The biggest crypto news and ideas of the day |
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SEC's Hester Peirce Leads Task Force |
Gary Gensler only officially stepped down as chairman of the U.S. Securities and Exchange Commission (SEC) yesterday, but the federal agency’s approach to crypto is already getting an overhaul. Acting Chair Mark Uyeda announced Tuesday that the agency has created a crypto task force dedicated to “developing a comprehensive and clear regulatory framework for crypto assets.” The task force will be led by Commissioner Hester Peirce, a long-time advocate for the crypto industry, and will work closely with the crypto industry to develop regulations. The task force will also work with Congress, providing “technical assistance” as it crafts crypto regulations. Both the tone and content of the SEC’s Tuesday announcement indicate a radical shift in the agency’s approach to crypto regulation under the new Trump administration. “To date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way,” the statement said. “Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive. The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better.” The SEC’s new crypto task force will also coordinate with the Commodity Futures Trading Commission (CFTC) – which, under the leadership of former Chair Gensler and former CFTC Chairman Rostin Behnam, has been locked in competition with the SEC over which agency should be the primary regulator of the crypto industry. “This undertaking will take time, patience, and much hard work. It will succeed only if the Task Force has input from a wide range of investors, industry participants, academics, and other interested parties. We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation,” said Commissioner Peirce in a statement. The SEC previously published staff guidance in 2019, though it has not been referenced or discussed much in the past five years. |
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Vitalik Comes Out Swinging |
It's been a rough year for the Ethereum Foundation, the grant-giving nonprofit that helps support Ethereum, the best-known blockchain behind Bitcoin. As Ethereum loses market cap and mindshare to competitors, the foundation has been beset by scandal. Vitalik Buterin, Ethereum's co-founder and chief figurehead, has laid out a new plan to right the ship. "We are indeed currently in the process of large changes to EF leadership structure, which has been ongoing for close to a year," Buterin said in an X post. "Some of this has already been executed on and made public, and some is still in progress." In his X post outlining the changes, Buterin listed a series of goals, including improving the "technical expertise within EF leadership" and improving "two-way communications and ties between EF leadership and the ecosystem actors" that it supports. According to Buterin, the changes won't be designed to centralize, corporatize or politicize the foundation. The organization won't suddenly "[s]tart aggressively lobbying regulators and powerful political figures," he said, nor would it "[b]ecome an arena for vested interests [...] or even more of a 'main character' within Ethereum." The shake-up comes as Ethereum's reputation among builders has soured in recent months. Members of the broader crypto community are flocking to fast and cheap competitors like Solana, which has been quicker to accommodate the recent memecoin fervor. Some say Ethereum has lagged because it lacks an organizing vision — something the foundation, while not "in charge" of Ethereum, might have helped remedy. Over the past 12 months, the foundation has been mired in controversy. It has weathered accusations of being ineffectual, yet also too powerful. Conflict-of-interest scandals haven't helped, either: Payments from private companies to foundation employees recently sparked wide backlash and forced the organization to update its policies. Some have blamed Aya Miyaguchi, the foundation's executive director since 2018, for the foundation's woes. Amid a pressure campaign for Miyaguchi's removal, Buterin has stepped in as the Ethereum Foundation's sole decision-maker. "The person deciding the new EF leadership team is me," he stated on X. "One of the goals of the ongoing reform is to give the EF a 'proper board', but until that happens it's me." Miyaguchi, however, has not been ousted from the foundation. Buterin lambasted some of her critics on X, accusing them of using her as a "scapegoat." In multiple tweets, Buterin highlighted certain particularly inflammatory social media comments — including death threats and explicit calls for more bullying of Miyaguchi — and called them "pure evil." "If you 'keep the pressure on', then you are creating an environment that is actively toxic to top talent," Buterin wrote. "Some of Ethereum's best devs have been messaging me recently, expressing their disgust with the social media environment that people like you are creating. YOU ARE MAKING MY JOB HARDER." |
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Circle Buys Into Tokenization |
Circle, the crypto company behind the $48 billion USDC stablecoin, said Tuesday it has acquired tokenized real-world asset (RWA) issuer Hashnote. The companies closed the deal this morning, a Circle spokesperson told CoinDesk and was announced in Davos, Switzerland during the annual World Economic Forum meeting. The companies didn't reveal pricing details. Circle aims to integrate USYC with USDC, Circle’s flagship stablecoin, enabling convertibility between cash and yield-bearing collateral on blockchains, the press release said. Hashnote issues the $1.3 billion USYC token, which saw massive growth last year to become the largest tokenized U.S. Treasury product on the market, according to rwa.xyz data. Circle’s CEO, Jeremy Allaire, said this marks a significant step toward aligning traditional financial structures with the speed and transparency of blockchain-based markets. "This is a huge unlock for a market that is increasingly being driven by institutional adoption, and where participants increasingly expect market structures that are common in TradFi,” Allaire said. Circle shared plans a year ago to go public, and the crypto industry widely expects the public share offering to happen later this year. The acquisition underscores the synergies between two of the hottest trends in crypto: stablecoins and tokenization. Circle's main stablecoin competitor Tether launched a tokenization platform last year. Stablecoins, a $200 billion asset class of cryptocurrencies with prices pegged predominantly to the U.S. dollar, are a crucial piece of infrastructure in tokenization efforts. They are used as a bridge between fiat money and digital assets and widely used for settling transactions on blockchain rails. Tokenized RWAs like treasury bills and money market funds are quickly gaining traction among sophisticated investors and asset managers as collateral for trading. Unlike in traditional markets, blockchain-based assets promise transparency, accessibility and around-the-clock settlements. Treasury-backed tokens also allow investors to earn a yield while posted as collateral or margin for trades, enhancing returns compared to trades collateralized with fiat money or stablecoins. For example, Singapore-based hedge fund QCP Capital earlier in January executed a bitcoin (BTC) basis trade using BUIDL, the money market fund token issued by BlackRock and Securitize. Circle also announced that it struck a deal with Cumberland, a DRW-affiliated crypto trading firm and market maker, to provide liquidity and facilitate settlements for USDC and USYC. The partnership aims to expand USYC as a form of collateral on exchanges and custodial platforms. Additionally, Circle laid out plans to deploy USDC on the Canton Network, a blockchain used by traditional financial institutions for real-world asset transactions. The integration with Canton would allow for constant liquidity between cash and collateral and allows seamless transfers between decentralized and traditional markets. |
Smart Valor, a crypto exchange and AI-led investment company, is exploring a possible sale of all or part of its business.
