Hello everyone!

Welcome to the sixth edition of my newsletter! Every Saturday I’ll be sending out a quick newsletter on how to master crypto. I write about mindset, trends and analysis.

Today, I focus on the SEC, the discussion about securities and commodities, and the lawsuits of Binance and Coinbase.

Securities vs. commodities

Since the SEC deals with securities and not commodities, let's clarify what exactly that means.

Securities and commodities are two distinct categories of financial instruments that are traded in various markets. While both involve investments, they have different characteristics and regulatory frameworks.

Securities refer to financial instruments that represent ownership or debt in a company or entity (e.g. stocks). When you invest in securities, you are essentially buying a stake in a company or lending money to an entity.

Commodities, on the other hand, are raw materials or primary goods that are interchangeable with other goods of the same type.

Common examples of commodities include agricultural products (such as wheat, corn, or coffee), metals (like gold or silver), energy resources (such as crude oil or natural gas), and more.

Commodities are generally traded on specialized exchanges and are subject to market forces of supply and demand. While there are some regulatory oversight and reporting requirements, commodities trading is typically less regulated compared to securities trading.

The implication for crypto

For cryptocurrencies, the classification as either securities or commodities can have significant implications.

If a cryptocurrency is deemed a security, it means that it represents an ownership stake or has characteristics similar to traditional securities. In this case, the cryptocurrency would be subject to securities regulations, including registration requirements, disclosure obligations, and compliance with investor protection measures.

The classification of cryptocurrencies can vary across jurisdictions, and different regulatory bodies may have differing interpretations.

The determination of whether a cryptocurrency is a security or a commodity depends on factors such as its functionality, purpose, distribution method, and the presence of any contractual rights or promises tied to its value.

The classification can impact the requirements for offerings, trading platforms, investor protection measures, and the overall legality and regulatory obligations associated with cryptocurrencies.

What is the SEC?

Established in 1934, the Securities and Exchange Commission (SEC) is a federal regulatory agency tasked with overseeing various aspects of the securities industry.

Its primary mission is to protect investors, maintain fair and efficient markets, and facilitate capital formation.

Key functions of the SEC:

1. Regulation and Oversight

2. Enforcement

3. Investor Protection

4. Capital Formation

The Lawsuits against Binance and Coinbase

On June 5th, the SEC filed charges against Binance, followed by charges against Coinbase on June 6th, alleging violations of securities laws.

However, while the EU has enacted clear and comprehensive legislation that will come into effect by the end of 2024, the regulation of cryptocurrencies in the US is still not well-defined.

Ultimately, whether cryptocurrencies are considered securities and subject to strict regulation is a matter of interpretation.

The regulations surrounding cryptocurrencies remain highly debated, not only in the United States but worldwide. In June, China reopened the doors for crypto through Hong Kong.

It's important to remember that the SEC is a government agency, and for years, the US, Europe, China, the WEF, and others have advocated for Central Bank Digital Currencies (CBDCs).

It's evident that the free and decentralized nature of the crypto scene is a concern for them, adding a political dimension to this discussion.

The Impact of the Lawsuits

I don't believe that the SEC's efforts to harm the crypto industry will have the desired impact. Cryptocurrency is a global phenomenon that cannot be stopped.

Unless the countries come together and collectively ban all crypto trading, such charges, like the ones we've seen this week, will only bring the community closer together. And as seen recently in the EU and China, two enormous markets are opening up to this new technology.

It's important to remember that similar charges have been made in the past and often result in lengthy legal processes. Sometimes a fine is paid, and the matter is resolved.

Nonetheless, such accusations create negative publicity and uncertainty for the general public, especially in the US. These charges certainly do not accelerate mass adoption of cryptocurrencies.

Furthermore, we should not overlook the fact that the trend of decentralized exchanges (DEX) gaining popularity over centralized exchanges (CEX) will continue to grow.

Stay tuned for more on this topic in the second part, coming next Saturday! It’s a very long one and all about the story in the background: WEF and CBDCs.

Twitter Reads

A little bit of TA after the political roundup:

The different types of accounts of CT:

Future of Crypto:

With my best regards and wishes, I hope you have a wonderful weekend.

Marco Johanning

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And if you have any questions, I’d happy to help. Just reach out to me on Twitter.

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