U.S. Securities and Exchange Commission Chairman Gary Gensler isn’t waiting for new powers from Congress to enforce securities laws against crypto companies, though he said Wednesday that it would be good to have more money and additional reach beyond U.S. borders.
- Gensler, who declined to specifically talk about failed crypto exchange FTX and its former CEO, Sam Bankman-Fried, said in an interview on Yahoo! Finance that the SEC has the basic disclosure and governance requirements in place to hold digital-assets firms accountable.
- The SEC chief also didn’t directly address questions about whether his agency would push out tailored crypto rules next year, but he insisted that it doesn’t need any. “The rules are there,” he said. “The law firms know how to advise their clients to comply.”
- FTX’s crash showed the dangers of running a global platform without walls between customer funds and investment operations, Gensler said. Crypto firms can’t do everything. “Your field will not last long outside of public policy norms,” he said.
- The court case over whether Ripple’s XRP is a security has been seen as the major lingering question holding the agency back, but Gensler said Wednesday that a federal judge’s decision last month determining that crypto startup LBRY violated securities laws by selling its native LBC tokens was a “very big win” for the SEC’s legal campaign.
- So far, the SEC hasn’t directly gone after U.S. exchange Coinbase (COIN) for listing what the agency believes are securities without registering as a national securities exchange. Still, the SEC has – in another recent enforcement action – listed several tokens it considers unregistered securities that were traded on the company’s platform.
Bitcoin (BTC): The largest cryptocurrency by market capitalization was recently trading at about $16,800, down about a percentage point over the past 24 hours. BTC has held comfortably above $17,000 for much of the past nine days, despite ongoing investor jitters about contagion linked to the implosion of crypto exchange FTX and macroeconomic uncertainties, particularly signs since late last week that the U.S. Federal Reserve will have to maintain its hawkish course on interest rate hikes through 2023.
SushiSwap (SUSHI): The decentralized finance (DeFi) protocol is facing a significant deficit in its treasury that threatens its long-term operational viability, according to a governance proposal from project developers. After reviewing expenditures, the project's annual runway requirement was reduced from $9 million to $5 million, but the treasury still provides for only about 18 months of runway, developers said.
Axie Infinity (AXS): The native token of the blockchain-based play-to-earn game Axie Infinity, has come out of oblivion this week with a double-digit price rally. Yet, leverage traders appear skeptical if AXS' turnaround from 17-month lows would be longlasting. That's because while open interest, or the dollar value locked in the number of active standard futures and perpetual futures contracts tied to AXS, has increased to a three-month high of $129.70 million, funding rates remain negative, according to data source Coinglass.
Crypto Market Analysis: Bitcoin’s High Correlation to Copper Does Not Bode Well for Short-Term Investors
By Glenn Williams Jr.
Absent a black swan or negative contagion event specific to a centralized entity, digital assets still seem very much connected to macroeconomic developments.
But, notably, yields for the federal funds rate, U.S. three-month and two-year Treasurys exceed the yield of 10-year Treasurys.
This condition, called an inverted yield curve, has predated past economic recessions. If viewed in isolation, an inverted yield curve does not bode well for bitcoin, or copper prices for that matter. Increased short-term rates and slower economic growth lead to lower demand and prices for physical and digital assets.
Coinbase Global (COIN) CEO Brian Armstong said the company’s revenue will be about half what it was last year as the crypto exchange struggles amid stark price drops in cryptocurrencies and continuing ripple effects from multiple bankruptcies this year, including the recent collapse of rival exchange FTX. Armstrong noted in an interview with Bloomberg’s David Rubenstein that Coinbase had done about $7 billion in revenue ($7.8 billion, according to FactSet) and $4 billion in positive EBITDA. “It's looking, you know, about roughly half that or less,” Armstrong said.
Genesis interim CEO Derar Islim wrote in a letter to customers Wednesday that resolution of his company’s lending unit’s withdrawal freeze is likely to be a matter of “weeks” rather than days. The lending arm of Genesis in November was forced to suspend redemptions following the collapse of crypto exchange FTX. This morning’s note from Islim said Genesis is committed to being as “transparent as possible” with customers and that it is working in consultation with highly experienced advisers and in close collaboration with its owner, Digital Currency Group. DCG is also the parent company of CoinDesk.
China removed harsh COVID-19 restrictions after weeks of protests nationwide that threatened to hobble its already struggling economy. The Chinese government had hoped its controls would zero out the infection rate, prioritizing public safety over declining productivity. But officials started to change their perspective amid mass demonstrations and growing acceptance that the latest COVID strains are less virulent.
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