The U.S. Securities and Exchange Commission (SEC), under Gary Gensler’s leadership, seems intent on imposing strong regulatory measures on the burgeoning cryptocurrency sector. The perceived threat this sector poses to the supremacy of the U.S. dollar has resulted in substantial enforcement actions against crypto exchanges and other platforms in the ecosystem. Consequently, the market is witnessing an exodus of retail investors, largely driven by profit-making ambitions. These events are likely to cause the death of many cryptocurrencies that the SEC labels as securities, while others might face stunted growth due to the constant threat of potential SEC action.

The Persistent Bullish Trend of Bitcoin

Despite the trials and tribulations faced by the crypto sector, Bitcoin’s upward trend remains unscathed. The cryptocurrency has been following this trajectory since the start of the year. An 18% correction since its peak at around $31,000 in early April does not mar this trend; in fact, it’s considered quite normal. Two key indicators, the weekly Stochastic RSI and the Gaussian Channel, serve as harbingers of this positive trend.

Analyzing Key Indicators: Weekly Stochastic RSI & Gaussian Channel

The weekly Stochastic RSI, an indicator soon to trigger, is inching towards bottoming out, presenting bullish divergence. This divergence could be a robust signal for Bitcoin considering its weekly time frame. Another powerful tool, the Gaussian Channel, helps to predict price trends with impressive precision. As per Bitcoin’s short history, the Gaussian Channel, when observed at a higher time frame of five days, hasn’t given false signals. The channel flipped from red to green in early May, indicating an upward trend. Bitcoin’s price has tested the top of the channel, and a bounce-back could be expected soon.

Bitcoin’s Potential to Trump the Dollar

While these indicators do not conclusively establish that Bitcoin has entered its bull market, they certainly provide positive signs. Furthermore, due to Bitcoin’s decentralization, predictable supply, and scarcity, it’s likely that it will outperform the dollar, which continues to suffer significant debasement.

Disclaimer: This article is intended for informational purposes only. It does not constitute or is intended to be interpreted as legal, tax, investment, financial, or any other form of advice.

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Prominent figures from the Republican Party and crypto-friendly legislators are mounting a campaign to oust Gary Gensler, the current chairman of the United States Securities and Exchange Commission (SEC). According to Fox News, a new bill aiming to dismiss Gensler from his position has been introduced.

The bill was brought forward by Rep. Warren Davidson of Ohio and House Majority Whip Tom Emmer of Minnesota. It not only aims at the removal of Gensler but also proposes an expansion in the number of commissioners assigned to the regulator. If passed, the SEC would gain a total of six commissioners instead of the existing five, ensuring no single party controls more than three seats.

The motives behind this potential shake-up are clear and relate to what legislators describe as a “long series of abuses permitted under the current SEC structure.”

What Does This Mean for the Crypto Industry?

Rep. Tom Emmer’s comments on the bill reflect the persistent demands of cryptocurrency industry stakeholders. These stakeholders have been advocating for clear and consistent regulation for the rapidly evolving market. The bill, officially referred to as the SEC Stabilization Act, if approved, would provide investors with improved protection by gradually transferring the SEC chair’s powers to the commissioners.

This proposal to depose Gensler seems to resonate with the majority of participants in the digital currency ecosystem. However, the broader ambition is to implement effective regulation that governs the daily operations of start-ups and investors in the field.

Push for Regulatory Clarity

In pursuit of regulatory clarity, Coinbase, a major cryptocurrency exchange, has taken the drastic step of filing a lawsuit against the SEC. The litigation is still ongoing. The case against the trading platform and the industry’s biggest player, Binance, underscores the need for a significant shift in approach. This new bill could potentially expedite the required changes, marking a significant stride towards more effective regulation for the cryptocurrency industry.

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In a possibly unprecedented move hidden in the lawsuit’s 69th line, the SEC today claimed it has the power to prosecute Balina not just because his case involves US transactions, but also because the whole Ethereum network comes under US government jurisdiction.

In its complaint, the agency observed that the ETH delivered to Balina was confirmed by an American network of Ethereum blockchain nodes.
The SEC finds that these transactions occurred in the U.S.

The SEC seems to propose that since more Ethereum validating nodes are in the US than in any other area, all Ethereum transactions should be deemed American.
Etherscan says 45.85% of Ethereum nodes are in the US.
Germany’s second-highest node density is 19%.

