SEC’s Gensler Raises Concerns Over House Bill Impacting Crypto Oversight

Gary Gensler, U.S. SEC Chairperson, has voiced apprehensions regarding a proposed House bill that could potentially undermine regulatory oversight of crypto capital markets. The bill, if passed, could have significant implications for how cryptocurrencies are regulated and supervised in the United States.

Gensler’s remarks highlight the growing regulatory scrutiny surrounding the cryptocurrency industry, as policymakers grapple with how to effectively regulate this rapidly evolving market. The proposed legislation has drawn attention from both industry participants and regulators, raising questions about its potential impact on investor protection and market integrity.

The SEC chairman’s concerns stem from provisions in the bill that could limit the agency’s authority to oversee crypto exchanges and trading platforms. Gensler warns that such limitations could weaken regulatory safeguards and expose investors to greater risks, particularly in light of the market’s inherent volatility and susceptibility to manipulation.

The House bill comes at a time when cryptocurrencies are gaining mainstream acceptance and attracting significant investment interest. As digital assets continue to proliferate and evolve, regulators are facing mounting pressure to establish clear rules and guidelines to govern their trading and issuance.

Gensler’s remarks underscore the SEC’s commitment to ensuring the integrity and stability of capital markets, even as new asset classes like cryptocurrencies emerge. The agency remains vigilant in its oversight efforts, seeking to strike a balance between fostering innovation and safeguarding investors against potential harm.

The proposed legislation has sparked debate within the crypto community and among lawmakers, with proponents arguing that it could provide much-needed clarity and certainty for market participants. However, critics contend that it could stifle innovation and hinder the growth of the nascent industry.

As discussions around crypto regulation continue to unfold, stakeholders are closely monitoring developments in Washington and the broader regulatory landscape. The outcome of the proposed House bill could have far-reaching implications for the future of crypto regulation in the United States, shaping the trajectory of this burgeoning market for years to come.

SOURCE: SEC’s Gensler Says House Bill Would ‘Undermine’ Regulator’s Crypto, Capital Markets Oversight

Democratic House Leadership Signals Non-Committal Stance on Crypto Bill Vote

Democratic leaders in the House of Representatives have indicated that they will not enforce party discipline on an upcoming vote concerning cryptocurrency legislation. This decision comes amid growing debate over regulatory measures aimed at the crypto industry.

The move to refrain from “whipping” the vote on the crypto bill reflects the complexities surrounding the issue and the diverse range of opinions within the Democratic Party. With members holding varying views on how best to regulate the burgeoning cryptocurrency market, party leaders have opted to allow for individual discretion in the upcoming vote.

The decision not to enforce party unity underscores the nuanced nature of the crypto regulation debate, with lawmakers grappling with how to strike a balance between fostering innovation and safeguarding against potential risks. By refraining from exerting pressure on members to vote along party lines, Democratic leadership aims to encourage open dialogue and deliberation on the proposed legislation.

The upcoming vote on the crypto bill is poised to have significant implications for the future of digital asset regulation in the United States. The legislation seeks to address key issues such as investor protection, anti-money laundering measures, and the oversight of crypto exchanges.

The Democratic leadership’s decision to adopt a hands-off approach to the vote reflects a recognition of the need for careful consideration and informed decision-making on complex policy matters. By allowing members to exercise their independent judgment, party leaders hope to foster a constructive and inclusive legislative process.

As the debate over crypto regulation continues to unfold, stakeholders across the political spectrum will be closely watching the outcome of the upcoming vote. The decision to eschew party discipline underscores the importance of collaboration and compromise in shaping the future regulatory landscape for cryptocurrencies.

In conclusion, Democratic House leadership’s decision not to whip the vote on the crypto bill reflects a commitment to fostering open dialogue and deliberation on complex policy issues. As lawmakers prepare to weigh in on the future of cryptocurrency regulation, the outcome of the upcoming vote will have far-reaching implications for the industry and its stakeholders.

SOURCE: Democrat House Leadership Says Crypto Bill Vote Won’t Be Whipped

Switzerland Adopting Global Standards for Crypto Tax Reporting

Switzerland’s highest authority has initiated a public consultation on adopting global standards for crypto tax reporting to ensure equal treatment of crypto assets and traditional assets. The Federal Council, comprising seven members who collectively head the Swiss government, aims to implement the Crypto-Asset Reporting Framework (CARF) to enhance tax transparency.

On May 15, the Federal Council released a consultation paper to gauge public sentiment on joining the Automatic Exchange of Information (AEOI), an international cooperation between tax administrations to combat tax evasion. Switzerland plans to extend its participation in the AEOI starting January 1, 2026.

