Like any other week in the crypto space, this week as well saw a couple of developments. With the SEC making the most headlines this week with its war on staking, stablecoins, and Do Kwon, BTC also caught the media’s attention with its bridge back to the $25K mark. As we head into a new week, here are the top stories this week.
Coinbase will fight the prohibition on staking services in court
Coinbase, earlier this week, made a bold statement that it would be defending staking against SEC’s security claims. The firm’s CEO Brian Armstrong published a statement on Twitter claiming that the company’s staking services do not constitute securities.
Coinbase's staking services are not securities. We will happily defend this in court if needed.https://t.co/GtTOz77YV3
— Brian Armstrong (@brian_armstrong) February 12, 2023
According to Coinbase, whose stock dropped after the ban rumor made the rounds, the US Securities Act and the Howey test, which the SEC uses to decide whether an investment contract is a security, do not consider accepting an investment that constitutes a security.
The Supreme Court’s ruling in Howey, which is the basis for the Howey test, was issued in 1946. The question of whether this criterion also applies to current assets like cryptocurrencies remain open, though. In any instance, the Howey test criteria (financial investment, joint venture, reasonable expectation of profits, and contributions from others) are not fulfilled by the staking procedure.
Hester Peirce argues opposes Gensler’s proposal
Hester Pierce, an SEC commissioner, February 15, weighed in on the Crypto Twitter topic to voice her opposition to the most recent proposal from her agency.
My statement on today's custody proposal. Looking forward to comments from the public. This one affects crypto, among many other issues: https://t.co/1eWT6P45Ya
— Hester Peirce (@HesterPeirce) February 15, 2023
Hester Peirce, a commissioner of the United States Securities and Exchange Commission (SEC), has a history of disagreements with her agency and on February 15 she questioned the most current proposal from SEC Chair Gary Gensler about crypto custody in the United States. Peirce’s agency and she had had their share of run-ins in the past.
Several in the cryptocurrency industry, including Peirce, who is affectionately known as “Crypto Mom,” have raised doubts about the SEC’s proposal, its feasibility, and the agency’s capacity to regulate the cryptocurrency sector.
According to what Peirce had written, this rule will have far-reaching effects on investors, financial advisers, and custodians. Pierce insisted that flawless execution was impossible without reader input. A second criticism she expressed was that the public is not given enough time to review the SEC’s proposal and provide feedback.
Bitcoin surpassed $25,000
This week saw Bitcoin’s price rise beyond $25,000 for the first time since August 2022 which was clearly good news for the whole cryptocurrency sector. After achieving a new price benchmark, Bitcoin once again grabbed media attention. Investors hoping for a rebound in the value of the digital currency were clearly overjoyed to hear this news.
In April, Russia plans to introduce CBDC.
Russia again this week unveiled plans to launch its own central bank digital currency (CBDC) after years of crushing sanctions; a prototype version might be available as early as April.
First deputy governor Olga Skorobogatova of the Russian Central Bank recently informed the press that the bank intends to begin testing the CBDC on April 1, 2023. While widespread adoption of the CBDC is the ultimate goal, pilot programs will first be launched to ensure the system is robust.
The Russian CBDC might be used by regular consumers, but for now, it will only be put through its paces by financial institutions and corporations. Somewhere down the line, smaller economic enterprises will be invited to join the trial.
The SEC opens fraud allegations on Terraform and Do Kwon.
US regulators additionally gave more juice to the crypto space this week. The watchdogs charged Singapore’s Terraform Labs PTE Ltd and one Do Kwon on February 17 for allegedly running a multibillion-dollar Ponzi scheme utilizing algorithmic stablecoins and other crypto asset instruments.
Today we charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) February 16, 2023
After soliciting billions of dollars from investors between April 2018 and May 2022, the SEC claims Terraform and Kwon’s plan collapsed. Several suspects have been identified in connection with the tragedy. According to the SEC, they accomplished this via the distribution of a bundled set of crypto asset securities, most of which were sold outside of the required regulatory filings.
