This will be one of the most eventful months for crypto in 2023, for better or worse.
Apple releasing its VR headset
Last week, Apple provided promotional details for its VR headset, offering advanced functionality across various personal and business use cases.
Scheduled for release early next year, the Vision Pro will attract a legion of fans who want to experience various metaverses through this device. In turn, this could benefit Metaverse and gaming-related digital assets and their projects – Decentraland (MANA), The Sandbox (SAND), Bloktopia (BLOK), Illuvium (ILV) and Gala Games (GALA) are a few that come to mind.
Nonetheless, all eyes will be on the tech behemoth and how well-received its VR headset is from its clients. As is often the case, I imagine several teething issues initially. However, I expect a sizeable cohort of people will readily fork out the money – as many already do with other devices – for this headset.
Ripple vs SEC – Hinman Speech documents being released
There is much anticipation in the XRP community — let alone the broader crypto community — to see how the release of the Hinman Speech documents from 2018 will affect the verdict of this drawn-out lawsuit.
For context, these refer to comments from William (Bill) Hinman, the former Director of the SEC’s Division of Corporation Finance. The US SEC tried to seal the contents of this speech. However, Judge Annalisa Torres denied their request, which should subsequently work in Ripple’s favour.
Whilst there is an assurance from SEC Chair Gary Gensler about Bitcoin being a commodity, not a security, altcoins (in this case, XRP) are still yet to discover where they sit in the eyes of US regulators; Ethereum’s classification is still yet TBC, but the following comments from Hinman, also back in 2018 provide optimism for those banking on it being classified a commodity.
“And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”
William Hinman, 2018
Hopefully, a ruling on this case can be made soon, i.e., by the end of (this) July. I say this for everyone’s sake, as the general crypto community, related businesses and prospective investors would finally like clarity about how regulators view crypto assets (e.g., a security, commodity or otherwise).
Once this case is concluded, Ripple can move ahead with its plans to IPO, with articles covering this idea dating back to 2019. Moreover, a Wall St veteran shared their thoughts about Ripple plausibly doing a 20x on its valuation.
Hong Kong (retail) crypto trading is back in town
Earlier this month, Hong Kong’s Securities and Futures Commission (SFC) gave the all-clear for retail investors to trade some crypto assets once again within the jurisdiction. The commission released its set of regulatory requirements for companies planning to offer trading of virtual assets to retail investors.
Many in the crypto community see this as a bullish sign as it not only helps unlock plenty of liquidity amongst affluent investors in the financial hub, but it could pave the way for everyday people from mainland China to trade Bitcoin and some altcoins, a far cry from its government’s antagonistic stance towards decentralised digital assets in recent years.
On the topic of Hong Kong and digital assets, Ripple, in partnership with the Taiwanese financial institution Fubon Bank, will be playing a role in implementing the CBDC for Hong Kong, the e-HKD—more on this in my last article about XRP and Ripple, available here.
Binance and Coinbase in hot water with the US SEC
Just when you thought we were on the cusp of not having to hear about dragged-out high-profile crypto lawsuits for a while as we approach a verdict on the Ripple Labs Inc. vs US SEC case, I have bad news for you.
This time, the regulator is taking on the top dog of crypto exchanges, Binance, which they announced on Monday.
The day after, the SEC also mentioned in a similar communiqué that Coinbase would be in their crosshairs.
The US SEC’s take-no-prisoners approach to the entire industry is forcing many crypto/blockchain companies to relocate or, at the very least, accelerate their overseas expansion.
This may be for the best, as this follows the lead of other multinational companies relocating abroad to tax and business-friendly jurisdictions.
Earlier this week, the SEC filed 13 charges against Binance Founder and CEO Changpeng Zhao (a.k.a. CZ), the exchange and its affiliated companies.
In a press release distributed on Monday, the SEC detailed the list of charges, including (as taken verbatim):
– Operating unregistered exchanges, broker-dealers and clearing agencies;
– misrepresenting trading controls and oversight on the Binance.US platform;
– and the unregistered offer and sale of securities.
