Crypto Special: The SEC and Crypto

On this special crypto episode of A Wiser Retirement™ Podcast, Casey Smith and Robert Swarthout talk about news in the Crypto world and the SEC’s involvement in lawsuits against different Crypto companies.

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SUMMARY:

Ripple x The SEC Case

The most recent movement in the Ripple vs. SEC case occurred in mid-May. The judge in charge of the case ruled to determine which pieces of evidence will be released to the public. There has been great anticipation for these documents because of the “Hammond documents”. Bill Hammond used to be the SEC’s director of enforcement when Jay Clayton was the chair of the SEC. Bill Hammond’s documents include 52 drafts of what the SEC claims were written according to his opinion. However, these documents were drafted with help from SEC attorneys. So, the public is having difficulty believing that they were solely his opinion. The judge has ruled that the documents will be released to the public. 

In addition to recent news on this lawsuit, the CEO of Ripple has recently stated that by the time this case is over, they will have spent roughly U$200M. The idea that a company has to spend this much money to defend itself from something they shouldn’t have been accused of in the first place is outrageous. Luckily for Ripple, they have a strong business and are able to spend all this money without going bankrupt. 

Because of the lack of regulations and what seems to be a desire of the SEC to make things more difficult, the United States is currently very behind in regards to crypto comparing to other countries. We are still at a point where we can try to catch up. However, pretty soon we might enter a period that’s past that point.

Finally, the most likely scenario in this case is that Ripple wins. Surely, there are things that Ripple did that could’ve been done better. So, they may pay a fine over sales of XRP done in 2017 and prior that could arguably be considered a security. Other than that, they have a strong case and a strong chance of winning it.

Coinbase x The SEC Case

After the whole case with Ripple and the SEC, Coinbase delisted XRP. This action caused a lot of discomfort among crypto investors since everyone expected Coinbase to stand in favor of crypto. Following that, Coinbase had an extensive period of regular meetings with the SEC, where they collaborated with all the information the SEC required of them. Unfortunately, the meetings still led to the SEC suing Coinbase for selling unregistered securities. Roughly a month ago, Coinbase sued the SEC for not giving them an answer in a timely manner to a question asked almost a year ago. 

There’s a chance that with all this the SEC will start to understand that their actions affect their “image”, which they haven’t seemed to care at all for the past few years. 

Grayscale x The SEC Case

Grayscale is to sue the SEC for not approving their ETF application while there is no real reason for disapproving it. The SEC claims that they do not have enough public information to have a stable ETF. Except there is actually a lot of information out there, which would be enough to approve their ETF application. It seems like the judges are starting to see through what is happening with the SEC and it looks like Grayscale could win this case, too.

Central Bank Digital Currency

Aside from all the commotion from the law suit, Ripple has been pushing forward and doing great things. They have launched a platform for central banks, CBDC- Central Bank Digital Currency. Credit cards and Apple Pay have digitalized our money in the sense that we no longer use cash in hand. The difference with CBDC though, is that it is money in a ledger and it’s programmable. The government could put rules around digital currency. They would work somewhat like some of the government aids we have now, such as food stamps. The government could determine the specific purposes for which to use the money. 

Many different countries are currently exploring this option. The US will probably be the last one to adopt it if it becomes a reality. The incentive the United States would have to go through with this would be to start controlling a lot of the dollars that they don’t control now.

Conclusion

Through all of the lawsuits between the SEC and these crypto companies, we can agree that SEC’s interactions with Crypto haven’t been the most positive. Leading to a lot of the delay in regulations being put in place, and the lack of better development of the industry in the United States. However, As the SEC x Ripple case progresses you can see Ripple’s executives becoming more confident, even in the way they speak in front of the press. his is good for them as an individual company but also great for crypto in general. The more confidence they build the bolder they get to look for ways to develop and innovate.

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TIMESTAMPS:

00:00 Intro

01:00 Ripple x The SEC Case

12:20 Coinbase x The SEC Case

19:15 Grayscale x The SEC Case

27:45 Central Bank Digital Currency

LINKS:

Learn more about Casey Smith, President of Wiser Wealth Management.

Learn more about Robert Swarthout, Founder, CEO & Portfolio Manager of Teton Crypto Capital.