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US Senator Wants Congress to Step in With Crypto Guidance — Urges SEC to Provide Much More Clarity on Regulations

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US Senator Wants Congress to Step in With Crypto Guidance — Urges SEC to Provide Much More Clarity on Regulations

US Senator: Congress Should Step In With Crypto Guidance, SEC Isn't Providing Clarity on Crypto Regulation

U.S. Senator Pat Toomey says Congress should step in and provide a regulatory framework for cryptocurrency. He stressed that the U.S. Securities and Exchange Commission (SEC) is not sharing its framework for regulating crypto with lawmakers, noting that Chairman Gary Gensler “owes us much more clarity on how and why he intends to apply SEC regulations.”


US Senator Wants Congress to Step in on Crypto Regulation

U.S. Senator Pat Toomey (R-PA), a ranking member of the Senate Banking Committee, discussed cryptocurrency regulation in an interview with Bloomberg Thursday.

Commenting on whether the U.S. Securities and Exchange Commission (SEC) is too slow in regulating cryptocurrency, he opined: “I think the problem is that the SEC isn’t sharing with us the framework that they are using.”

The senator proceeded to reference SEC Chairman Gary Gensler stating that most crypto tokens are securities, stating:

Gary Gensler famously argues that virtually all crypto tokens are securities. I think reasonable people can disagree with that.

The lawmaker noted that while Gensler “would exempt bitcoin from that classification,” he said that “pretty much everything else … is a security.”

Senator Toomey explained that the SEC chairman “doesn’t go on to say how he would apply the existing frameworks that we use to regulate securities issuance and trading to a very, very new and very different technology where some of these things don’t fit — like custody rules, clearance rules — these things don’t have any application. He hasn’t provided any clarity on that.”

Toomey opined:

I think, actually, Congress should step in and provide some guidance.

“I think crypto is sufficiently different even if you want to argue that these tokens are securities,” the senator further noted, adding that it is indisputable that cryptocurrencies “are very different from a stock or a bond, and therefore Congress ought to step in and provide a framework.”

The lawmaker concluded:

In the meantime, chairman Gensler owes us much more clarity on how and why he intends to apply SEC regulations.

Gensler recently revealed that he has asked the staff at the Commission to fine-tune crypto compliance. In addition, he said he has “asked the SEC staff to work directly with entrepreneurs to get their tokens registered and regulated, where appropriate, as securities.” The securities regulator is also setting up a dedicated office to review crypto filings.

What do you think about the comments by Senator Pat Toomey and do you think Congress should step in and provide a regulatory framework for crypto? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Grayscale Launches New Investment Product While Bitcoin Trust Crashes to 35%

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Grayscale Launches New Investment Product While Bitcoin Trust Crashes to 35%

Grayscale Investments is offering investors an opportunity to invest in Bitcoin mining hardware in the bear market.

The new investment opportunity, called the Grayscale Digital Infrastructure Opportunities LLC (GDIO), is now open to qualified individual and institutional investors, even as the asset manager allows ETF-related court proceedings to run their course.

Grayscale putting capital to work

Grayscale will use investor capital from the GDIO to buy mining hardware for a minimum of three years. It will use the hardware to mine and subsequently sell bitcoin. Mining is the energy-intensive process undertaken by a computer network to create a new transaction block and verify it. The node in the network that creates the block is known as a miner. A miner is rewarded in bitcoin for his effort, which typically requires large amounts of cheap electricity and computing power.

Part of the proceeds Grayscale will earn from its efforts will be paid out quarterly to GDIO investors.

“Grayscale’s unique position at the center of the crypto ecosystem enables us to create offerings that allow investors to put capital to work through differing market cycles,” stated Michael Sonnenshein, Grayscale’s chief executive.

GDIO represents another way the company has sought to provide investors with exposure to bitcoin without directly holding the asset.

Investors can also purchase shares from its GBTC trust and gain exposure to bitcoin through Grayscale’s legally regulated business in the U.S.

But Grayscale has a problem. Because investors cannot redeem shares in the trust for bitcoin, the price per share has dropped drastically, trading at a discount of 35% to its Net Asset Value. 

At the close of the trading day on Oct. 5, shares were trading at a shade over $12, despite being backed by $18.45 worth of bitcoin.

To mitigate this discount, Grayscale has pursued the conversion of GBTC into a spot bitcoin exchange-traded fund, which has so far been unsuccessful. The U.S. Securities and Exchange Commission denied the company’s latest application in June 2022, prompting Grayscale to pursue legal action against the federal agency. 

Nic Carter of Castle Island Ventures, a venture capital firm focused on early-stage public blockchain startups, said that Grayscale could wind down the ETF:

watching the GBTC discount. looks like ATL at -35%. on top of discounted spot BTC. paths to breaking open the piggy bank: SEC can approve ETF conversion, or Grayscale can wind down the trust themselves if they so choose.

— nic carter (@nic__carter) June 17, 2022

The SEC maintains that spot bitcoin ETFs are prone to underlying market manipulation.

Grayscale undeterred by SEC rejection

Despite consistent resistance from U.S. regulators, Grayscale launched its first European ETF in May 2022, which tracks the Bloomberg Grayscale Future of Finance Index, offering customers exposure to institutions at the crossroads of finance, technology, and cryptocurrencies.

Grayscale raised investors’ eyebrows recently when it announced that it had applied with the SEC to distribute 3 million ETHPoW tokens that were distributed to all Ethereum (ETH) holders after the controversial proof-of-work fork went live. 

At the time, Grayscale said it was seeking the rights to sell the tokens and pay out shareholders. 

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Colorado is now accepting crypto for tax payments — but if you choose to use that option, it could change the amount you owe…
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