "I'm pleased that the court recognized the innovation in the digital asset space. But I'm disappointed because the court's ruling limits the SEC's ability to protect investors from fraud and manipulation in the crypto markets."

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Gensler's response underscores the ongoing tension between fostering innovation and ensuring investor protection. He expressed his concern that the court's ruling could potentially limit the SEC's ability to protect investors from fraud and manipulation in the crypto markets. However, he also acknowledged the court's recognition of innovation in the digital asset space, a sentiment that reflects the growing acceptance of cryptocurrencies and blockchain technology in the financial sector.

While Gensler's mixed response to the Ripple ruling highlights the delicate balance regulators must strike between fostering innovation and protecting investors, this ruling has significant implications for the crypto industry, potentially setting a precedent for future cases. As the crypto wild west continues to evolve, the need for a sheriff in town becomes increasingly apparent. Gensler's mixed response to the Ripple ruling is a testament to this delicate dance.

And in another pivotal moment for the crypto industry, potentially influencing future legislation, Coinbase CEO Brian Armstrong is set to meet privately with a group of US House of Representatives Democrats. The meeting, scheduled for Wednesday, July 19, will see Armstrong making remarks on the future of digital asset legislation. This comes at a time when Coinbase and Binance, two of the world's largest crypto exchanges, are grappling with lawsuits brought by the SEC for allegedly failing to register their operations with the agency.

Armstrong's rendezvous with the Democrats could be a game-changer for the crypto industry, potentially influencing future legislation. It also underscores the growing intrigue of digital assets in the corridors of power.

Elsewhere,

  • Institutions Pour $742 Million, Mostly into Bitcoin: According to CoinShares, institutional investors poured $137 million into the crypto markets last week, continuing a four-week run of inflows that has seen $742 million poured into the markets. This represents the largest run of inflows since the final quarter of 2021. The majority of these inflows originated from North American investors, with Bitcoin taking home most of the inflows. This surge in institutional investment is a testament to the growing acceptance of digital assets as a legitimate investment class. It also suggests that despite the rollercoaster ride and regulatory uncertainties, institutions are betting big on the long-term prospects of cryptocurrencies.
  • Dragonfly, Arthur Hayes Back $6M Round for New Stablecoin: Ethena, a Portugal-based startup, has raised $6 million in a seed funding round for its new Ethereum-based stablecoin. The round was led by crypto-focused venture capital firm Dragonfly and included participation from BitMEX founder Arthur Hayes and his family office, Maelstrom. Ethena plans to use the capital towards the launch of its stablecoin and bond asset in the third quarter.
  • Presidential Candidate Vows to 'Nix' Digital Currency Plans: Ron DeSantis has voiced his opposition to the implementation of Central Bank Digital Currencies (CBDCs) in the United States. In a recent statement, he declared that if elected as President, he would put an end to any plans for CBDCs in the country. DeSantis cited concerns about the potential threat to American liberty, arguing that a CBDC would allow the government to monitor and control citizens’ financial transactions.


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