The SEC approved the first tranche of BTC ETFs.
FINRA included guidance on crypto for the first time in its annual regulatory oversight report.
The CFTC tackled DeFi in a thoughtful and constructive subcommittee report
SDNY decided that LUNA and TerraUSD are securities subject to SEC oversight.
The breaking news in the US regulatory world is the SEC’s approval of the first bitcoin ETFs this afternoon, which appears to be genuine after yesterday’s “false start.” The Commission approved the applications from BlackRock, Ark Investments and 21Shares, Fidelity, Invesco, and VanEck among others, with trading expected to start this week. This marks a watershed moment in the evolution of US crypto markets and represents a significant regulatory milestone for an agency that continues to hold a preeminent position in crypto governance, but had been steadfast in its rejections of these products for a decade.
FINRA in its 2024 Annual Regulatory Oversight Report included a section addressing ‘Crypto Asset Developments” for the first time. The content includes a summary of FINRA and SEC guidance on ‘crypto asset securities’ and considerations for firms looking to shape their compliance programs. While we appreciate the useful compendium of existing guidance, we note that it still does not answer the fundamental question of what constitutes a ‘crypto asset security’ and when these rules and procedures apply to firms looking to conduct crypto transactions in the US.
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The breaking news in the US regulatory world is the SEC’s approval of the first bitcoin ETFs this afternoon, which appears to be genuine after yesterday’s “false start.” The Commission approved the applications from BlackRock, Ark Investments and 21Shares, Fidelity, Invesco, and VanEck among others, with trading expected to start this week. This marks a watershed moment in the evolution of US crypto markets and represents a significant regulatory milestone for an agency that continues to hold a preeminent position in crypto governance, but had been steadfast in its rejections of these products for a decade.
FINRA in its 2024 Annual Regulatory Oversight Report included a section addressing ‘Crypto Asset Developments” for the first time. The content includes a summary of FINRA and SEC guidance on ‘crypto asset securities’ and considerations for firms looking to shape their compliance programs. While we appreciate the useful compendium of existing guidance, we note that it still does not answer the fundamental question of what constitutes a ‘crypto asset security’ and when these rules and procedures apply to firms looking to conduct crypto transactions in the US.
The CFTC’s Digital Assets and Blockchain Technology Subcommittee issued a report finding that “the benefits and risks of DeFi depend significantly on the design and features of specific DeFi systems.” While this conclusion itself is not groundbreaking, we applaud the CFTC for tackling this complex regulatory topic in a dedicated effort. We also note that the report’s statement that DeFi’s oftenintentional absence of clear lines of responsibility and accountability poses the greatest risk for consumers and core policy priorities (e.g., AML). The solutions offered by the report (e.g., disclosures, regulatory reporting, third-party audits) are worthy attempts to enable the continued development and application of innovative financial products while optimizing the regulator’s ability to oversee them.
On December 28, Judge Rakoff in the Southern District of New York (SDNY) sided with the SEC in its motion for summary judgment against Terraform Labs, determining that LUNA and TerraUSDare investment contracts subject to US securities laws. The decision stated that "there can be no genuine dispute that the elements of the Howey test...have been met for UST, LUNA, wLUNA, and MIR. ”The SEC has already filed letters in both the Coinbase and Binance lawsuits to leverage the decision in both cases, alleging they are operating unregistered security exchanges.
These developments come after a year in which crypto and digital payments companies paid $5.8b in fines for AML/KYC shortcomings, according to the Financial Times (although $4.3b of that total was from the Binance enforcement action). Given the persistent absence of a broader regulatory framework for US digital asset markets, we assess domestic firms will continue to have to navigate the current ambiguous and fragmented structure without a comprehensive legislative framework in place. That said, today’s BTC ETF approvals could go a long way toward keeping the US market active and stemming the exodus of US firms overseas
Purpose This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda .io. Analyst Certification Tom Nath, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships. Conflicts of Interest This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation. General Disclosures Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http ://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using services. BitOoda its brokerage makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information. The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance. All derivatives brokerage is conducted by Ooda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. BitOoda Technologies, LLC is a member of FINRA. “BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc. Copyright 2024 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
The breaking news in the US regulatory world is the SEC’s approval of the first bitcoin ETFs this afternoon, which appears to be genuine after yesterday’s “false start.” The Commission approved the applications from BlackRock, Ark Investments and 21Shares, Fidelity, Invesco, and VanEck among others, with trading expected to start this week. This marks a watershed moment in the evolution of US crypto markets and represents a significant regulatory milestone for an agency that continues to hold a preeminent position in crypto governance, but had been steadfast in its rejections of these products for a decade.
FINRA in its 2024 Annual Regulatory Oversight Report included a section addressing ‘Crypto Asset Developments” for the first time. The content includes a summary of FINRA and SEC guidance on ‘crypto asset securities’ and considerations for firms looking to shape their compliance programs. While we appreciate the useful compendium of existing guidance, we note that it still does not answer the fundamental question of what constitutes a ‘crypto asset security’ and when these rules and procedures apply to firms looking to conduct crypto transactions in the US.
The CFTC’s Digital Assets and Blockchain Technology Subcommittee issued a report finding that “the benefits and risks of DeFi depend significantly on the design and features of specific DeFi systems.” While this conclusion itself is not groundbreaking, we applaud the CFTC for tackling this complex regulatory topic in a dedicated effort. We also note that the report’s statement that DeFi’s oftenintentional absence of clear lines of responsibility and accountability poses the greatest risk for consumers and core policy priorities (e.g., AML). The solutions offered by the report (e.g., disclosures, regulatory reporting, third-party audits) are worthy attempts to enable the continued development and application of innovative financial products while optimizing the regulator’s ability to oversee them.
On December 28, Judge Rakoff in the Southern District of New York (SDNY) sided with the SEC in its motion for summary judgment against Terraform Labs, determining that LUNA and TerraUSDare investment contracts subject to US securities laws. The decision stated that "there can be no genuine dispute that the elements of the Howey test...have been met for UST, LUNA, wLUNA, and MIR. ”The SEC has already filed letters in both the Coinbase and Binance lawsuits to leverage the decision in both cases, alleging they are operating unregistered security exchanges.
These developments come after a year in which crypto and digital payments companies paid $5.8b in fines for AML/KYC shortcomings, according to the Financial Times (although $4.3b of that total was from the Binance enforcement action). Given the persistent absence of a broader regulatory framework for US digital asset markets, we assess domestic firms will continue to have to navigate the current ambiguous and fragmented structure without a comprehensive legislative framework in place. That said, today’s BTC ETF approvals could go a long way toward keeping the US market active and stemming the exodus of US firms overseas
Purpose This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda .io. Analyst Certification Tom Nath, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships. Conflicts of Interest This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation. General Disclosures Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http ://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using services. BitOoda its brokerage makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information. The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance. All derivatives brokerage is conducted by Ooda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. BitOoda Technologies, LLC is a member of FINRA. “BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc. Copyright 2024 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.