regulation

SEC pushes deadline to decide on Grayscale spot Ether ETF

The commission said it will have until January 2024 to reach a decision on the spot Ether investment vehicle or institute proceedings to extend the deadline again.

The United States Securities and Exchange Commission has delayed its decision on whether to approve or disapprove of a spot Ether (ETH) exchange-traded fund, or ETF, offering from asset manager Grayscale.

In a Dec. 5 notice, the SEC said it would designate a longer period on whether to approve or disapprove of a proposed rule change that would allow NYSE Arca to list and trade shares of the Grayscale Ethereum Trust. The commission’s announcement was one of the first following an appellate court ordering the SEC to review Grayscale’s Bitcoin (BTC) ETF offering in October.

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” said the SEC. “Accordingly, the Commission […] designates January 25, 2024, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change.”

Crypto-friendly US lawmaker Patrick McHenry won’t seek reelection in 2024

All 435 seats in the U.S. House of Representatives will be up for grabs in the 2024 election, with the future of crypto bills in the House Financial Services Committee uncertain.

Representative Patrick McHenry, chair of the United States House Financial Services Committee and a proponent of many pieces of crypto-focused legislation, will be retiring from Congress.

In a Dec. 5 statement, McHenry said he would not seek reelection to the U.S.

“This is not a decision I come to lightly, but I believe there is a season for everything and — for me — this season has come to an end,” said McHenry.

During his time as chair of the House Financial Services Committee, McHenry was one of the few crypto proponents in Congress who pushed for passing bills to establish regulatory clarity for digital assets.

“Chairman McHenry is an unparalleled leader who has consistently recognized the importance of responsible innovation and fit-for-purpose regulation in the financial sector,” said Sheila Warren, CEO of the Crypto Council for Innovation.

Jake Chervinsky, soon-to-be former chief policy officer of the Blockchain Association, thanked McHenry on X (formerly Twitter) for his “leadership on crypto policy.” Some industry leaders on the social media platform expressed regret at the North Carolina Representative’s departure, including Coinbase president Emilie Choi.

You’ve had an incredible run.

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Jury in Terraform Labs case shouldn’t decide whether crypto is a security — SEC

According to the SEC, the tokens at issue in its civil case against Terraform Labs should be a “legal question” for a court, “not a factual question for the jury.”

Lawyers representing the United States Securities and Exchange Commission requested the judge in its civil case against Terraform Labs and co-founder Do Kwon determine whether certain crypto assets are securities rather than a jury.

In a Dec. District Court for the Southern District of New York, the SEC argued that the matter of cryptocurrencies as securities under the commission’s guidelines was a “legal question to be determined [by] the Court, not a factual question for the jury.” According to the SEC, sending the question of whether certain cryptocurrencies in the Terraform Labs case qualified as securities under the Howey test — the commission’s standard for determining what is a security — opened the matter up for discussion.

“There is no genuine dispute of material fact that Defendants’ crypto asset offerings involved an investment of money, in a common enterprise, with an expectation of profit to be derived from Defendants’ efforts,” said the SEC.

The SEC has taken it upon itself to label different cryptocurrencies as securities in various lawsuits, including enforcement actions against Binance and Coinbase. In the commission’s case against Ripple, a federal judge ruled in July that the XRP (XRP) token did not necessarily qualify as a security, potentially leading to the SEC dropping charges against CEO Brad Garlinghouse and executive chair Chris Larsen.

The question of what cryptocurrencies qualify as securities or commodities in the United States has been an ongoing debate among lawmakers and regulators, as has the role the SEC should play in regulating digital assets. Many experts are also speculating that the SEC may soon decide on whether to approve a spot crypto exchange-traded product for the first time.

IRS team reports rise in crypto tax investigations

According to the fiscal year 2023 report, the IRS unit investigated failures to disclose crypto holdings and report on capital gains for transactions.

The Criminal Investigation (CI) Unit of the United Internal Revenue Service (IRS) reported an increase in the number of investigations around digital asset reporting.

In its annual report released on Dec. 4, the IRS investigative arm said it had initiated more than 2,676 cases in which it had identified more than $37 billion related to tax and financial crimes in the 2023 fiscal year.

“These investigations consist of unreported income resulting from failure to report capital gains from the sale of cryptocurrency, income earned from mining cryptocurrency, or income received in the form of cryptocurrency, such as wages, rental income, and gambling winnings,” said the Criminal Investigation Unit.

