Former SEC officials have made many speeches about their “personal” view that cryptocurrencies are currencies. .. .. [+]
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News was reported Thursday that President Biden would issue a drastic presidential order ordering his administration to develop a regulatory framework for digital assets as a “national security” issue. This should have been welcomed. Cryptocurrency innovators have sought a clear regulatory framework for most of the decade.
But the news sent chills to the crypto space. After years of abuse by crypto investors and innovators, the Securities and Exchange Commission’s (SEC) credibility has fallen into disrepair.
Decided to break the cipher
Biden’s news didn’t happen in a vacuum. A fellow Democrat in Congress has called for a massive crackdown on cryptography and portrays Anodyne’s digital stablecoin as a Frankenstein monster that must be hunted down and destroyed. A Federal Reserve paper on the Central Bank’s Digital Currency (CBDC) identified the economic benefits of digital assets to remove friction from the financial system. Federal Reserve Chair Jerome Powell has already set the stage for concern when he said at a House meeting on FinTech last summer that the CBDC could eliminate the need for cryptocurrencies. The Democratic Party seems to have seen this as a green light on the road to Prohibition.
However, the SEC has paved the way for breaking confidence in crypto space and has existed before the Biden administration. During the Trump administration, SEC Commissioner Robert Jackson reiterated in a public forum, where the SEC deliberately avoided clarifying why digital assets were secure and was subject to regulatory regulation instead of “market dialogue.” I said it would be. The “discussion” was a set of mysterious and contradictory guidance given by former SEC Chair Jay Clayton and his director of Corporation Finance, William Hinman.
The infamous “Talking” event, in a June 2018 speech by Hinman, declared that the Ethereum network token, Ethereum, is not security. Mr Hinman said Ethereum’s sales are no longer considered “no longer” a stock exchange because Ethereum is “sufficiently decentralized.” Hinman’s criteria included “putting aside” the Ethereum Public Initial Coin Offering (ICO) in 2014.
These are the principles adopted by other SEC guidance, and the sale of other tokens, including owners and users of billions of XRP tokens traded on the open market since 2013, is not a securities transaction. I made many people believe it. XRP didn’t have an ICO. The XRP ledger was built and decentralized before it went on sale. Ripple, a cross-border payment software company and the largest XRP user,, along with crypto exchange Coinbase, sought a clear explanation from the SEC on XRP. After “discussing” with the SEC, Ripple continued to sell the XRP program and Coinbase listed the tokens in 2019.
SEC pronoun play: “I, that is, us”
Before the speech, Hinman gave the usual disclaimer that it was his personal opinion, not the Commission’s. But everyone on the planet understood this as official guidance and the market reacted.A few minutes after giving the speech, Hinman himself Explanation The “Chair and SEC” felt they were “clearer” and “transparent” and had to give “guidance” about ether, so he gave it. In a subsequent appearance at Georgetown Law School, Hinman said his speech “expressed to the world that ether is currently being offered and is not considered security.” .. .. He also talked a bit more about Ethereum and Bitcoin’s view last summer, “clarifying that there is no reason to regulate them as securities.”
Regarding speeches that are not “necessarily” the Commission’s view, Hinman reiterated “us” when referring to the SEC’s approach. He wasn’t alone. Jackson also repeatedly called Hinman’s speech “guidance” on “our thoughts.”Two months after the speech, Clayton himself Said Hinman “Meeting in Nashville outlining the approach we [emphasis added] Take it to assess whether your digital assets are secure. We encourage you to take a look at Bill’s speech. It is available on our website. “
On his last day as chairman, Clayton’s SEC filed a blockbuster enforcement action against Ripple, XRP has been a securities since its inception, and all sales, including exchange retail owners, are securities transactions. He said everyone should have known for seven years. The logic was so enthusiastic that Hinman’s speech became the logical centerpiece of Ripple’s defense, and the SEC was capricious in applying securities law to them and other cryptographers.
Ripple emerges with the participation of market advocates and investors
The SEC responded with a ridiculous controversy as much as a complaint about Ripple. Hinman’s speech was a personal opinion, not a market guidance. Currently, agencies are fighting maniacs to prevent Ripple from getting dozens of emails, speech drafts, and conference notes that reveal how Hinman’s speech was developed. Such a document would be a disclaimer for Ripple and would reveal that Ethereum investors and their lawyers played a role in writing Hinman’s speech. Approximately 65,000 holders of XRP, who lost $ 15 billion in value before their holdings were locked by the suspension, joined as court friends to the SEC. Ripple, which has a world-class legal team based in San Francisco, continues to oppose the proceedings.
In court, SEC lawyers stand behind a logically neutral pronoun, XRP is always security, Hinman’s speech is not guidance, and all “us,” or SEC, is a mass delusion. This is a spectacular exhibition of federal hypocrisy determined to protect its power, in addition to its obligation to protect markets and investors. The White House needs to rethink the presidential directive to celebrate this madness.
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