If the SEC classifies Ethereum behavior as similar to that of an American securities market, it would claim authority over all activity on the purportedly decentralized Ethereum network.
It would increase the SEC’s oversight over Ethereum, where most NFT and DeFi activity occurs, and crypto in general.

SEC Chair Gary Gensler said last week, after Ethereum’s successful migration to proof-of-stake, that the shift may bring the network closer to the definition of security.

Gensler spoke before the Senate Banking Committee on how “staking” (pledging assets to a crypto network in return for passive benefits) may be regarded as a signal that an asset qualifies as a security under the Howey Test. He did not specify any particular cryptocurrency or network.

Under Gensler, the SEC has not taken an official position on Ethereum, despite prior leadership stating it was “sufficiently decentralized” and not a security.

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If an asset fits the Howey test’s parameters, it is classified as an “investment contract” and is therefore subject to federal security rules.

According to the criterion, an asset is considered an “investment contract” if investors make a commitment to provide financial backing for a business with the expectation of profiting from the company’s activities. According to Gensler, proof-of-stake cryptocurrencies have a good chance of passing that test and being considered securities.

The Wall Street Journal reported that he said there’s additional proof that, under the Howey test, the investing public is anticipating returns based on the work of others. Another sign is that investors expect returns from the work of others.

Verification of Ethereum transactions is now performed by proof-of-stake rather than proof-of-work.

Staking, or locking up one’s money, is a necessary part of the proof-of-stake blockchain protocol that allows it to operate and ensures the security of the transactions that are processed on the network.

It’s not the same as Bitcoin or any other proof-of-work cryptocurrency, which is now the most valuable cryptocurrency in terms of market value. The Bitcoin mining process is very power-hungry.

If Gensler’s claims hold water, Ethereum’s historic move would suggest that the asset now has the potential to be classified as an “investment contract,” subjecting it to the rules governing securities. Although Gensler has stated his belief that Bitcoin is not a security, he has previously refrained from commenting on Ethereum specifically. While discussing staking and proof-of-stake currencies, the chairman of the SEC did not specifically mention Ethereum or any other currency.

The Coin Center said on Thursday that Ethereum’s move to proof of stake shouldn’t change how the cryptocurrency is managed. However, Gensler’s predecessors at the SEC made it plain that they did not consider Ethereum to be a security, so it’s possible that this is just a policy decision.

According to a statement released on the Coin Center’s blog earlier today, central to classification as security is continuous reliance on revenue received mostly from the labor of others.

Proof-of-work and proof-of-stake are “both consensus procedures” that are specifically meant to eliminate any such dependency by fostering an open competition amongst strangers.

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Gary Gensler, speaking at a conference for the sector on Thursday, expressed his excitement at the prospect of granting the Commodity Futures Trading Commission additional control over the cryptocurrency market “as long as it doesn’t take away power from the SEC.”
Yet, Gensler pointed out that it was essential to find a middle ground with regard to the regulatory monitoring that is provided to the CFTC and to make certain that it does not undercut securities laws in the United States.

The Senate Agriculture Committee, which is the regulatory body that oversees the Commodity Futures Trading Commission (CFTC), has proposed measures that would give the agency supervision over Bitcoin and Ethereum, which are two of the major cryptocurrencies currently available on the market. At this time, the CFTC is only authorized to exercise regulatory authority over the cryptocurrency market, which includes futures and swaps.

The plan is in accordance with the effort by crypto lobbyists to have the sector regulated by the CFTC, which the proposal would accomplish. Regulations governing commodities, as opposed to laws governing the securities market, are widely believed to be more appropriate for governing digital assets. This opinion is shared by many industry professionals. Between the years 2009 and 2014, Gensler served as the head of the CFTC.

What Does It Mean for CFTC?

The statements made by Gensler represent a significant step forward in the process of regulating cryptocurrencies in the United States. In order for the SEC to concentrate on regulating the other aspects of the digital asset business, it would be beneficial to delegate control of Bitcoin and Ethereum to the CFTC. The agency has not wavered from its position that it considers other cryptos to be securities and that they should be handled in accordance with the regulations that already exist regarding securities.

The government started the year by almost doubling the size of the team working in its crypto enforcement branch. And it is pursuing registrations from crypto exchanges that are situated in the United States.

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During the questions of the House Committee, Gensler highlighted that banning crypto is not under SEC’s mandate. “That would be up to Congress,” he added.

