If you want more cryptocurrency analysis including full-length research reports, trading signals, and social media sentiment analysis, use the code "Publish0x" when subscribing to CryptoEQ.io to make your first month of CryptoEQ just $10! Or just click the button above!
The Crossroads Newsletter CryptoEQ® and 7investing meet you at the crossroads of Stocks and Cryptocurrencies. December 2021
7investing and CryptoEQ recently up to help investors get a better consolidated view of the opportunities in both equities and cryptocurrencies. 7investing provides its top-seven stock market recommendations every month, while CryptoEQ provides its top-rated cryptocurrencies.
The two companies are now joining forces and publish a monthly Collision Course conversation where they discuss important recent developments and the impact they’ll have on both equities and crypto.
This month, our teams discuss the impact rising inflation and the metaverse will have on equities and cryptocurrencies. They also describe Block’s (formerly Square) recent DeFi product and why “CityCoins” could soon catch on across America. They also share several companies and cryptocurrencies that should be on your investing radar.
Hearing on the Hill
Simon Erickson, 7Investing: “Let’s start with regulations… The United States House of Representatives Committee on Financial Services had a hearing that was entitled “Digital assets and the future of finance: Understanding the challenges and benefits of financial innovation in the United States.” it was all about the kind of regulations and where the future of cryptocurrency is going, right?”
Spencer Randall, CryptoEQ: “I’ve watched a number of hearings and testimonies. And this was really the first time where I felt like a majority of the regulators in the room got it. Like, a majority of the folks that are representing us as citizens within this hearing in this body of regulators seem to understand the big shift that’s happening with digital assets.”
On Wednesday, December 8th, 2021, the US Housing Committee met with top executives of six major crypto companies before Congress. The topics covered at the “Digital Assets and the Future of Finance” panel spanned everything from the challenges, advantages, and regulatory environment of the industry. The hearing served to improve Congress’ understanding of cryptocurrencies and how they fit into existing financial regulations. The common sentiment among the six representatives was that since crypto does not fit neatly within the existing legal regulatory environment, new laws specific to the sector are likely required for the space.
This meeting marked the first time major stakeholders in the crypto industry scored face-time with Congress. Many hoped the sit-down with Congress could help assuage their fears and help convince them to not hinder the financial innovation occurring in the crypto space.
The crypto representatives included:
- Samuel Bankman-Fried, Founder and CEO of FTX exchange
- Jeremy Allaire, Co-Founder, Chairman, and CEO of Circle
- Brian P. Brooks, CEO of Bitfury Group
- Denelle Dixon, CEO and Executive Director of Stellar Development Foundation
- Alesia Jeanne Haas, CEO of COINBASE Inc. and CFO of Coinbase Global Inc.
- Charles Cascarilla, CEO and Co-Founder of Paxos Trust Company
While the hearing left the crypto world feeling mostly positive, “uncertainty” remains the top word when it comes to cryptocurrency regulation heading into 2022. Luckily, Wyoming Republican Senator Cynthia Lummis, a well-known Bitcoin advocate, is planning to introduce a comprehensive bill in 2022 that includes taxes, consumer protections, and more. The bill aims to enact clear guidance on which assets belong to different asset classes, regulate stablecoins, and create a new organization under the CFTC and SEC specifically for cryptocurrencies. Lummis and other crypto-friendly regulators have helped bring the potential of digital assets in front of the Senate and other US regulatory bodies in the back half of 2021.
As a reminder, ??in the US, crypto is at the mercy of the Financial Services Oversight Council (FSOC) and its 10 voting members. There’s the Federal Reserve (Fed), the Department of Treasury, the Commodities & Futures Trading Commission (CFTC), the Securities & Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Commission (FDIC), the Consumer Financial Protection Bureau (CFPB), and a couple of others that are less directly relevant to crypto.
FSOC is a byproduct of Dodd-Frank, responsible for identifying risks and emerging threats to the financial system. That means it has the statutory authority to organize a policy response to emerging tech like crypto. The committee is chaired by the Treasury Secretary and aims to ensure there are no blind spots in the US financial regulatory framework. As the US makes up 38% of the world’s financial market, FSOC’s impact is effectively global.
Changing Regulatory Environment
Simon Erickson, 7Investing: “A few months ago, Brian Armstrong, the CEO of Coinbase, mentioned on Twitter that he was getting asked by the SEC for a whole bunch of documentation. (The SEC) weren’t really understanding his business. He was very frustrated that he felt the bar was continually changing and he was begging for a framework that made sense for companies in the crypto space to abide by.”
Over the course of October 2021, we saw ??Coinbase and a16z pitch their ideas for crypto regulation. Coinbase wants to block the Securities and Exchange Commission (SEC) from being the primary regulator over crypto, and instead, create a special regulator for digital assets. Coinbase’s plans will be released publicly in the near future but have stated that it believes crypto users face uncertainty about which federal agencies should oversee the industry. Following Coinbase and a16z’s efforts, the highly influential and well-capitalized crypto exchange FTX released their own views regarding how the markets should be regulated, and crypto news outlet Coindesk has put forth a crypto asset classification diagram.
It’s encouraging that industry leaders are thinking hard about these things, but also illustrates just how slow to act and, frankly, poorly the current U.S. administrations have handled the growth of the digital asset space.
Brian Armstrong’s comments could not be any more appropriate as the Commodity Futures Trading Commission (CFTC) chairman recently stated “nearly 60% of cryptocurrencies are commodities” and that his team is positioned to lead regulations over the market. Meanwhile, SEC chairman Gary Gensler has continually commented that many cryptocurrencies, including stablecoins, are no different than securities and, as such, should fall under his sphere of influence in the name of “consumer protection.”
There is a power grab going on among U.S. regulatory bodies. These bodies see the tremendous attention and capital in the crypto ecosystem and are vying to be the one to regulate and, to an extent, harness such an influential sector.
