Regulatory Battle: DeFi Week of May 14
Happy weekend Defiers! Here’s what we covered this week!
The battle over how to regulate crypto in the United States wages on, with the Securities and Commission refusing to respond to a legal action from Coinbase asking the agency to deliver regulatory guidelines for the crypto industry on Monday.
Coinbase wants the SEC to develop clear web3 regulations informed by public input per its formal rulemaking process, and to end its current campaign of regulation-by-enforcement. Industry stakeholders criticize the SEC for claiming every cryptocurrency barre Bitcoin is a security per the 1933 Securities Act.
On Thursday, Republic House majority whip, Tom Emmer, entered the fray by proposing the ‘Securities Clarity Act’. If passed, Emmer’s bill would amend the Securities Act to exempt assets sold via investment contracts that are otherwise not securities from being legally classified as securities, potentially reigning in the SEC’s anti-crypto crusade.
Across the pond, the EU Council approved a regulatory framework for crypto for the first time, providing certainty to the region’s digital asset firms. The Markets in Crypto Assets legislation includes licensing and reporting guidelines for exchanges, wallet providers, and stablecoin issuers.
Memecoin mania continues to simmer, with users sending $7M worth of Ether to Ben.eth for the pre-sale of PSYOP. Ben.eth, the pseudonymous creator of BEN, asked buyers to simply send their ETH to his wallet to secure an allocation, providing no terms of sale or smart contract-based assurance he would just run off with the funds.
PSYOP launched on Thursday, but Ben.eth seeded the token’s Uniswap pool with roughly $700,000 worth of ETH, keeping the remaining Ether for himself. Ben.eth has received threats of a class action lawsuit if he does not return funds to pre-sale investors. The incident serves as a cautionary tale for both memecoin investors and creators.
The crypto community is also up in arms after Ledger, a major hardware wallet manufacturer, launched an optional feature allowing users to recover the seed phrase for their wallet after passing ID verification. Privacy proponents fear the service could create new attack vectors for hackers and criminals, but Ledger says the feature will help onboard millions of new users to crypto.
And in this week’s podcast, Polygon co-founder, Mihailo Bjelic, brings us up to speed on what his team is currently working on to scale Ethereum, and how the project inked major deals with the likes of Starbucks and the NFL.