The Zug, Switzerland-based company is conducting a strategic review after receiving a number of inquiries from large global exchanges, crypto platforms and traditional finance (TradFi) institutions including banks and trading platforms, CEO and co-founder Olga Feldmeier told CoinDesk in an interview. The European Union's Markets in Crypto Asset (MiCA) rules came into force on Dec. 30, and Smart Valor could be a target for companies that don't have regulatory approval in Europe. While neither Switzerland nor Lichtenstein, where Smart Valor's retail crypto exchange is regulated, are members of the bloc, they belong to the European Economic Area (EEA) and can adopt MiCA. Liechtenstein's law to do so comes into force Feb. 1.
“Our ultimate goal is to find the best strategy for growing stakeholder value while leveraging the resurgence of the crypto market and the benefits of enhanced regulation," Feldmeier said in an email.
The firm has mandated investment banking firm Imperii Partners to explore potential opportunities, she said. The Swiss company could be an attractive acquisition for large exchanges, borrow and lend platforms, wealth management firms and retail brokerages. Advisers are running an auction with bids due by Jan. 24, two people familiar with the matter said. Several companies are expected to bid for the regulated exchange business, with a few more completing due diligence that could also join the auction, said the people, who spoke of condition of anonymity as the matter is private.
At least one publicly listed company is also expected to join the bidding, one person said. Smart Valor was founded in 2017 and services both retail clients and banks. It has three units: The licensed retail crypto exchange, a business that sells exchange technology to banks and an artificial intelligence-driven investment platform called Elann.AI.
A data room was set up before Christmas for would-be suitors to conduct due diligence, according to the people familiar.
The company conducted an oversubscribed initial public offering in 2022 and its stock was listed on the Nasdaq First North Growth Market in Stockholm, becoming one of the first publicly listed crypto companies in the region. The shares were delisted in May 2024. |
The Takeaway: Beware Crypto Tax Changes |
By Robin Singh, CEO of Koinly Tax. The word may make you cringe, but it's also one you probably don’t want to ignore. Bitcoin (BTC) hit $100,000 for the first time in December 2024, and while you’ve probably had your fair share of “I told you so” moments with the crypto skeptics over the holidays, now is the time to make sure you’re clued in on the tax side of things if you’re planning to cash in on profits. It’s not just about keeping track of your own jurisdiction; you should stay aware of global rules as well, as your jurisdiction may adopt them in the future. With the average long-term Bitcoin holder having paid around $24,516 for their Bitcoin, it’s clear that many hodlers are now sitting on profits nearly four times that amount. For those who’ve held on through the ups and downs, it’s been a rewarding payoff. But let’s not kid ourselves — tax authorities worldwide are getting a lot better at tracking these gains. The days of thinking crypto profits fly under the radar are long gone. Whether you like it or not, the taxman is catching up, and he’s getting more savvy by the day. For instance, the United States Internal Revenue Service (IRS) recently introduced a new rule stating that investors must use wallet-based cost tracking for crypto assets from 2025 onward. Previously, crypto users could group all their assets together to calculate their cost-basis for taxes under the Universal tracking method. But now, the IRS requires each wallet or account to be treated as its own separate ledger. This isn’t exactly great news for crypto investors, as it limits them on what counts as their cost-basis for sold assets — everything has to be tied to the same crypto wallet. As a crypto tax software platform, Koinly has had to move quickly to keep up with the changes, just like the investors that use our platform. One of the updates we’ve made is allowing users to adjust their cost-basis settings from a certain date, without affecting previous tax calculations. I wouldn’t be surprised if this wallet-tracking rule starts spreading to other parts of the world in the coming years. Australia, the United Kingdom, Ireland, and many other countries all apply a fairly similar tax treatment to cryptocurrencies as the United States. While they haven’t introduced anything like this yet, it shouldn’t be ruled out. It was clear from the start that tougher crypto tax laws were on the way, and the IRS made no secret of it. Earlier in 2024, it ramped up their efforts by bringing in private-sector experts from the crypto world to help bolster their approach to taxing crypto. It’s not unusual for countries to adopt tax rules that have already been implemented elsewhere, and this has happened with crypto in a few cases already. Take the approach of taxing short-term crypto gains while leaving long-term gains tax-free — something countries like Germany and Malta have already adopted. Portugal, for example, had no crypto taxes until 2023. Then, it added a 28% tax on short-term gains, while long-term holders still get a break. As crypto continues to grow and gain traction worldwide, staying on top of tax laws around the world is becoming more and more important. Over the next couple of years, I expect we’ll see a lot of changes in how governments handle crypto taxes. |
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