30th March 2023 - The SEC.

tl;dr

An oil deal settled in Yuan puts a US regulator’s authoritarian approach in the spotlight.

Market Snap

Market Wrap

And a breach of $29k to the upside. Oh my, this is getting exciting.

Curious Cryptos’ Commentary – China and France

France has bought 65,000 tonnes of LNG sourced from the UAE brokered by the Shanghai Petroleum and Natural Gas Exchange.

The interesting part? It was settled in Chinese Yuan, a landmark transaction ending the dollar’s total grip over energy markets.

Various and sometimes catastrophic predictions about what this might mean for the global economy going forward are being made. I am not so sure that this won’t remain a niche market, despite reports that Saudi Arabia is considering joining the party, in cahoots with China, Russia, and Iran. Not much personal freedom and liberty on display amongst those four countries.

Yet another macroeconomic/geopolitical reason for crypto adoption.

Curious Cryptos’ Commentary – Something right, something wrong

Gary Gensler, Chair of the SEC (Securities and Exchange Commission) is every crypto enthusiast’s punchbag.

Testifying in front of Congress, he was grilled about the increasingly hostile approach the SEC is taking towards the crypto industry. In response he had two interesting things to say, one of which is right, and one of which is wrong.

Let’s give him credit upfront and look at what he said was right.

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Gensler told the House that regulations are already in place which can be applied to cryptos:

“They’re called the securities regulation.”

This is true as far as it goes. He might also have added “… and they’re called commodities regulation” but that would have shown respect to his greatest rival, the CFTC (Commodities and Futures Trading Commission), and we all know that Gensler isn’t necessarily a role model for co-operation and collaboration.

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What he got wrong though is far more revealing, and somewhat shocking:

"I think there is one agency — the Securities and Exchange Commission and the courts … that define what a security is …”.

There cannot be a clearer example of regulatory overreach.

It is up to the democratically elected lawmakers to provide the definition of a security. It is up to the regulator to implement those rules. It is up to the courts to adjudicate when there are disputes.

Gensler is a smart man. He must know that his claim isn’t true. Then we get to see his motivation:

“If Congress were to act … I think many of the legislative vehicles would, if adopted, undermine the securities remit.”

We must hope that the Lummis-Gillibrand Responsible Financial Innovation Act (see CCC 10th November 2022 and several other missives) is given a fighting chance of becoming law.

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In separate news, Gensler is demanding an extra 300mm in funding for the SEC taking the annual total to $1.4 BILLION. That’s an extraordinary number for a regulator to burn through every year. There is no end in sight to the fiscal incontinence of the US, a position that would be increasingly hard to sustain if deals like the one between China and France referenced above do become more widespread.

Gensler says that this extra money will allow him to recruit another 170 staff, though the split between front-line investigators and diversity officers has not yet been revealed.

At an average cost of $1.75mm per annum for each additional employee my CV is already winging its way into Gensler’s inbox.