6th October 2023 > > The SEC and crime.

tl;dr

The SEC, a criminal, and a criminal approach to regulation.

Market Snap

Market Wrap

The carnage in government bond markets, if recognised on-balance sheet, would likely make much of the banking system insolvent. Those problems will surface if yields continue to climb. 10-year bonds are down nearly 50% in three years, mostly matching notable stock-market crashes in 2000 and 2008.

And regulators persist in claiming that investment grade government bonds are risk-free. What tosh.

Curious Cryptos’ Commentary – The SEC

As all regular readers know, today is the day for the SEC’s self-imposed deadline to its own public consultation and questionnaire regarding spot BTC ETFs.

Will Gary Gensler take this opportunity to save face and back down in his unwarranted and unjustified rejection of all the previous and current applications for a spot BTC ETF?

Gosh, I can’t wait to find out.

Curious Cryptos’ Commentary – Sam Bankman-Fried

It’s only day three of the trial, but the focus has been very much on the Alameda back-door, which allowed the hedge fund unlimited credit with no margining. The net effect was that Alameda was using FTX’s clients’ funds for its own purposes. At the heart of securities laws in the US is the need to prevent co-mingling of investors’ funds with any other funds for precisely the reasons that led to the collapse of FTX. Ring-fencing of funds is central to the smooth operation of capital markets. This right here means that Bankman-Fried will never get out of jail again.

Curious Cryptos’ Commentary – The UK

For a long time now the UK has been a willing partner and acceptor of EU derived rules and regulations. Not much has changed in recent times, and indeed our prospective new Prime Minister Sir Keir Starmer has raised the prospect of dynamic alignment with EU rules.

You may agree or disagree with that approach, but the politics of it do not concern us here.

What does concern us is that Lisa Cameron, chair of the UK all-party parliamentary group (APPG) on crypto and digital assets has ruled out copying the EU’s flagship crypto regulation, MiCA (Markets in Crypto Assets).

This is madness. As Cameron herself says:

“Not just is MiCA good for consumers, for protection, but also when you have that clarity, it brings investment—so a lot of investment is now moving to the EU because of MiCA.”

What exactly is wrong with that outcome?

…

Cameron then witters on about a “bespoke approach for the framework that we want to set here” that will give us a “competitive edge”. Meanwhile, crypto businesses flock to the EU, and Singapore, and Hong Kong, where they will likely stay.

Unwittingly exposing the lack of urgency shown by the APPG, Cameron says that for benchmarking purposes they have been to Zug, but only planning to go to Paris and Brussels. I can download the Eurostar timetable for her if she likes. I will even book the tickets.

Then, the APPG may engage with Singapore and Dubai, but they haven’t decided whether to do so or not.

Scary stuff, especially in the context of politicians’ rampant and untrammelled desires to spend as many taxpayers’ dollars as possible.