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16th February 2023 > > Gensler again.


Apologies in advance to those who wish Gary Gensler might take some time out of trying to cripple cryptos.

Market Snap

Market Wrap

Yesterday’s short squeeze propelled us tantalisingly close to the all-important 25-handle following another crypto outburst from Charlie Munger, Vice Chairman of Berkshire Hathaway:

"But when you’re dealing with something as awful as crypto s***, it's just unspeakable. I’m ashamed of my country that so many people believe in this kind of c*** and the government allows it to exist."

I am very intrigued as to how low he wants BTC to go with his trash talk, and what his target entry price is for size.

Occasional Series – Nicola Sturgeon (*)


Occasional Series – Nicola Sturgeon

If the result of the next UK general election was ever so slightly in doubt before now, Sturgeon’s resignation in disgrace – and everyone sees through those tears shed simply because a camera was in place - is a cast-iron guarantee that Sir Keir Starmer will take his place amongst the pantheon of the great and the good.

I believe – and I may be wrong – that Sir Robert Walpole (1721-1742) is the only other knight to have taken on the role of Prime Minister before now.

As a member of the Whig Party, Walpole would today be called a “leftie”, though presumably not in the pejorative sense of the word we are used to from some political commentators. To be fair to him, at the time of his premiership, such a term might not correlate with our current understanding of politics.

Regardless, I do find it disappointing that 300 years later privilege wins out irrespective of one’s political calling.

Curious Cryptos’ Commentary – Gary Gensler

I apologise for Gensler’s seemingly starring role in these missives of late, but he is deliberately being a bit of a nuisance.

In his role as Chair of the SEC (Securities and Exchange Commission) Gensler has been prosecuting the case that – in his view – all cryptos bar BTC are securities. But now he has a new line of attack in his one-man crusade to cripple the US crypto industry, and to drive tax dollars offshore.

Gensler has proposed amending federally imposed custody rules to include “all crypto assets”. He has been quoted as saying:

“Though some crypto trading and lending platforms may claim to custody investors’ crypto, that does not mean they are qualified custodians.”

Taken at face value this proposal makes good sense. The CCC has often banged on about the need for regulated, and robust, custodial services, to drive both retail and institutional adoption of cryptos.

Custody rules are designed to ensure, through a process of registration, documentation, audits, and so on, that customer assets held by custodians are segregated from any other business assets.

This is extremely important to all investors. The assurance that even if a financial institution such as a high street bank goes bust your share portfolio is safe allows assets to be held in electronic form rather than as physical bits of paper, a phenomenon which was the case not so long ago.

And we need look no further than the fraudulent fiasco at FTX to understand that co-mingling customer assets with business assets (the hedge fund side of FTX) encourages risky practices and allows for lax management controls. Any one unfortunate enough to have not read the CCC warnings about FTX and so failed to remove their assets from that platform before it went bust are years away from receiving any compensation.

Indeed, Gensler refers to this very situation:

“Rather than properly segregating investors’ crypto, these platforms have commingled those assets with their own crypto or other investors’ crypto.”

“When these platforms go bankrupt — something we’ve seen time and again recently — investors’ assets often have become property of the failed company, leaving investors in line at the bankruptcy court.”

So, what’s not to like?

In theory, this is a great idea. In practice, I have some fears.

The person responsible for approving an institution for providing custodial services is none other than Gensler himself.

Gensler and his cronies continue to reject all applications for a spot-based BTC ETF (exchange traded fund) despite its massive advantages – from an investor’s point of view – to the current futures-based ETFs.

Gensler’s primary responsibility is to investors, but in the application of his duties with respect to cryptos, I am not alone in judging that he is a foe, and not a friend, of the crypto industry.

So, yes bring in the new rules, but please do not use them to simply refuse all requests from industry participants to become regulated custodians of crypto assets, for that will damage investors’ interests.

(*) Ah, the supporter of misogynists and vocal denier of women’s rights. Is that the one? If so, now I remember her.

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