Our FY23 Annual Report highlights more than 2,600 investigations, $37.1 billion identified from tax and financial crimes. #IRSC #ByTheNumbers #WhatWeDoCounts
https://t.co/B1hZw8ClXm pic.twitter.com/EZWQKNB2uu

— IRS Criminal Investigation (@IRS_CI) December 4, 2023

Starting in 2019, the IRS began requiring U.S. In the report, CI chief Jim Lee said that “most people using cryptocurrency do so for legitimate purposes,” but digital assets pose a risk for financing terrorism, ransomware attacks, and other illicit activities.

Since it began increasing efforts to investigate crimes involving cryptocurrency in 2015, the IRS has seized more than $10 billion in digital assets.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

Coinbase initiative announces crypto-themed US presidential forum

Presidential candidates Asa Hutchinson, Vivek Ramaswamy and Dean Phillips will discuss blockchain and crypto ahead of the New Hampshire Primary.

The “Stand With Crypto” campaign launched by cryptocurrency exchange Coinbase plans to bring candidates for the 2024 United States presidential election together to discuss blockchain technology and digital assets.

According to its website as of Dec. 4, Stand With Crypto confirmed that Republican candidates Asa Hutchinson and Vivek Ramaswamy, as well as Democratic candidate Dean Phillips, will appear in person in New Hampshire on Dec.

“This special opportunity allows you to hear from each presidential candidate and will provide candidates with a venue to address the crypto and blockchain community in New Hampshire,” said Stand With Crypto.

We are excited to announce the first-ever Crypto Presidential Forum!

Join us in New Hampshire to hear directly from candidates about their positions on crypto policy and a wide range of other topics.

Local leaders will also be… pic.twitter.com/B5fqd5TlfE

— Stand With Crypto️ (@standwithcrypto) December 1, 2023

On Jan.

At the time of publication, polls suggested that President Biden was most likely to face Trump in 2024, with the former president double digits ahead of DeSantis, Haley and Ramaswamy — roughly 58% to their 5%–13%. 1 Quinnipiac poll showed Kennedy Jr.

It’s unclear whether the Dec. and Ramaswamy, have made digital assets one of the key issues in their campaigns, but frontrunners Biden and Trump rarely speak publicly on crypto and blockchain.

In El Salvador, former President Nayib Bukele resigned from his position on Dec. Bukele advocated for the Central American nation to adopt Bitcoin (BTC) as legal tender and has been behind multiple buys of the cryptocurrency for the government.

Nayib Bukele steps down as El Salvador’s President ahead of re-election bid

Acting President Claudia Rodríguez de Guevara, the first female head of state for El Salvador, took office on Dec. 1 and is expected to serve until June 2024.

El Salvador President Nayib Bukele, who was behind legislation recognizing Bitcoin (BTC) as legal tender in the country, has stepped down from office to campaign.

On Dec.

“Current state of democracy in El Salvador: the office of the President of the Republic will be occupied by a person for whom no one has ever voted,” said Héctor Silva, candidate for the mayor’s office of San Salvador, on X.

El legado correcto

The right legacy
https://t.co/dO2c0ZtQUN

— Nayib Bukele (@nayibbukele) November 29, 2023

Bukele, who first took office in June 2019, quickly became known for his attempts to reduce the homicide rate in El Salvador — one of the highest in the world at the time — as well as his pro-crypto policies. He advocated for the Salvadoran government to adopt Bitcoin as legal tender in September 2021 and pushed for the creation of a volcano-powered ‘Bitcoin City’ in the country.

Though the homicide rate under Bukele has dropped significantly, many critics have pointed to El Salvador violating laws on human rights in its attempts to crack down on gang activity.

Sam Bankman-Fried will not file any post-trial motions, say lawyers

The former FTX CEO was found guilty of seven felony charges on Nov. 2, for which he could face up to 115 years in prison.

Following his conviction on federal fraud charges on Nov. 2, former FTX CEO Sam “SBF” Bankman-Fried will not pursue any post-trial motions.

In a Dec. 1 letter to Judge Lewis Kaplan in United States District Court for the Southern District of New York, lawyers representing Bankman-Fried said they had “decided not to file any post-trial motions” but reserved their rights to pursue claims on appeal. The filing was the latest following SBF’s conviction on Nov. 2 as he awaits sentencing on March 28.

