SEC is targeting – Gemini Earn
On 12 January 2023, the United States Securities and Exchange Commission (SEC) charged leading cryptocurrency firm Genesis Global Capital along with the crypto exchange Gemini Trust Company for allegedly engaging in the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto-asset lending program.
Genesis alerted Gemini Earn investors in November 2022 that it would not let them to withdraw their crypto-assets owing to Genesis’s inability to meet withdrawal requests due to volatility in the crypto-asset market. Genesis is said to have roughly $900 million in investor assets from 340,000 Gemini Earn investors at this time. Gemini ended the Gemini Earn programme in early January 2023.
The SEC claims that additional investigations into other securities law breaches and alleged misbehaviour are ongoing. Gemini Earn investors have yet to be allowed to withdraw their crypto-assets.
The United States Congress has established a crypto regulatory panel.
The United States Congress has established a new subcommittee to supervise and focus on the cryptocurrency and fintech businesses. The House Financial Services Committee will include the Subcommittee on Digital Assets, Financial Technologies, and Inclusion.
2022 was a turbulent year for the crypto business, marked by crashing prices, ASIC halt orders, liquidation, and the arrest of FTX CEO and creator Sam Bankman-Fried.
While the negative appears to outweigh the positive, 2022 saw a surge in calls for regulation and legislation to be introduced to protect the business and encourage involvement.
Today, as we approach the start of 2023, this subcommittee may assist provide the United States with the kind of crypto-knowledge and smart regulation that has so far been lacking. Congressman Hill has a reputation for being crypto-friendly, and he is clearly aware about the difficulties and opportunities presented by blockchain and cryptocurrency, which can only be a good thing for the industry.
BlackRock envisions a tokenized future.
Larry Fink, Chairman and CEO of BlackRock, the world’s largest asset manager, has recently acknowledged the possibilities and benefits of tokenization in financial markets. Fink stated in an interview with Aaron Ross Sorkin at the New York Times Dealbook Conference in late November:
The next generation for markets, the next generation for securities, will be tokenization of securities.
Tokenisation is a digital representation of an asset that is generated and exchanged on a blockchain. When opposed to traditional shares, bonds, or real estate, tokenisation allows for a different means of trading assets. The transaction is recorded on a secure and decentralised ledger.
Fink pointed out that distributed ledger technology allows for immediate settlement and drastically lower fees by eliminating the need for middlemen.
Fink also feels that tokenization will improve investor involvement and governance, as he stated to CNBC last week:
We want to democratize the vote. This is one of the reasons why I’m focused on the whole idea of blockchain for securities. I look forward to the day when we can tokenize stocks and bonds that every stock and every bond we can identify immediately who is the beneficial owner and this is why we’re working on it and every beneficial owner from an individual to an institution have the ability to vote, to democratize every single vote, and that’s where we want to take this and we’re leading that effort.
Tokenization is gaining popularity among financial heavyweights and venture investors. Flowcarbon, which tokenizes carbon credits, raised $70 million from major investors such as General Catalyst and Samsung Venture Investment in May of last year. JPMorgan and Polygon collaborated in November 2022 to trade tokenised cash deposits.
While JP Morgan CEO Jamie Dimon has long been a critic of cryptocurrencies, the bank has been a vocal supporter of blockchain technology and tokenization via its Onyx platform. Tyrone Lobban, the unit’s head, extolled the virtues of institutional DeFi at last year’s Consensus conference:
Over time, we think tokenizing U.S. Treasurys or money market fund shares, for example, means these could all potentially be used as collateral in DeFi pools…The overall goal is to bring these trillions of dollars of assets into DeFi, so that we can use these new mechanisms for trading, borrowing [and] lending, but with the scale of institutional assets.
These developments suggest a high level of institutional interest in the use of blockchain technology in financial markets. The use of these technologies to Australian markets is likely to be studied further as part of the Government’s proposed payment and market infrastructure changes, which it has committed to move forwards this year.
NAB will introduce a AUDN stablecoin.
National Australia Bank (NAB) plans to create its own stablecoin, AUDN, alongside big-four competitor ANZ by mid-2023.
AUDN will be issued on the Ethereum blockchain and backed by fiat currency, in this case Australian dollars held by NAB. The AUDN stablecoin will enable NAB clients to settle transactions in real time, such as when shipping money abroad or trading carbon credits.
NAB’s Head of Innovation, Howard Silby said:
We certainly believe there are elements of blockchain technology that will form part of the future of finance… That continues to be the source of some debate. But certainly, from our point of view, we see [blockchain] has the potential to deliver instantaneous, transparent, inclusive, financial outcomes.
Stablecoins are a good way for large financial institutions to get started with blockchain and Web3 since they are well positioned to provide reliable asset-backed tokens. Once its clients learn about the benefits of blockchain technology, NAB’s debut may inspire additional investment and study.
Although blockchain technology and cryptographic tokens have yet to realise their full potential, it is important that two of Australia’s “big four” banks have experienced benefits in some form in embracing stablecoins. NAB aims to employ AUDN as a settlement token, enabling for fast settlement of transfers and transactions.
Digital asset specialist, DigitalX, has promised to use AUDN to prove reserves in digital asset funds and create real-time settlements.
The Governor of the Reserve Bank of Australia (RBA), Phillip Lowe, has previously endorsed the benefits of stablecoins describing them as:
the one piece of the crypto landscape where I think there is real promise
Nevertheless, the RBA stated late last year that Australia’s Council of Financial Regulators (CFR) is investigating ways to incorporate payment stablecoins into the regulatory framework for stored-value facilities. According to reports, NAB and ANZ are collaborating closely with financial regulators on the regime.
With two of Australia’s biggest banks now supporting stablecoins, the future of stablecoins as a component of the country’s growing payments ecosystem appears bright.
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