The Organisation for Economic Co-operation and Development (OECD) established the AEOI and other initiatives for the Group of 20 (G20) nations, which were later extended to include additional countries. Switzerland previously adopted the OECD’s Common Reporting Standard (CRS) in 2014 but excluded CARF, which governs the handling of crypto assets and their providers. Planning to address this omission, the Federal Council stated:

“Implementation of the CARF will expand Switzerland’s progressive crypto market regulation and help to maintain the credibility and reputation of the Swiss financial center.”

However, the CARF implementation will require parliamentary approval and cannot be based solely on responses to the consultation paper.

By 2027, nearly 50 countries are expected to fully adopt CARF regulations to collectively combat money laundering. The Swiss federal authority aims to “close gaps in the tax transparency mechanism and ensure equal treatment with respect to traditional assets and financial institutions.”

The consultation will run for over three months and conclude on September 6.

In a related development, Canada’s annual budget in April 2024 suggested that the country would implement CARF for taxation by 2026. The CARF would impose new reporting requirements on crypto asset service providers, such as cryptocurrency exchanges, crypto-asset brokers, and crypto-asset automated teller machine operators. When the regulation takes effect, Canadian individuals and businesses will be required to report transactions between crypto assets and fiat currencies, as well as crypto-to-crypto transactions, to the Canada Revenue Agency.

SOURCE: Swiss leaders plan to enforce global crypto reporting framework

Cypher Protocol Developer Confessing to $300K Theft and Gambling

Pseudonymous Cypher Protocol developer Hoak has admitted to stealing nearly $300,000 worth of user funds and gambling them away, shaking the Solana-based cross-margin decentralized exchange (DEX) community. 

In a public statement shared on May 14, Hoak confessed, “To address the elephant in the room, the allegations are true, I took the funds and gambled them away. I didn’t run away with it, nor did anyone else.”

This confession followed a revelation by the pseudonymous core contributor Barrett_io on May 13, who noted the absence of funds. The post initially went unnoticed until an unknown Discord group member highlighted issues with fund withdrawals. Barrett explained, “Hoak has stolen funds from the cypher redemption contract. This happened over months via 36 withdraws… Deployer wallet (ETR8…) withdraws funds from Cypher’s redemption contract. Then conducts swaps and sends SOL, USDC, and USDT to an intermediary wallet (7sKM…). This intermediary wallet then sends funds to Binance.”

On-chain data compiled by Barrett revealed that a total of $317,000 worth of Solana (SOL), Tether USD (USDT), and USDC were sent by Hoak’s address to Binance exchange. At its peak on December 7, Hoak’s wallet held $68,365 worth of digital assets before the funds were transferred to Binance. CoinStats data shows that over $56,000 worth of assets remained in the wallet on April 22, but more than 99% of these assets were transferred in the next two days.

This insider theft is another blow to Cypher Protocol, which had already been trying to recover from an August 2023 hack that resulted in over $1 million worth of digital assets being stolen. 

In his statement, Hoak attributed his actions to a severe gambling addiction, saying, “I am also in no way, shape, or form attempting to victimize myself, but this is the culmination of what snowballed into a crippling gambling addiction and probably multiple other psychological factors that went by unchecked for too long.”

Cryptocurrency skeptics have often criticized the industry for promoting casino-like behavior. U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has famously compared the crypto ecosystem to “casinos in the Wild West,” with stablecoins functioning as the “poker chips.” A 2023 YouGov survey found that individuals gambling at harmful levels were nearly five times more likely to own cryptocurrencies, highlighting the risks associated with crypto trading.

SOURCE: Solana-based Cypher developer confesses to gambling away $300K of user funds

Bitcoin Runes Protocol Faces Challenges Amid Decreasing Traction

Bitcoin Runes Protocol, which garnered significant attention during its initial launch, is now encountering challenges as its traction appears to be waning. The protocol, which was once hyped for its innovative features, is now facing criticism and skepticism within the cryptocurrency community.

One of the main issues plaguing the Bitcoin Runes Protocol is its inability to sustain the momentum generated during its introduction. Despite the initial excitement surrounding the protocol’s unique approach, user adoption has failed to meet expectations, leading to concerns about its long-term viability.

Moreover, critics have pointed out various flaws and limitations in the protocol’s design, further dampening enthusiasm among potential users and investors. These criticisms range from technical issues to concerns about the protocol’s governance structure and decentralization.

Additionally, competition from other blockchain projects offering similar functionalities has intensified, putting further pressure on the Bitcoin Runes Protocol to differentiate itself and attract users. As a result, the protocol is struggling to maintain relevance in an increasingly crowded and competitive market.

Despite these challenges, proponents of the Bitcoin Runes Protocol remain optimistic about its potential to address key issues in the cryptocurrency space. They believe that with strategic adjustments and improvements, the protocol can regain momentum and establish itself as a leading player in the industry.