It’s unclear whether prosecutors plan to move forward with Bankman-Fried’s second trial in March.

After the jury verdict was handed down, Bankman-Fried returned to the Brooklyn Metropolitan Detention Center, where he is expected to remain until sentencing. 30, crypto blogger Tiffany Fong interviewed a former mob enforcer, Gene Borrello, who reported on some of SBF’s experiences in jail.

Terraform Labs and SEC lawyers spar over whistleblower in court: Report

Though many filings in the SEC case were made under seal, Judge Jed Rakoff reportedly suggested that nothing would remain confidential should the matter go to trial.

Lawyers representing the United States Securities and Exchange Commission and Terraform Labs and co-founder Do Kwon sparred in court over information provided by a whistleblower in the securities lawsuit.

According to a transcript of court events provided by Inner City Press on Nov. 30, the SEC reiterated its claims that Terra and Kwon “committed fraud” using the LUNA token, citing sealed evidence provided by an unnamed whistleblower.

“The SEC has misrepresented Do Kwon’s statements,” said Kwon’s and Terra’s lawyer, according to the report.

OK – now at SEC v Terraform Labs & Do Kwon, Inner City Press will live tweet, thread below https://t.co/zRKCGlc0T4

— Inner City Press (@innercitypress) November 30, 2023

The arguments came in a hearing of the U.S. 28, the judge approved the confidential treatment of certain materials filed by Jump Crypto, the firm under scrutiny for its alleged involvement in the events leading to the depegging of UST.

Kwon, who was arrested by authorities in Montenegro in March for using falsified travel documents, could face extradition to either the U.S. Attorney’s Office charged Kwon with eight criminal counts related to fraud at Terraform Labs.

Courts will provide ‘good guidance’ for crypto — CFTC commissioner

Kristin Johnson proposed several potential paths for handling digital assets in the United States — through Congress, having private companies address governance and the courts.

Kristin Johnson of the United States Commodity Futures Trading Commission (CFTC) said there are many ways of handling cryptocurrencies in the country, but legislating through courts could provide a solid, if slow, path.

Speaking at the Blockchain Association’s Policy Summit in Washington, D.C. 30, Johnson said the “best outcome” for corporate governance of crypto firms would be to have companies implement their own plans. She cited policymakers introducing reporting requirements for Binance as part of a $4.3 billion settlement with the crypto exchange.

We’re honored to welcome @CFTCjohnson to the #BAPolicySummit stage for our next session as she sits down with @GeorgiaQuinnEsq of @Anchorage pic.twitter.com/FpgQRjPZ0B

— Blockchain Association (@BlockchainAssn) November 30, 2023

According to the CFTC commissioner, Congress could also step in and provide clarification as to the definition of a security — one of the key points behind the U.S.

“If we rely on the courts we will get good guidance, but it won’t come quickly,” said Johnson.

Though the CFTC and SEC have both, at times, settled lawsuits with different crypto firms rather than going to trial, many companies have asked for their day in court.

SEC solicits comments on Fidelity’s spot Ether ETF application

“Interested persons” will have 21 days to comment on a proposed rule change allowing the Cboe BZX Exchange to list and trade shares of the Fidelity Ethereum Fund.

The United States Securities and Exchange Commission called on the public to comment on a proposed rule change that could allow asset management firm Fidelity to offer shares of its spot Ether (ETH) exchange-traded fund, or ETF.

In a Nov. 30 notice, the SEC said “interested persons” may comment on the Fidelity offering, proposing the Cboe BZX Exchange list and trade shares of its Fidelity Ethereum Fund. Fidelity first filed for approval of the fund on Nov.

Has been long known that Fidelity entered the spot ETF race but this filing *essentially* starts the ~240+ day clock for their spot #Ethereum ETF. Will have definitive deadline dates in the coming weeks https://t.co/0C6NKcxNNz pic.twitter.com/gdW9ZQDgs9

— James Seyffart (@JSeyff) November 30, 2023

The filing noted that investors in other countries, “including Germany, Switzerland and France,” had opportunities to gain exposure to Ether through exchanges offering exchange-traded products.

“U.S.

The filing added:

“Approval of a Spot ETH ETP would represent a major win for the protection of U.S. investors in the crypto asset space.”