For balance, this was not unexpected, and regardless of what you think, Binance allegedly proceeded with some crypto services in the USA without regulators’ permission.
This is according to point 111 of the SEC’s submission to the United States District Court, which states:
“As Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a fking unlicensed securities exchange in the USA bro.” (Emphasis added.)”
This will go down as a memorable (dare I say, legendary) quote in the space for the months and years to come.
It is frustrating and difficult for leading crypto exchanges such as Binance and Coinbase to operate legitimately, particularly with the US still providing sufficient and clear rules for this sector.
By now, US-based businesses, let alone crypto holders, should have enough clearness from the US SEC and more support from elected officials in establishing a regulated system while fostering innovation and business growth.
I recall that up until 2021, Coinbase was historically more hesitant to list new crypto assets on its platforms due to (what appeared to be) uncertainty about the legality of listing digital assets on its platform.
However, in defence of Binance, Coinbase or any other crypto exchange, big or small, operating in the US, they have been requesting clarity from regulators for years. Whilst other countries/regions have forged ahead with providing clear(er) rules about the crypto rules and regulations, US lawmakers have failed to establish clear rules on this.
What doesn’t help is having anti-crypto crusaders such as Elizabeth Warren and Brad Sherman, particularly the former, tarnishing the reputation of legitimate crypto assets and entities by painting the entire sector with the same brush.
It is worth remembering that the SEC approved Coinbase’s request to IPO in 2021, which begs the question, why didn’t the regulator address their concerns back then?
Additionally, the timing of back-to-back lawsuits makes me think that the government body in the cusp of losing its litigation to Ripple. One of the most knowledgeable voices in the crypto sphere, The Modern Investor, provided this tweet about the entire situation, reflecting many people’s sentiments.
People are speculating that the SEC is going after Binance and Coinbase so aggressively (the SEC is trying to freeze Binance US's assets right now) because the SEC might fear losing the lawsuit against Ripple and are now looking for another target to gain control
— The Modern Investor (@ModernInvest) June 6, 2023
Federal Reserve announcement on interest rates
The US Federal Reserve will provide an updated interest rate on 15-16 June as part of regular meetings each year (eight in total, generally six to seven weeks apart).
Many will be closely observing the decision made by Jerome Powell and company, considering the USA’s increasingly precarious with astronomical public debt — no sign of reversing anytime soon — coupled with the standoff between Democrats and Republicans last month surrounding its government’s debt ceiling.
Forbes and Bloomberg have reported that investors expect a pause to interest rates for this month, even though additional rate hikes are still possible despite ten consecutive increases since March 2022 to curb inflation.
Pausing interesting rates will be a bullish sign for the cryptocurrency space, as crypto traders and holders have benefitted from historically-low interest rates since Bitcoin’s inception in 2009.
US Fed Funds Rate – (circa 1971 to present). Source: Trading Economics
- Apple’s move with the new VR headset will contribute to an uptick in Metaverse platform users, which will help boost the profile of both centralised and decentralised programs (ideally more the latter than the former) and, in turn, increase related crypto prices.
- I am optimistic about a favourable outcome for Ripple, as they will have spent close to $2 million in legal fees by the end of this lengthy litigation. I believe that they will benefit from the comments made by William Hinman and that this will contribute to a favourable decision for the crypto company.
It will be a matter of time before the Chinese Government (and those behind other states which have also restricted crypto) reconsider their stance and provide their residents with ample opportunities to interact with crypto assets legally.
- As per Binance and Coinbase, I expect the SEC to come down harder on Binance then their US-based counterpart, especially as the latter is a public company (and I imagine greater scrutiny and regulations that come along with this….though I might be wrong) and could use this to their advantage.
Both companies have plenty of money to cover legal fees and a strong crypto community to help advocate for more ideal rules and regulations. Watch this space.
P.S. As I wrap up, on an unrelated (yet interesting) note, June will also mark the highly anticipated return of Black Mirror, with six new episodes. I say “unrelated”, but technology features prominently in this dystopian anthology. We will eventually see an episode about crypto, CBDCs, the Metaverse or something relevant to this space.
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