Regulation
US Lawmakers Unite Against SEC As Crypto Regulations Tighten Globally
Last May, the Fed noted that it was not going to cut rates anytime soon, and the BTC the price fell below $57,000 in early May. Despite this, unexpectedly, it has become a good time for the crypto market. The Bitcoin ETF has seen record inflows since March, hedge funds are reporting record numbers of crypto investments and US lawmakers have passed anti-SEC resolutions.
Other crypto regulation updates outside the US include a new crypto bill in Turkey, a mining ban in Venezuela, regulatory uncertainty in the EU, and consultations between crypto regulators in India.
Are US lawmakers uniting against the SEC?
The US Senate has pass a resolution against the SEC to overturn Rule 129, which requires banks to report their crypto balances to the commission. Senators voted 60 to 38; both Republicans and Democrats supported this resolution. However, Biden has already said he will veto it.
Regardless, this is the first time that the US Congress and Senate have agreed on crypto regulation. The resolution was supported by both Republicans and Democrats, including Majority Leader Chuck Schumer. Lawmakers gently suggest to the SEC and its chairman, Gary Gensler, that the commission does not have to abuse its authority over cryptocurrencies and banks.
Growing number of investments in Bitcoin ETF
In mid-May, some large institutional investors made waves by announcing their shares in Bitcoin. Millennium Hedge Fund invested approximately $2 billion, while Morgan Stanley invested $270 million. The Wisconsin State Investment Council also revealed that it has approximately $164 million Grayscale and Blackrock Bitcoin ETF. Meanwhile, with the US CPI for April coming in 0.1% lower than expected, Bitcoin price surged to $67,000. Last week, according to Farside Investors, we saw inflows of $948.3 million into US spot Bitcoin ETFs.
Finally, Pantera Capital invested a significant amount in the TON cryptocurrency, unknown but probably exceeding Pantera’s investment in Solana ($250 million). The Chicago Mercantile Exchange (CME Group) has also seen increased institutional demand for Bitcoin and plans to directly launch Bitcoin spot trading.
Regulatory uncertainty in the European Union
Meanwhile, Europe is preparing for the full implementation of the MiCA crypto regulatory framework. Overall, this isn’t the best news for the industry: there is a lot of uncertainty about how cryptocurrency companies will continue to operate in Europe. This not only concerns medium-sized VASPs, but also large market players.
In April, it became known from Tether CEO Paolo Ordoino that the company is not considering licensing USDT in the EU. Kraken trade last week announcement that it will delist USDT for its European clients. Tether will likely develop euro-denominated stablecoins in the EU. However, it is unclear how this will happen: until now, the capitalization of euro-denominated stablecoins has remained relatively low.
At the same time, European countries are continuing to implement their classic VASP crypto regulatory frameworks, which require all crypto entities operating in the country to obtain a license/registration. For example, the French Financial Markets Authority (AMF) informed the public that Bybit had been operating illegally in the country since 2022 because it had not obtained a license from the regulator. The bybit is included on the AMF blacklist as a company that does not comply with the regulations in force in the country.
Turkey to pass new crypto bill
Last week, the ruling party presented a crypto bill to the Turkish parliament. The new legislation regulates licensing procedures for crypto entities, compliance and anti-money laundering. The Capital Markets Board (CMB), the local financial regulator, will be the main institution in this process.
India updates its crypto regulations
Although awaiting new elections, the national government has so far resisted its legislative initiatives to regulate cryptocurrencies – regulators are doing it for them. Local financial regulator – SEBI has published its recommendations dedicated to crypto regulation in the country. It recommends dividing crypto activities by regulators: SEBI to regulate ICOs and securities, Central Bank – stablecoins, FIU – VASP registrations.
The FIU started VASP registration in the country late last year, and 28 companies were registered. Last week, the top two foreign exchanges, Binance and Kucoin, were also approved to operate in the country.
Venezuela imposes mining ban
Despite the existing economic and political problems in Venezuela, cryptocurrencies are legal in the country. Additionally, there are regulations for mining. Unfortunately, last week the local Ministry of Electric Power claimed it would disconnect existing mining farms from the grid. The government explained this initiative by citing the heavy load on the country’s electricity networks. Additionally, the move could be linked to the country’s anti-corruption campaign: the government previously confiscated 2,000 devices in the city of Maracay and 11,000 mining devices in Carabobo state. It remains to be determined whether the ban on mining in Venezuela will be temporary or permanent.
Such initiatives to ban or restrict mining due to the high load on power grids are not uncommon. For example, in 2021, mining was banned in Iran for four months. The Central Asian countries of Kazakhstan, Uzbekistan and Kyrgyzstan have also imposed some restrictions on the activities of mining operators.
VanEck ETH ETF Request
Finally, I would like to remind you of the important event of the coming week: on May 23, the SEC is expected to rule on VanEck’s Ethereum ETFs. Bloomberg analyst Erik Balchunas said last week that the SEC would likely not approve any Ethereum spot ETFs. He suggests that based on the commission’s current position, it evaluates Ethereum as a security. Indeed, the probability of rejection is quite high, but let’s see what the regulator decides.
If you want to get more information on crypto regulation, you can check out the Global Crypto Regulation Assessment. here and receive updates on my Telegram channel.