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SEC Cannot ‘Ban’ Crypto, New ‘Safe Harbor’ Proposal Put Forth – Regulations Weekly




This past week saw a flurry of activity surrounding the regulation of digital assets.  From fines to bill proposals, commentary, and more – this is a quick rundown of these events.

Echoing Commentary

Last week, crypto markets received a boost when Federal Reserve Chairman Jerome Powell indicated that the organization had no intent to ban crypto.  This week, Securities and Exchange Commission (SEC) Chairman Gary Gensler echoed this sentiment in a conversation with the House Committee on Financial Services.  In this lengthy discussion, Gensler made it clear that the SEC simply does not have the authority to ban cryptocurrencies.

These combined statements, along with various other positive industry developments, have resulted in Bitcoin experiencing a notable resurgence, with BTC up roughly 10% in the past 24hrs.

On-going Investigation

Stablecoins have had a rough go as of late, with regulators having called in to question their status as a security, and true asset backings.  This scrutiny was recently highlighted when USDC creator, Circle, announced that it was being investigated by the SEC.

Unfortunately for Circle, it has close ties to multiple entities which have found themselves squarely in the crosshairs of the SEC in recent months – with both Poloniex and Coinbase being examples of this.  As it looks to distance itself from any frowned-upon activity, Circle has just released a new filing which indicates its ongoing cooperation with the SEC, as it gears up to go public in the coming months.

While Tether still remains the #1 ranked stablecoin in the world, USDC has managed to take massive strides over the past year towards taking this spot for itself, becoming the 9th largest digital asset at time of writing.

Power Generation

Independent power generation is all the rage these days.  Why be an anchor on the power-grid, weighing it down, when you can generate a surplus independently?  While the practice may be acceptable when it comes to making homes more efficient, power generation in a commercial sense is a highly restricted and regulated practice in most developed nations as strict safety, environmental, and fair market practices must be adhered to.

Unfortunately for one mining firm in Alberta, Canada, the idea of independent power generation has landed it in hot water.  The Alberta Utilities Commission (AUC) has recommended that hefty fines be levied against Link Global.

The issue at hand stems from a series of power plants being operated by Link Global without appropriate approval/oversight.  Power produced was being sold to cryptocurrency miners, outside of the established frameworks meant to govern power generation within the province.

Link Global CEO Stephen Jenkins, has recently released a statement indicating that the company is now working in conjunction with the AUC towards a positive outcome.

“Our business works to respect the laws, the people, and the environment and we believe that our submission to the AUC will make this apparent…The team working on the Link Global submission will provide facts and evidence to show what would be only the second disgorgement order in AUC history is unwarranted. Link has followed the orders issued by the AUC and believes that what enforcement staff is proposing is punitive and not consistent with the AUC’s August 19, 2021 decision and earlier operating requirements during the process. I apologize to our shareholders who do not deserve this. We will work tirelessly to ensure the outcome is positive.”

It is believed that Link Global faces roughly $5.6 million in fines as a result of its actions.  For its part, Link Global appears set on convincing the AUC that this however not a reasonable course of action.

Safe Harbor

For the past few years, companies involved with digital assets have repeatedly stated that existing regulations are confusing, and structured for a past era.  In an effort to provide a safe environment for such assets to be built/developed, SEC Commissioner Hester Peirce drafted what is known as the ‘Safe Harbor Proposal’.  Fast forward to present day, and a new iteration of this proposal has been released by Congressman Patrick McHenry, titled the Clarity for Digital Tokens Act of 2021.

In recent days, many have wondered whether or not the United States would follow in the footsteps of China, and ban crypto assets from within its borders altogether.  While fears of this happening have been somewhat allayed on the back of commentary by heads of both the Federal Reserve and the SEC, Congressman McHenry wants to ensure this is truly the case.  With the new proposal, he states that “We need to nurture innovation and technology in this country, not send it overseas”.  Essentially, it is aimed at fostering innovation, rather than condemning it, ensuring forward progress continues.

Many involved with digital assets have supported such as bill as being critical for the development of the digital assets industry.  Moreover, such as bill would ideally be implemented in a timely manner, as digital assets never sleep – any delay will simply result in industry progress moving beyond the borders (and control) of the United States.

Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

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