He also added the following remarks:

“It’s a matter of how we get this field within the investor consumer protection that we have and also working with bank regulators and others — how do we ensure that the Treasury department has it within anti-money laundering, tax compliance.”

According to  Gensler, financial stability issues can result from stable coins. This is the current priority of the SEC.

Representative Patrick McHenry asked Gensler about the actions taken during his leadership. He accused him of failing to according to the agency’s “long-held practice of noticing comments on rulemaking and procedures.” Gensler replied that the SEC follows the administrative procedures act.

McHenry also asked about his 2019 comments about SEC classifying Bitcoin and Ether as commodities. “I’m not going to get into any one token, but I think the securities laws are quite clear. If you’re raising money […] and the investing public […] have a reasonable expectation of profits based on the efforts of others, that fits within the securities law.”

Meanwhile, Bitcoin hits the monthly high of $52K for the first time in a month. It has kept climbing the charts since the last week, and the experts expect it to hit $55K soon.

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“We’ve got a lot of casinos here in the Wild West, and the poker chip is these stablecoins at the casino gaming tables,” said Gary Gensler. In his interview with Washington Post columnist David Ignatius, Gensler also said that a significant majority of cryptocurrency projects have been on the radar of the regulatory authority as they were dealing in securities. They have been strict with cryptocurrency investments.

“Stablecoins are almost acting like poker chips at the casino right now,” said Gensler. He also emphasised the need to bring in more regulations and stressed that Congress should work with regulatory authorities to create a more robust and effective tax framework and policies regarding crypto investments. 

“I do really fear that we’ll keep bringing these enforcement cases, but there’s going to be a problem. There’s going to be a problem on lending platforms, on trading platforms. Frankly, when that happens, I think a lot of people are going to get hurt,” he explained.

Gensler, who had been welcomed by many in the crypto world, has been sharply criticizing cryptocurrencies lately. The SEC has also been very strict with blockchain companies and cryptocurrency investments. It even threatened to sue the world’s largest cryptocurrency exchange Coinbase for its offerings.

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After trading around the $38,000 mark, Bitcoin prices saw a jump during the day.  At press time, BTC is exchanging ownership for around $39,000. The upward trend follows the positive statement from the US SEC chair, Gary Gensler. 

Gensler in an interview with a popular mainstream media outlet said he has no doubt about the potential of Bitcoin. “This innovation — Satoshi Nakamoto’s innovation — if it is going to meet its potential, needs to come within public policy frameworks,” he said. Talking about cryptocurrencies he specifically endorsed Bitcoin as an innovation. 

Gensler himself worked as a lecturer at the Massachusetts Institute Of Technology and has been teaching blockchain and cryptocurrencies.  His remarks as SEC chair about Bitcoin is giving investors more confidence and that’s evident from the upward push after his media appearance. 

Experts have been bullish on Bitcoin and as the downward trend saturated at $38,000 for coin BTC, analysts are speculating a higher low. Bitcoin could soon cross the $40,000 mark, and it is very much possible that it happens before the weekend.

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XRP currently ranks fourth on Coin Market Cap with a market cap of over $61.1 billion. It is trading at around $1.35 at the time of writing.

The lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple has been ongoing since December 2020. At the time, the SEC has charged Ripple with an illegal securities offering of XRP worth $1.3 billion.  

Last week, Ripple had another small win when the judge allowed the company to look into the SEC’s internal communications, searching for information on what defines cryptocurrency as a security. Also last week, a petition to Gary Gensler, the SEC’s Chairman-Designate, was started asking to end the lawsuit against Ripple.

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A week ago, Gensler spoke about his thoughts on cryptocurrency regulations, specifically the importance of investor protection. During his confirmation hearing, Gensler also commented on viewing cryptocurrencies either as securities or utility tokens. According to his logic, Bitcoin is not a security, but coins like Ripple are.

The lawsuit between the SEC and Ripple started in December 2020 and is still ongoing. Last week, both the CEO Brad Garlinghouse and the Executive Chairman Chris Larsen filed motions to dismiss the lawsuit.  

In the meantime, Bitcoin, the largest cryptocurrency by market cap, posted gains of about 14% in the past 7 days and around 2.45% in the past 24 hours. It is trading at around $56,100 at the time of writing and has a market cap of over $1 trillion. The second-largest cryptocurrency, Ether, has gained about 14% in the past 7 days and lost about 2% in the past 24 hours. It is currently trading at around $1,770, per CoinMarketCap.com data.

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