However, addressing the protocol’s shortcomings will require concerted efforts from its development team and community members. Transparency, accountability and a commitment to user feedback will be essential in rebuilding trust and confidence in the protocol’s capabilities.

In conclusion, the Bitcoin Runes Protocol’s journey reflects the highs and lows inherent in the cryptocurrency industry. While its initial hype generated excitement, the protocol is now grappling with the realities of user adoption and competition. Moving forward, the protocol must address its challenges head-on to regain traction and fulfill its potential as a transformative force in the blockchain space.

SOURCE: Bitcoin Runes Protocol Sees Traction Waning After Much-Hyped Introduction

Stolen Ether from Poloniex Exchange Remains Unrecovered

Over half of the $100 million worth of Ether (ETH) linked to the infamous Poloniex hack from November 2023 has been siphoned via the privacy protocol Tornado Cash, according to recent reports.

On November 10, 2023, crypto exchange Poloniex experienced massive unauthorized outflows from its wallets. Subsequent investigations confirmed the loss of over $100 million worth of ETH due to a hack. Despite Poloniex identifying the hacker weeks later and offering a $10 million bounty, the stolen funds were never recovered. Blockchain security firm CertiK attributed the incident to a “private key compromise.” In response, Poloniex temporarily disabled the compromised wallet.

Six months later, it became evident that the hacker had no intention of returning the stolen funds. Blockchain investigation firm PeckShield discovered that more than half of the stolen Ether was transferred through Tornado Cash, a protocol used to anonymize assets. The hacker moved over 17,800 ETH from six different wallets into a single Tornado Cash address. At the time of transfer, the tokens were worth approximately $53.3 million.

Despite the significant setback, Poloniex resumed operations shortly after the incident, allowing investors to deposit and withdraw crypto. The exchange also appointed a “top-tier security auditing firm” to enhance the security of funds on Poloniex and prevent future hacks. At the time, Poloniex stated, “Currently, they are in the final stages of the security audit and verification processes for Poloniex. Upon completion of the audit, we will promptly resume deposit and withdrawal services on our platform.”

Poloniex owner Justin Sun, who acquired the exchange in 2019, promised to fully reimburse users affected by the breach. Sun assured that Poloniex “maintains a healthy financial position” and is seeking collaborations with other exchanges to recover the lost funds.

SOURCE:

Metaplanet Boosts Bitcoin Amid Japan’s Mounting Debt Crisis

Metaplanet, a prominent financial institution, has taken a bold step by designating Bitcoin as a reserve asset amid Japan’s escalating debt crisis. This decision comes amidst growing concerns over Japan’s towering debt mountain, which has reached alarming levels in recent years.

Japan’s debt predicament stems from a combination of factors, including extensive government spending, economic stagnation, and an aging population. As the nation grapples with these challenges, there are fears that its debt burden could have far-reaching consequences for its economy and financial stability.

By embracing Bitcoin as a reserve asset, Metaplanet aims to diversify its holdings and hedge against the risks associated with traditional fiat currencies. Bitcoin, known for its decentralized nature and limited supply, offers a potential safeguard against inflation and currency devaluation, which are pressing concerns in the current economic climate.

Metaplanet’s decision to incorporate Bitcoin into its reserve holdings underscores the increasing recognition of cryptocurrencies as legitimate assets within the global financial landscape. As institutional adoption of Bitcoin continues to grow, its role as a store of value and hedge against economic uncertainty becomes more pronounced.

Moreover, Japan’s debt crisis serves as a stark reminder of the need for innovative solutions to address structural economic challenges. The incorporation of Bitcoin into traditional financial institutions’ portfolios represents a paradigm shift in how assets are managed and allocated in response to evolving market dynamics.

While Bitcoin’s designation as a reserve asset by Metaplanet signals confidence in its long-term viability, it also raises questions about the future of traditional financial systems and the role of cryptocurrencies in reshaping them. As Japan grapples with its debt woes, Metaplanet’s move may serve as a catalyst for further adoption of digital assets by institutions seeking alternative stores of value.

Metaplanet’s decision to designate Bitcoin as a reserve asset amid Japan’s mounting debt crisis underscores the growing recognition of cryptocurrencies as viable financial instruments. As the world navigates through economic uncertainties, institutions are increasingly turning to Bitcoin and other digital assets as a means of diversification and risk mitigation.

SOURCE: Metaplanet Makes Bitcoin a Reserve Asset as Japan’s Debt Mountain Grows

Chinese Workers Increasingly Cashing Out Digital Yuan

Workers in China participating in the pilot program for the country’s Central Bank Digital Currency (CBDC) are choosing to immediately convert their digital yuan into physical cash. This trend highlights growing hesitations about the practicality and desirability of the state-backed digital currency.

