Regulation
US lawmakers unite against SEC as cryptocurrency regulations tighten globally
Last May, the Fed noted that it would not cut rates anytime soon, and so Bitcoin the price fell below $57,000 in early May. Despite this, it is unexpectedly becoming a good time for the cryptocurrency market. The Bitcoin ETF has seen record inflows since March, hedge funds report record numbers of cryptocurrency investments, and US lawmakers have passed anti-SEC resolutions.
Other updates to cryptocurrency regulation outside the US include a new cryptocurrency law in Turkey, a mining ban in Venezuela, regulatory uncertainty in the EU, and consultations among cryptocurrency regulators in India.
Are US lawmakers uniting against the SEC?
The United States Senate did past a resolution against the SEC to overturn Rule 129, which forces banks to report their crypto balances to the commission. Senators voted 60-38; both Republicans and Democrats supported this resolution. However, Biden has already said that he will veto it.
However, this is the first case that the US Congress and Senate have agreed on cryptographic regulation. The resolution was supported by both Republicans and Democrats, including Majority Leader Chuck Schumer. The lawmakers gently suggest to the SEC and its chairman, Gary Gensler, that the commission must not abuse its authority over cryptocurrencies and banks.
Growing number of Bitcoin ETF investments
In mid-May some large institutional investors made headlines by announcing their shares in Bitcoin. Millennium Hedge Fund invested approximately $2 billion, while Morgan Stanley invested 270 million dollars. The State of Wisconsin Investment Board also disclosed that it had done so $164 million Grayscale and Blackrock Bitcoin ETF. Meanwhile, with the April US CPI falling 0.1% lower than forecast, Bitcoin’s price rose to $67,000. Last week, we saw inflows of $948.3 million into US spot Bitcoin ETFs, according to Farside Investors.
Last but not least, Pantera Capital invested a large sum in the TON cryptocurrency, which is not known but probably exceeds Pantera’s investment in Solana ($250 million). The Chicago Mercantile Exchange (CME Group) has also seen an increase in institutional demand for bitcoin and plans to directly launch spot bitcoin trading.
Regulatory uncertainty in the European Union
Meanwhile, Europe is preparing for the full implementation of the MiCA cryptocurrency regulatory framework. Overall, this is not 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 affects medium-sized VASPs, but also large market players.
In April it became known from Tether CEO Paolo Ordoino that the company does not plan to obtain a license for USDT in the EU. Kraken trade last week announced which will delist USDT for its European customers. Tether will supposedly develop euro-denominated stablecoins in the EU. However, it is not known how this will happen: so far the capitalization of euro-denominated stablecoins has remained relatively small.
At the same time, European countries continue to implement their classic VASP crypto regulatory frameworks, which oblige all crypto entities operating in the country to obtain a license/registration. For example, the French financial regulator Autorité des marchés financiers (AMF) has informed the public that Bybit has been operating illegally in the country since 2022 because it has not obtained a license from the regulator. Bybit it is included blacklisted by the AMF as a company, which does not comply with existing regulations in the country.
Turkey to approve new cryptocurrency law
Last week, the ruling party presented a cryptocurrency law to the Turkish parliament. The new legislation regulates crypto entity licensing procedures, compliance and AML. The local financial regulator Capital Markets Board (CMB) will be the lead institution in this process.
India Updates Cryptocurrency Regulations
Although awaiting new elections, the national government has so far resisted its legislative initiatives to regulate cryptocurrencies: regulators are the ones doing it instead. The local financial regulator – SEBI has published its recommendations dedicated to the regulation of cryptocurrencies in the country. Recommends dividing crypto assets 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 have been registered. Last week so were the first two exchanges, Binance and Kucoin approved to operate in the country.
Venezuela imposes ban on mining
Despite the economic and political problems that exist in Venezuela, cryptocurrencies are legal in the country. Additionally, it has regulations for mining. Unfortunately, last week, the local Ministry of Electricity said it would disconnect existing mining farms from the grid. The government explained this initiative by citing the high load on the country’s electricity grids. Furthermore, the decision could be linked to the country’s anti-corruption campaign: the government had previously confiscated 2,000 devices in the city of Maracay and 11,000 mining devices in the state of Carabobo. It remains to be determined whether Venezuela’s mining ban will be temporary or permanent.
Such initiatives to ban or restrict mining due to the high load on electricity grids are not uncommon. For example, in 2021, mining in Iran was banned for four months. Central Asian countries Kazakhstan, Uzbekistan and Kyrgyzstan have also imposed some restrictions on the activities of mining operators.
Application of the VanEck ETH ETF
Finally, I would like to remind you of the important event next week: on May 23, the SEC is expected to rule on VanEck’s Ethereum ETFs. Bloomberg analyst Erik Balchunas commented last week that the SEC will likely not approve any Ethereum spot ETFs. He suggests that, according to 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 are interested in getting more insights into cryptocurrency regulation, you can look at the Global Cryptocurrency Regulation Assessment Here and get updates on mine Telegram channel.