Who will regulate crypto?

Clarity and regulations are making their way to digital assets.

While fear-mongering has centered around the SEC as the defacto regulator, a bill quietly passes through the Senate that favors the CFTC.

A summary was provided by law firm Akin Gump about the two primary takeaways:

1. This aims to settle the ongoing dispute between the SEC and the CFTC over primary regulatory jurisdiction for cryptocurrency, with deference being given to the CFTC. The bill creates a new digital commodity asset class, excluding securities, and would empower the CFTC to regulate spot markets for such assets— furthering its jurisdiction beyond derivatives to underlying commodities in the digital asset space. - Source

While it's unlikely the bill passes this year, we're expecting clarity to emerge in 2023 at the latest.

Keep in mind this bill is supported by FTX, which is growing to be one of the largest and most influential cryptocurrencies and derivatives exchanges.

Back in May Sam Bankman Fried appeared before congress about this very proposal.

Next, the bill provides clarity about registrations, user fees, activity monitoring, and demographics.

2. The bill would require all digital commodity platforms and companies—including trading facilities, brokers, dealers and custodians—to register with the CFTC through several new registration categories. This would allow the CFTC to fill the regulatory gap and hold digital commodities to existing standards. It also creates a funding instrument for CFTC oversight by enabling the regulator to impose user fees on digital commodity platforms. Further, it directs the CFTC to complete a report on demographic customer trends and statistics and how such findings will impact CFTC rulemaking and other activities. - Source

This bill will make it easier for the IRS to verify digital asset transactions as information reporting will be a normal part of the process, just as in the traditional finance sector.

More to come in the months ahead.

Ultrasound Money

With the ETH merge complete, Ethereum now has a narrative to compete with Bitcoin.

To date, Bitcoin's narratives have been "digital-gold" and "store-of-value."

With Ethereum shifting from a Proof-of-Work protocol (PoW) to Proof-of-Stake (PoS), the circulating narrative we're watching to see unfold into 2023 is "ultrasound money."

This narrative is on our radar due to the behind-the-scenes institutional adoption that is unfolding.

The creators of MetaMask, one of the most widely used DeFi wallets, launched MetaMask Institutional back in April.

In spite of all the regulatory posturing going on, these companies are building products and services to accommodate mass adoption. They're not waiting for guidance.

They're launching, learning, and adapting in real time.
Which is the new norm for anyone growing a business in this digital economy.

Since 2020, DeFi has continued to attract the most investments in terms of venture capital funds and total locked value onchain. We're still early.

Download the Report Here

For those who want to learn more about the nuances of the Merge and what it will mean to the Ethereum ecosystem in the months ahead, download the report.

Good news for our premium subscribers, we're on track for a major update to our analytical tools in the next 45 days.

2022 has made many of us reevaluate the metrics that matter.

The Terra Luna $40B collapse revealed the vulnerabilities of leverage, loans, and algorithmic stablecoins.

It helped us all to refine our strategies and tools before owning cryptocurrencies becomes a normal part of life and business. It's a part of the cost of being early, and we accept this.

In the last post, we showed how September would be bearish for the majority of the month.

Let's look at where the market is trending as we approach October...

Bitcoin's Trend

Week 38 of 52

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