a16z exec: Stablecoin regulatory clarity needed to avoid ‘FTX-level issue’

Blockchain technology could enable “a broad swath of novel use cases for securities” and foster “new kinds of market activities that many of the Commission’s legacy rules and regulations do not contemplate today,” Securities and Exchange Commission (SEC) Chairman Paul Atkins said.During his keynote address at the Commission’s May 12 roundtable on tokenization and digital assets, Atkins welcomed “a new day at the SEC,” adding that “policymaking will no longer result from ad hoc enforcement actions. Instead, the Commission will utilize its existing rulemaking, interpretive, and exemptive authorities to set fit-for-purpose standards for market participants.”Source: U.S. Securities and Exchange CommissionA key priority will be to “develop a rational regulatory framework for crypto asset markets that establishes clear rules of the road for the issuance, custody, and trading of crypto assets while continuing to discourage bad actors from violating the law.”In particular, Atkins said the SEC would focus on establishing “clear and sensible guidelines” for crypto assets that could be considered securities. Another area of focus would be to allow brokers to offer a broader range of investment products on their platforms, which in some cases may mix securities and non-securities.Atkins’ approach moves away from former SEC Chair Gary Gensler’s, whose tenure was criticized by some industry participants for its “regulation by enforcement” method of oversight.Securities evolutionAtkins likened the tokenization of securities to the evolution of audio formats — from vinyl to cassettes to digital software — highlighting how each shift enhanced compatibility and interoperability across a wide range of devices and applications. This progression eventually gave rise to streaming content business models, which he said “greatly benefited consumers and the American economy.”SEC’s Crypto Task Force Roundtable on May 12. Source: SECSecurities tokenization is an ongoing topic at the intersection of traditional finance and crypto. Some asset management firms, like BlackRock and Franklin Templeton, have already jumped into tokenization through their respective BUIDL and BENJI tokenized US treasury funds. Robinhood is considering building a blockchain to allow European retail investors to trade tokenized US securities.Tokenized securities may attract interest from firms and brokerages due to features such as faster settlement times, reduced reliance on traditional financial infrastructure, and improved accessibility. Tokenization may also help provide liquidity to asset classes that have historically been illiquid.According to RWA.xyz, $22.6 billion of real-world assets are onchain, a 7.6% rise in the past 30 days. That doesn’t include stablecoins, which are often backed by real-world assets like treasury bills. Stablecoins have a $243 billion market capitalization as of May 12, according to data from DefiLlama. Tether’s USDt (USDT) alone has a market cap of $150.6 billion.Magazine: SEC’s U-turn on crypto leaves key questions unanswered

The US government has asked a federal judge to impose a two-year sentence for Eric Council Jr., the individual who helped post a fake message announcing the approval of Bitcoin exchange-traded funds through the Securities and Exchange Commission’s (SEC’s) X account.In a May 12 filing in the US District Court for the District of Columbia, prosecutors recommended Judge Amy Berman Jackson sentence Council to two years in prison for his role in posting a message to the social media platform X suggesting that the SEC had approved spot Bitcoin (BTC) exchange-traded funds (ETFs) for the first time in January 2024. The fake announcement, which shook markets in the roughly 24 hours before the regulator actually approved spot Bitcoin ETFs, led to the arrest of Council.“This case deserves a guidelines range prison sentence,” said US prosecutors. “Defendant profited through a sophisticated fraud scheme involving fraudulently produced identification documents, a series of misrepresentations at telecommunication stores, and the transmission of password reset codes for victim online accounts to co-conspirators located in the United States and abroad. This conduct deserves a significant penalty.”US government’s May 12 sentencing recommendation for Eric Council. Source: PACERAs of May 12, Council’s legal team had not filed a response to the sentencing recommendation. He is scheduled to appear before Judge Jackson on May 16.Related: Ledger secures Discord after hacker bot tried to steal seed phrasesCouncil pleaded guilty to being part of a group that took control of the SEC’s X account through a SIM swap attack. With control of the regulator’s social media account, the hackers posted a fake message announcing the approval of spot Bitcoin ETFs. The SEC quickly removed the message and announced official approval of the crypto investment vehicles the following day.Many in the crypto industry had been anticipating whether the SEC would approve or disapprove of listing spot BTC investment vehicles on US exchanges when the fake X post appeared. The price of Bitcoin surged by more than $1,000 before then-SEC Chair Gary Gensler refuted the false post’s claims.DOJ leadership change-up under TrumpThe Council case and others will be decided under US Attorney picks who have not received confirmation in the Senate. President Donald Trump appointed interim leadership for the Eastern District of New York, the Southern District of New York, and the District of Columbia after facing pushback from Democrats.It’s unclear how the president’s influence could affect the Justice Department pursuing criminal cases involving digital assets, given his ties to the industry and his own crypto holdings. In New York’s Southern District, a judge ordered former Celsius CEO Alex Mashinsky to 12 years in prison after a December 2024 guilty plea. Magazine: SEC’s U-turn on crypto leaves key questions unanswered

The list of the top holders of US President Donald Trump’s memecoin has been finalized ahead of background checks to apply for a dinner and “VIP tour” with the president on May 22.In a May 12 X post, the TRUMP memecoin project said it would stop considering additional purchases for a dinner with the president, adding that the top tokenholders had been notified to apply for background checks if they wanted to attend. According to data provided on the project’s leaderboard, the top 220 wallets held more than 13.7 million tokens as of May 12, worth roughly $174 million at the time of publication.Top 10 TRUMP memecoin holders as of May 12. Source: TRUMP memecoin projectIt’s unclear who, if any, of the wallet holders will choose to apply for and attend the dinner with Trump, or the “exclusive reception” expected to be in the White House for the top 25 holders, on May 22. A May 7 Bloomberg report suggested that the majority of tokenholders were based outside of the United States, leading to potential security concerns and conflicts of interest.Many US lawmakers and figures in the crypto industry criticized the president for launching the memecoin just days before taking office on Jan. 20. In the wake of his dinner announcement on April 23, the calls for congressional oversight and allegations of corruption have intensified, with one senator calling for Trump’s impeachment and other representatives refusing to consider crypto-related legislation until their concerns were addressed.Related: FT report suggests advance knowledge of Melania Trump memecoin launchCompanies also apparently seeking influence over Trump’s policies have invested in the memecoin. In April, Freight Technologies said it would invest $20 million in the token, suggesting that it could affect the president’s trade war between the US and Mexico, where the firm conducts some of its business. As of May 12, the company had not announced whether it qualified to send a representative to the dinner.Not Trump’s first appeal to crypto usersDuring his 2024 campaign, Trump hosted a dinner with supporters who purchased his “mugshot” non-fungible tokens, which featured a picture of the then-presidential candidate at his surrender to authorities on charges he attempted to overturn the 2020 election. Many of the “mugshot” attendees publicly shared their identities on social media ahead of and during the event, but at the time of publication, no one appeared to be claiming they would apply for the memecoin dinner. Wallets with the usernames “Sun” and “elon” have led to speculation that Tron founder Justin Sun and Tesla CEO Elon Musk — both Trump supporters who have financial interests tied to Trump’s presidency — could be among the attendees. Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions