The latest regulatory changes, updates, and decisions impacting the alternative investment sector.
Joe Rotunda, the enforcement director of the Texas State Securities Board (TSSB), found that he could easily apply to join FTX’s yield-earning offering even though he listed his Austin address. The problem? FTX has not registered to sell securities in Texas. It appears, therefore, that FTX has been offering unregistered securities to Texas residents through its yield-bearing cryptocurrency accounts – a matter under investigation by the TSSB since last week.
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More Stories on Regulations
Digital Assets: Congress Wants Action Taken Reports On Crypto Fraud From Agencies, Digital Exchanges
The Committee shot off a series of letters earlier this week to four agencies, including the Department of the Treasury, the Federal Trade Commission, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, as well as five digital asset exchanges — Coinbase, FTX, Binance.US, Kraken, and KuCoin, asking for details of actions taken to “identify, investigate, and remove or flag potentially fraudulent digital assets or accounts,” as well as highlight discussions around “whether to adopt more stringent policies.”
Grayscale Investments, the largest digital asset manager globally, has filed a suit against the SEC for rejecting its application to convert the Grayscale Bitcoin Trust into a spot bitcoin ETF. Donald B Verrilli Jr., former U.S. Solicitor General, and a top lawyer for the Obama administration, whom Grayscale hired early this month, filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit.
Digital Assets: CFTC Hauls Winklevoss-Owned Crypto Exchange Gemini To Court Alleging “Misleading” Statements in 2017
In a press release issued Thursday, June 2, 2022, the US Commodity Futures Trading Commission (CFTC) revealed it had taken Gemini to court for “making false or misleading statements of material facts or omitting to state material facts to the CFTC in connection with the self-certification of a bitcoin futures product.”
In a speech on Wednesday, Jon Cunliffe of the Bank of England called for tough regulations on cryptocurrencies, drawing a parallel between the $1.2 trillion subprime mortgage market in 2008 and the growth of the crypto market from a mere $16 billion five years ago to its $2.3 trillion capitalization today.
China’s Ministry of Science and Technology (MOST) has released a document titled “New Generation Artificial Intelligence Ethics Specifications” that specifies six ethical guidelines for the implementation and use of AI, rests all decision-making with humans, and addresses issues such as fairness, security, discrimination, privacy and data leaks.
Speaking on a Bloomberg interview on Tuesday, Gary Gensler, chairman of the United States Securities and Exchange Commission, said he supported more regulatory protection of the crypto space. His comments had a negative effect on the price of bitcoin, the leading cryptocurrency, which at one stage fell below $38,000.
In an announcement today the Securities and Exchange Commission deferred its decision on the application by the Cboe BZX Exchange on March 1, 2021, to list shares of the VanEck Bitcoin Trust through a proposed rule change.
The European Commission (EC) on Wednesday set forth new rules and actions for governing AI with the twin objectives of guaranteeing the safety and fundamental rights of people and businesses while strengthening AI uptake, investment, and innovation across the EU.
A draft set of proposals obtained by Bloomberg shows that the EU could fine AI and tech companies as much as 4% of global revenue if they fall foul of the EU’s new norms for the use of AI. Further, these proposals include a ban on AI-powered mass surveillance or systems that rank social behavior.
A Reuters report today, which quoted a senior Indian government official, said India plans to outlaw cryptocurrencies such as bitcoin, making anyone trading or holding them punishable with fines.
Ripple claims XRP is a virtual currency, not a security, and the SEC has no authority to regulate it as one. Ripple Labs on Thursday filed its answer to the complaint by the US Securities and Exchange Commission that ripples distributions of XRP constituted investment contracts and were subject to registration under the Securities Act…
The pressure is now building upon the SEC for approving a bitcoin ETF. Shortly after the Canadian regulators approved two bitcoin ETFs, the Chicago Board Options Exchange (CBOE) has notified the US SEC of its intention to list the BTC ETF from investment management firm VanEck and its Bitcoin Trust.
Bank of Korea Governor Lee Ju-yeol, when speaking at a parliamentary session on Wednesday, said crypto-assets such as bitcoin had no intrinsic value and were victim to highly volatile price swings.
Valkyrie Digital Assets LLC, a wholly-owned subsidiary of Valkyrie Investments Inc., has thrown its hat in the ring to obtain SEC approval for the launch of a bitcoin ETF. On Friday, Valkyrie submitted its application to the regulator for the “Valkyrie Bitcoin Fund,” to be listed on the New York Stock Exchange.
The People’s Bank of China published a draft set of rules on Wednesday for anti-trust regulation of the non-bank payment providers in the fintech sector. The draft is in the public opinion domain until February 19.
China’s State Administration for Market Regulation (SAMR) announced Thursday an investigation into Alibaba’s (NYSE: BABA) allegedly monopolistic practice of barring its merchants from selling on competing e-commerce platforms. Merchants must agree to sell their products only on the behemoth’s online shopping platform.
The SEC on Tuesday charged Ripple and two executives for raising over $1.38 billion via an unregistered securities offering.
The SEC filed the complaint in the federal district court in Manhattan alleging that the defendants violated the registration provisions of the Securities Act. It prayed for injunctive relief, disgorgement with prejudgment interest, and civil penalties. The two executives named in the complaint are Christian Larsen, Ripple’s co-founder, executive chairman of its board, and former CEO; and Bradley Garlinghouse, the company’s current CEO.
On Friday, the Jack Ma-controlled Ant Group’s Alipay platform, which offers an impressive array of financial products to its customers, removed online deposits that it was accepting on behalf of several banks. The reason – regulatory restrictions.
The SEC will likely sue Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen, according to Fortune. The SEC will charge the defendants for selling XRP tokens, which it alleges are unlicensed securities. XRP ranks third in the pecking order of cryptocurrencies with a market cap of $23 billion. The SEC would make the case that XRP is a security and it needed to be registered as an investment contract prior to its sale.
In an article titled “Fintech Risk in 2021,” Halverson warns of heightened fintech risk in 2020 following free central bank “helicopter” money, overenthusiastic private equity and venture capital firms, and exuberant stock markets. In particular, he points to fintechs offering buy-now-pay-later (BNPL) products that have captured consumers’ fancy and encouraged them to increase their indebtedness.
The barrage of regulatory voices against the “fintech-that-shall-not-be-named” continues. In the latest call to hobble giant fintechs such as the Ant Group, former finance minister Lou Jiwei said regulators should restrict the number of banks that they can partner with.
The Securities and Futures Commission (SFC) licensed OSL Digital Securities to operate a regulated brokerage and automated trading service for digital assets. OSL is now the world’s first SFC-licensed, listed, digital asset wallet-insured, Big-4 audited digital asset trading platform for institutions and professional investors, it said in an announcement.
In an article in a newly released book from the central government explaining the country’s economic priorities and development plan for 2035, Guo warned of a disturbance in global financial markets if the United States stepped up its strategic containment and rivalry with China. Given this circumstance, China is taking steps to address financial vulnerabilities that could stem from fintech giants such as the Ant Group.
Gazprombank (Switzerland), the wholly-owned Swiss arm of Russia’s Gazprombank (JSC), announced October 29 that it had received regulatory clearance from the Swiss Financial Market Supervisory Authority to offer crypto custody and trading services to its institutional and corporate clients.