A recent report from the South China Morning Post reveals that despite China’s transition towards becoming a “functionally cashless” society, the uptake of the digital yuan, or “e-CNY,” has faced significant resistance. Many state employees, who are among the early recipients of their salaries in e-CNY, are opting to cash out their digital earnings right away. Sammy Lin, an account manager at a state bank in Suzhou, explained, “I prefer not to keep the money in the e-CNY app because there’s no interest if I leave it there,” highlighting a lack of financial incentives to retain earnings in digital form. He added, “There are also not so many places, online or offline, where I can use the e-yuan.”

The sentiment is echoed by civil servant Andrew Wang, whose wife, also a recipient of her full salary in e-CNY, converts all her digital currency to cash due to its limited usability. “She can’t deposit the money or buy financial products with the e-CNY wallet,” Wang noted, emphasizing the restrictions that come with the digital currency.

Despite the challenges, more than $250 billion in transactions have been conducted with the digital yuan, as per a statement by Yi Gang, former governor of the People’s Bank of China. However, concerns about privacy and surveillance persist. Ye Dongyan from Beijing’s Cheung Kong Graduate School of Business stresses the need for a better balance between privacy and security to foster wider acceptance of the digital yuan.

These concerns are compounded by the digital yuan’s “controllable anonymity,” which ensures privacy for smaller transactions but not for larger ones, potentially contributing to the hesitation among users to fully embrace the digital currency.

SOURCE: Chinese workers paid in CBDC are cashing it out for real money: Report

FTX Creditors to Receive 118% of Funds Back in Cash, Estate Reveals

In a recent development, the estate handling the aftermath of the FTX collapse has announced a new plan that could see almost all creditors receiving 118% of their funds back in cash. This revelation comes as a significant relief to many affected by the collapse of the popular crypto exchange.

According to the estate, this new plan aims to provide swift and equitable restitution to creditors, ensuring that they are compensated for their losses as fairly as possible. The decision to offer creditors more than their initial investments reflects the estate’s commitment to prioritizing the interests of those affected by the collapse.

The announcement comes after months of uncertainty and speculation surrounding the fate of FTX creditors’ funds. The collapse of the exchange had left many investors worried about the prospect of losing their investments entirely. However, this new plan offers a glimmer of hope for those seeking to recover their losses.

Under the proposed plan, creditors will have the option to receive their funds in cash, allowing them to access their money quickly and easily. This is expected to provide much-needed relief to individuals and businesses who may have been struggling financially as a result of the collapse.

Additionally, the plan underscores the importance of transparency and accountability in the cryptocurrency industry. By providing regular updates and clear communication, the estate has been able to instill confidence in creditors and stakeholders, demonstrating its commitment to resolving the situation in a fair and timely manner.

Overall, the announcement of the new plan represents a positive step forward in the aftermath of the FTX collapse. While challenges may still lie ahead, creditors can take comfort in the fact that efforts are being made to address their concerns and ensure that they receive the restitution they deserve. As the process unfolds, stakeholders will continue to monitor developments closely, hopeful for a favorable outcome.

SOURCE: Nearly All FTX Creditors Will Get 118% of Their Funds Back in Cash, Estate Says in New Plan

Vitalik Buterin’s Proposal Aims to Enhance Ethereum’s Account Abstraction

Ethereum, the pioneering blockchain platform, might soon undergo a significant upgrade, thanks to a proposal put forward by Vitalik Buterin, one of its co-founders. Buterin’s proposal, known as EIP-7702, targets the refinement of “account abstraction” on Ethereum.

Account abstraction is a critical aspect of Ethereum’s architecture, defining how user accounts interact with the blockchain. Buterin’s proposal seeks to improve this interaction by making it more flexible and efficient. With EIP-7702, users could execute transactions and interact with smart contracts using a broader range of cryptographic keys, enhancing security and usability.

The proposed changes could pave the way for more diverse and advanced applications to be built on Ethereum. By enabling greater flexibility in account management, developers could create innovative decentralized finance (DeFi) protocols, non-fungible token (NFT) marketplaces, and other decentralized applications (dApps) with enhanced functionality and security.

Buterin’s proposal has garnered attention and sparked discussions within the Ethereum community. Developers, researchers, and enthusiasts are evaluating the potential implications of EIP-7702 and providing feedback to refine the proposal further.

If adopted, EIP-7702 could usher in a new era of innovation and growth for Ethereum. By enhancing account abstraction, Ethereum would become more adaptable to the evolving needs of its users and developers, positioning itself as a leading platform for decentralized applications.

Overall, Buterin’s proposal reflects Ethereum’s commitment to continuous improvement and innovation. As the blockchain ecosystem evolves, initiatives like EIP-7702 play a vital role in ensuring Ethereum remains at the forefront of blockchain technology, driving progress and empowering users worldwide.

SOURCE: Vitalik Buterin proposes EIP-7702 aiming to refine account abstraction on Ethereum