US crypto regulation

‘US has left a vacuum that other countries are eager to fill’: Coinbase

While the U.S. government opts for “regulation by enforcement,” other countries are fostering “vibrant” crypto ecosystems due to progressive regulation, argues Coinbase’s Daniel Seifert.

With Coinbase seemingly on the verge of a court battle with the Securities and Exchange Commission (SEC), the firm has emphasized that the U.S. government’s hawkish approach to crypto regulation has “left a vacuum that other countries are eager to fill.’

The SEC issued Coinbase a wells notice on March 22 outlining that SEC staff had recommended the agency take enforcement action over “possible violations of securities laws” concerning some of the firm’s asset listings, staking services and Coinbase Wallet.

In a March 23 blog post titled Europe is winning. Will the US catch up? Daniel Seifert, Coinbase’s Vice President and Regional Managing Director in Europe, stressed that the U.S.’s “regulatory approach to crypto has been marked by regulation by enforcement,” despite industry-wide calls for “comprehensive crypto regulation.”

“This approach has created an environment of uncertainty and instability in the crypto industry,” he wrote.

As such, Seifert argued that the U.S. is losing its status as the leading hub of the crypto sector, while France, the U.K. and the European Union, are now building “vibrant” ecosystems due to their friendlier approach to crypto regulation.

“The US has left a vacuum that other countries are eager to fill,” he wrote, adding: “we are proudly an American company. It’s hard to sit by and watch the US squander the opportunity it has been given.”

In particular, Seifert highlighted the significance of the Blockchain Week event being hosted at the Louvre in Paris this month. He also pointed to the U.K.’s recent push to become a crypto hub, and the European Union’s Markets in Crypto-Assets (MiCA) regulation that is slated to come into effect in 2024.

“This year it’s being held in a private space at the Louvre, arguably the greatest national treasure in France and one of the world’s most respected museums,” he said, adding:

“To me this is a clear signal: France is rapidly recognizing the opportunity that crypto presents and is offering it space to flourish. The broader EU, the UK, UAE, Hong Kong, Singapore, Australia, and Japan are all following suit.”

The MiCA legislation has been in development for two years, and aims to establish a “harmonized set of rules for crypto-assets and related activities and services.”

Related: Cathie Wood’s ARK loading up on Coinbase shares again, buying $18M

It is generally expected to be a positive move for the European cryptocurrency ecosystem, as it will offer clear rules and guidelines for the sector.

“Already we are seeing that Europe now matches the US in its share of crypto developers ( 29% apiece globally). The US used to lead the charge with 40%,” he said, adding that:

“This level of growth does not happen by chance. Concerted efforts have to be made, such as developing a regulatory framework that will provide clarity and stability for businesses operating in the space.”

In a lengthy March 23 Twitter thread, the Crypto Council for Innovation also highlighted similar points to Seifert, noting that “crypto is global, and nobody is waiting around for the US to land the plane.”

The thread explored positive developments across the globe, including examples such as the National Australia Bank’s work with non-USD pegged stablecoins, Hong Kong’s efforts to become a digital asset hub, and the Canadian Securities Administration recently imposing “enhanced investor protection commitments” on domestic crypto exchanges.

‘US has left a vacuum that other countries are eager to fill’: Coinbase

While the U.S. government opts for “regulation by enforcement,” other countries are fostering “vibrant” crypto ecosystems due to progressive regulation, argues Coinbase’s Daniel Seifert.

With Coinbase seemingly on the verge of a court battle with the United States Securities and Exchange Commission (SEC), the firm has emphasized that the U.S. government’s hawkish approach to crypto regulation has “left a vacuum that other countries are eager to fill.“

The SEC issued Coinbase a Wells notice on March 22 outlining that SEC staff had recommended the agency take enforcement action over “possible violations of securities laws” concerning some of the firm’s asset listings, staking services and Coinbase Wallet.

In a March 23 blog post titled, “Europe is winning. Will the US catch up?” Daniel Seifert, Coinbase’s vice president and regional managing director in Europe, stressed that the U.S.’s “regulatory approach to crypto has been marked by regulation by enforcement,” despite industry-wide calls for “comprehensive crypto regulation.”

“This approach has created an environment of uncertainty and instability in the crypto industry,” he wrote.

As such, Seifert argued that the U.S. is losing its status as the leading hub of the crypto sector, while France, the U.K. and the European Union are now building “vibrant” ecosystems due to their friendlier approach to crypto regulation.

“The US has left a vacuum that other countries are eager to fill,” he wrote, adding: “we are proudly an American company. It’s hard to sit by and watch the US squander the opportunity it has been given.”

