SEC Faces Another Setback in Grayscale Case as Court Deems Its Decision Unfair and Lacking Reasonable Basis
The SEC has suffered a setback in the Ripple lawsuit regarding the nature of XRP tokens. Additionally, the SEC may face another disappointing outcome in the Grayscale case. The D.C. Circuit has ruled that the SEC's decision to exclude certain stock volatility futures from certain regulations was unfair and lacked a reasonable basis. As a result, SPIKES Index Futures will now fall under "securities futures" rather than "futures," and market participants will have three months to adjust their transactions.
Representative Ritchie Torres Proposes FIT Act to Reform Cryptocurrency Market Structure and Establish Guidelines for Stablecoins
Representative Ritchie Torres (D-CA) has criticized the SEC's approach to regulating the cryptocurrency industry, calling it a "war on the whole industry." He has proposed the Financial Innovation and Technology (FIT) for the 21st Century Act, which aims to reform the market structure by defining which cryptocurrencies fall under the SEC's jurisdiction. The proposed legislation would classify a crypto asset as a commodity falling under the jurisdiction of the CFTC once it can demonstrate sufficient decentralization. Torres is also supporting a measure that focuses on stablecoins, but a bipartisan compromise on the stablecoin measure has recently collapsed, adding complexity to ongoing discussions about stablecoin regulations.
SEC commissioner questions warning to accounting firms over non-audit work for crypto clients
Hester Pierce, a commissioner of the SEC, has expressed concerns about the watchdog's warning to accounting firms regarding non-audit work for crypto clients. She disagrees with the SEC's chief accountant, Paul Munter, who warned accounting firms against engaging in work for crypto platforms unless it involves a complete financial audit. Pierce believes that discouraging good-faith efforts to provide more transparency may hinder sincere efforts from crypto platforms. Munter, on the other hand, believes that work beyond a full audit's scope will lack transparency for investors and accounting firms should consider making a noisy withdrawal if a client is making misleading statements about its non-audit work to the public.
Grayscale Claims Coinbase is Not a Suitable Partner for Bitcoin ETF Surveillance
Grayscale has urged the SEC to approve any qualifying Bitcoin spot ETF applications simultaneously and avoid favoritism. However, Grayscale has also argued that Coinbase should not be considered a suitable surveillance partner for launching a Bitcoin spot ETF. The SEC's decision on these matters could create more clarity and stability in the cryptocurrency market.
SEC Chair Gary Gensler Avoids Discussing Ripple Case Specifics in Bloomberg Interview
Bloomberg intelligence runner James Seyffart pointed out that SEC chair Gary Gensler avoided discussing the Ripple case and Bitcoin ETF filings in a recent Bloomberg TV interview. During the interview, Bloomberg reporter Kailey Leinz asked Gensler about his thoughts on the Ripple verdict and whether the agency planned to appeal it. Gensler was evasive in his response, stating that he is one of five commissioners and has no say over whether the SEC will appeal the verdict. The judge in the Ripple case determined that XRP sales to retail investors did not qualify as securities, while those to institutional investors did.
Ripple Attorney Withdraws from SEC Lawsuit, Ripple Asks for Another Attorney to Withdraw
Another attorney representing Ripple has withdrawn from the ongoing lawsuit with the United States Securities and Exchange Commission (SEC), causing uncertainty for XRP holders. Ripple has requested permission from the court to withdraw Lisa R. Zornberg as an attorney in the case, as she will no longer be working with the law firm from July 31. However, this will not affect Ripple's relationship with Debevoise & Plimpton LLP, as other attorneys from the firm will continue to represent Ripple Labs in the case. The court had previously approved withdrawal motions for three other attorneys, and the case has been referred to a settlement conference.
Binance and US SEC Oppose Eeon's Petition to Intervene in Lawsuit
The SEC and Binance have opposed a petition by third-party entity Eeon to intervene in the lawsuit on behalf of customers. Binance gave three reasons for dismissing the petition, including Eeon's failure to meet requirements for intervention under the law. The SEC argued that Eeon is a serial pro se litigant whose causes have failed to gain traction in federal courts, and requested the court to deny the petition. Meanwhile, Binance has filed a motion to dismiss the US CFTC lawsuit claiming that it lacks jurisdiction on the global crypto exchange and the right to sue its CEO CZ.
SEC Warns Accounting Firms of Obligations When Working with Crypto Firms
The chief accountant of the SEC, Paul Munter, has cautioned accounting firms about their responsibilities when working with crypto companies. Misrepresenting findings could have serious consequences, including legal liability. Munter advised accounting firms to consider contractual prohibitions on certain language and to prioritize their independence. The SEC relies heavily on accountants to ensure compliance with federal securities law requirements, and accounting firms have a legal obligation to report any illegal activities they uncover.
SEC Chair Gary Gensler Dodges Questions on Next Steps in Ripple Lawsuit
Gary Gensler, the Chair of the SEC, avoided answering questions about the agency's next steps in response to the recent XRP vs SEC lawsuit ruling. During an interview with Bloomberg TV, he did not confirm whether the SEC would appeal the decision. Gensler had previously expressed disappointment with the ruling, and the SEC has stated its intention to seek further review. The ruling determined that XRP is only a security when sold to institutional investors, not retail investors, and many US-based crypto exchanges have since relisted the token.
The SEC Issued New Regulations: Listed Companies Must Announce Hacker Attacks in a Timely Manner, and Brokerages Are Restricted From Using AI
According to Golden Ten Data on July 27th, on Wednesday local time, the US Securities and Exchange Commission (SEC) issued a new policy requiring all listed companies to disclose to the public the network hacking attacks they have encountered in a timely manner. This will help investors understand information such as the frequency of hacking attacks on listed companies and financial losses, officials said. On the same day, five members of the SEC also voted to pass another draft policy, requiring U.S. securities firms to solve the problem of damage to customer interests in the process of using artificial intelligence technology. This move is partly due to the "retail investors vs. Wall Street" in the US capital market in 2021. Regulatory authorities found that some investment advisory software and securities brokerage institutions used AI and online game-like methods to encourage certain behaviors of traders.
