Here’s What The Crypto Industry Is Looking For As Federal Agencies Draft Policy

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Good morning! Welcome to Distributed Ledger, our weekly crypto newsletter that hits your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch, and I’m going to bring you the latest and greatest digital assets from this week so far.

Find me on Twitter at @FrancesYue_ to send feedback or tell us what you think we should cover.

Crypto at a Glance

BitcoinBTC USD,
-2.19%
posted a loss of 5.9% over the past seven days, recently trading at around $39,196, according to data from CoinDesk. Ether ETHUSD,
-2.19%
fell 7.8% over the seven-day period to around $2,600. Dogecoin DOGEUSD Meme Token,
-1.15%
is down 9%, while another dog-themed Shiba Inu SHIBUSD token,
-1.72
is trading down 9% from seven days ago.

Cryptographic metrics
The biggest winners Price % return over 7 days

Waves

$28.41

57.5%

Synthetix Network Token

$4.45

11.9%

Earth

$101.65

10.5%

Zcash

$141.05

10.4%

Arweave

$33.42

5.8%

Source: CoinGecko at March 10
The biggest declines Price % return over 7 days

Phantom

$1.27

-36.5%

Frax Sharing

$17.01

-27.5%

Convex Finance

$16.24

-23.2%

Humans.ai

$0.09

-22.7%

Harmony

$0.13

-22.2%

Source: coinGecko from March 10
Executive Decree

President Joe Biden on Wednesday signed an executive order requiring federal agencies to engage in a broad review of their policies relating to cryptocurrencies and other digital assets.

The order focuses on six priorities of the Biden administration in the digital asset space, including consumer protection, financial stability, illicit finance, economic competitiveness, financial inclusion and innovation, and will give Agencies from 90 days to one year to make policy recommendations. , reported Chris Matthews of MarketWatch.

Although some industry participants applauded the executive order as a “watershed moment” because they believe it signals greater regulatory clarity and will encourage widespread adoption of crypto, some noted that it does not was only the first step in a “long and complex policy”. make the trip.

“I don’t think you can expect everything to be detailed upfront,” Aaron Cutler, partner at Hogan Lovells law firm, said in an interview.

Grant McCarty, co-founder of the Bitcoin Policy Institute think tank, echoed this point. “There’s actually remarkably little concrete action being taken to regulate cryptocurrencies under this executive order,” McCarty said. “As far as we can tell, this is just a call to take this very seriously and a call for the government to work in coordination across many different sectors to ensure that crypto -currency is properly regulated.”

Which tokens are securities?

As the crypto industry waits for more detailed policy recommendations, some are hoping for more clarity on what cryptocurrencies are considered securities by regulators.

A lawsuit filed by the U.S. Securities and Exchange Commission against Ripple Labs Inc. near the end of the Trump administration claimed the platform violated investor protection laws, but it is not still not resolved. The regulator said Ripple did not register the XRP cryptocurrency it launched as a security offering, while the company argues that the crypto is used for international payment and falls outside the scope of the regulator. jurisdiction of the SEC.

Meanwhile, William Hinman, former chief financial officer of the SEC, said in 2018 that ether was not a security.

The SEC categorized the tokens into utility tokens and security tokens in “a rather crude way,” according to Will Cong, a professor at Cornell University.

Cong recommends classifying cryptocurrencies based on their economic functionality and then determining specific regulations. Tokens can be divided into four categories, including general payment tokens, platform tokens, property or product tokens, and cash flow tokens, Cong noted in his research.

Bitcoin and stablecoin Tether USDTUSD,
-0.02%
fall into the category of general payment tokens, according to Cong. Platform tokens, such as Filecoin FILUSD,
-2.10%
and Chainlink LINKUSD,
-2.27%,
are used as local means of payment on platforms providing certain services or functionalities. Non-Fungible Tokens, or NFTs, belong to the property token basket.

Cash flow tokens, which give the holder certain rights over a company’s future cash flows, are “what regulators or practitioners usually have in mind when they talk about security tokens,” he said. said Cong. “These tokens are essentially security contracts and should be properly regulated by security law,” Cong said.

A spot the bitcoin ETF?

The executive order also raised hopes among some that a cash bitcoin exchange-traded fund would be approved. That now “seems much more likely,” Mikkel Morch, executive director of crypto hedge fund ARK36, wrote in an email.

Since October, the SEC has approved several bitcoin futures-based ETFs for trading, but has yet to approve any applications for physical bitcoin-related ETFs, citing concerns about fraud and manipulation.

“I’m not sure if [the executive order] is going to directly affect their decision,” Alexander Kravets, chief executive of crypto exchange Symbridge told MarketWatch in an interview. “But I think creating more transparency around trading will provide a better path for that in the medium term, as there will be more certainty around the asset class.”

At least “there will be more regulation on how crypto trades and more checks on market manipulation,” Kravets said.

Crypto companies, funds

Shares of Coinbase Global Inc.. PIECE OF MONEY,
-3.35%
traded down 5% to $170.12 on Thursday afternoon. It was down 4.4% in the last five trading sessions. by Michael Saylor MicroStrategy Inc.
MSTR,
-3.58%
was down 6% on Thursday at $410.24, after losing 4.3% over the past five days.

mining company Riot Blockchain Inc.
RIOT,
-1.96%
the shares are down 3% at $16.32, after being up 2.1% in the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
-3.62%
fell 6.4% to $24.04, with a loss of 2.5% over the past five days. Another miner Ebang International Holdings Inc.
EBON,
-5.88%,
was trading down 6.3% at $1.12, with a loss of 6.3% over the past five days.

Overstock.com Inc.
OSTK,
-3.47%
traded down 3.7% to $49.69. Shares lost 4.9% over the five-session period.

Block Inc.
SQ,
-2.73%it’s
the shares, officially known as Square, are down 5.4% at $105.94, with a loss of 7.1% for the week. Tesla Inc.
TSLA,
-2.41%it’s
the shares lost 4.9% to $817.50, while its shares have posted a loss of 2.6% over the past five sessions.

PayPal Holdings Inc.
PYPL,
-1.67%
fell 3% to $97.20, while it was down 4% over the five-session period. Nvidia Corp.
NVDA,
-1.55%
fell 4% to $220.55 and was looking at a 7% loss in the week so far.

Advanced micro-devices invs. AMD,
-4.13%
fell 6.5% to $103.92, while it was down 7.3% over the past five trading days on Thursday afternoon.

Among crypto funds, ProShares Bitcoin Strategy ETF
BITO,
-5.55%
was 6.5% lower at $24.61 on Thursday, while Valkyrie Bitcoin Strategy ETF
BTF,
-5.58%
was down 6.8% at $15.22. VanEck Bitcoin Strategy ETF
XBTF,
-5.47%
fell 6.5% to $38.50.

Grayscale Bitcoin Trust
GBTC,
-5.34%
was trading at $26.50, down 5.7% on Thursday afternoon.

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