In particular, Seifert highlighted the significance of Paris Blockchain Week hosted at the Louvre this month. He also pointed to the U.K.’s recent push to become a crypto hub, and the European Union’s Markets in Crypto-Assets (MiCA) regulation, slated to come into effect in 2024.

“This year it’s being held in a private space at the Louvre, arguably the greatest national treasure in France and one of the world’s most respected museums,” he said, adding:

“To me this is a clear signal: France is rapidly recognizing the opportunity that crypto presents and is offering it space to flourish. The broader EU, the UK, UAE, Hong Kong, Singapore, Australia, and Japan are all following suit.”

The MiCA legislation has been in development for two years, and aims to establish a “harmonized set of rules for crypto-assets and related activities and services.”

Related: Cathie Wood’s ARK loading up on Coinbase shares again, buying $18M

It is generally expected to be a positive move for the European cryptocurrency ecosystem, as it will offer clear rules and guidelines for the sector.

“Already we are seeing that Europe now matches the US in its share of crypto developers (29% apiece globally). The US used to lead the charge with 40%,” he said, adding that:

“This level of growth does not happen by chance. Concerted efforts have to be made, such as developing a regulatory framework that will provide clarity and stability for businesses operating in the space.”

In a lengthy March 23 Twitter thread, the Crypto Council for Innovation also highlighted similar points to Seifert, commenting that “crypto is global, and nobody is waiting around for the US to land the plane.”

The thread explored positive developments globally, including examples such as the National Australia Bank’s work with non-U.S. dollar-pegged stablecoins, Hong Kong’s efforts to become a digital asset hub, and the Canadian Securities Administration recently imposing “enhanced investor protection commitments” on domestic crypto exchanges.

​​Stablecoins and Ether are ‘going to be commodities,’ reaffirms CFTC chair

In the tug-of-war between the United States regulators over control of crypto assets, the Commodity Futures Trading Commission chair has tripled-down on his stance that Ether and stablecoins are commodities.

Stablecoins and Ether (ETH) are commodities that should come under the purview of the United States Commodity Futures Trading Commission, its chairman has again asserted at a recent Senate hearing.

At the March 8 Senate Agricultural hearing, CFTC chair Rostin Behnam was asked by Senator Kirsten Gillibrand about the differing views held by the regulator and the Securities and Exchange Commission following the CFTC’s 2021 settlement with stablecoin issuer Tether. Behnam replied:

“Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view.”

“It was clear to our enforcement team and the commission that Tether, a stablecoin, was a commodity,” he added.

In the past, the CFTC has asserted that certain digital assets such as Ether, Bitcoin (BTC) and Tether (USDT) were commodities — such as in its lawsuit against FTX founder Sam Bankman-Fried in mid-December.

Asked what evidence the CFTC would put forward to win regulatory influence over Ether during the Senate hearing, Behnam said it “would not have allowed” Ether futures products to be listed on CFTC exchanges if it “did not feel strongly that it was a commodity asset,” adding:

“We have litigation risk, we have agency credibility risk if we do something like that without serious legal defenses to support our argument that [the] asset is a commodity.”

The comment has seemingly cemented Behnam’s sometimes wavering opinion on the classification of Ether. During an invite-only event at Princeton University in November last year he said Bitcoin was the only cryptocurrency that could be viewed as a commodity, leaving out Ether. Only a month before that, he suggested Ether could be viewed as a commodity too.

Related: CFTC continues to explore digital asset policy considerations in MRAC meeting

Behnam’s most recent comments oppose a view held by SEC chair, Gary Gensler, who claimed in a Feb. 23 New York Magazine interview that “everything other than Bitcoin” is a security, a claim that was rebuffed by multiple crypto lawyers.

The differing viewpoints of the market regulators could set the stage for a conflict as each vies for regulatory control of the crypto industry.

In mid-Febuary, the SEC flexed its authority against stablecoin issuer Paxos saying it may sue the firm for violating investor protection laws alleging its Binance USD (BUSD) stablecoin is an unregistered security.

Around the same time, the regulator similarly targeted Terraform Labs and called its algorithmic stablecoin TerraUSD Classic (USTC) a security, a move Delphi Labs general counsel, Gabriel Shapiro, said could be a “roadmap” for how the SEC could structure future suits against other stablecoin issuers.

The SEC’s crypto clampdowns have seen pushback from the industry. Circle founder and CEO Jeremy Allaire said he doesn’t believe “the SEC is the regulator for stablecoins,” saying they should be overseen by a banking regulator.