Andrew Gunderman

## US Chamber of Commerce Supports Coinbase in Regulatory Clarity Battle
The US [Chamber of Commerce](https://www.uschamber.com) has come forward to express its support for [Coinbase](https://www.coinbase.com), the leading cryptocurrency exchange, in its pursuit of regulatory clarity from the US [Securities and Exchange Commission (SEC)](https://www.sec.gov). In an [amicus brief](https://www.law.cornell.edu/wex/amicus_curiae) filed in the [Coinbase vs. SEC case](https://www.coindesk.com/business/2023/05/04/us-court-orders-sec-to-respond-to-coinbase-allegations-within-10-days/), the Chamber stated that the SEC's refusal to respond to Coinbase's petition is causing significant economic harm to both Coinbase and the broader business community.
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The Chamber of Commerce, established in 1912 and recognized as the world's largest business organization, works tirelessly on Capitol Hill to advocate for the interests of US businesses. Its members, including companies subject to US securities laws, have a strong interest in regulatory clarity, as the SEC's current approach to digital assets can adversely affect them.
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Coinbase, in its petition last summer, requested the SEC to propose and adopt rules that would provide clear guidelines on which digital assets fall under securities laws. The lack of regulatory certainty has hampered innovation in the digital asset industry, hindering its growth and potential contributions to the broader economy.
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The Chamber of Commerce emphasizes that the SEC's actions go beyond Coinbase's specific case and have broader implications for the economy. By focusing on regulation through enforcement without testing legal claims in court, the SEC settles enforcement actions with companies, leaving them to bear the financial burden of potential future litigation or to cease engaging in activities that may or may not be targeted by the agency.
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The Chamber's support for Coinbase underscores the need for regulatory clarity and the potential benefits of digital asset products in making the financial system more inclusive for the previously unbanked.
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As the legal battle between Coinbase and the SEC unfolds, the outcome will undoubtedly have far-reaching consequences for the cryptocurrency industry and the regulatory landscape surrounding digital assets. The US Chamber of Commerce's backing of Coinbase reflects the growing urgency for clear and consistent regulations to foster innovation while protecting investors and promoting economic growth.
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This is a massive boon for the crypto ecosystem as this represents the first time that a large mainstream actor has stepped forward to help defend the future of the industry. Until now, most mainstream organizations have largely ignored the SEC’s hostility towards crypto, but that sentiment appears to be changing.

![Sam Altman Raises $100 million financing for Worldcoin](https://images.barrons.com/im-781882?width=1280&size=1.33333333)
## Sam Altman’s Worldcoin Secures $100 Million Financing for “World Saving” AI-Powered Crypto Project

According to the Financial Times, [Sam Altman](https://en.wikipedia.org/wiki/Sam_Altman), the billionaire founder of [OpenAI](https://openai.com), is on the verge of securing an additional $100 million in financing for [Worldcoin](https://worldcoin.org). This funding comes after the project raised $100 million in a private token sale last year at a $3 billion valuation, with participation from notable investors like [Andreessen Horowitz](https://a16z.com).
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Worldcoin is an [open-source](https://en.wikipedia.org/wiki/Open_source) protocol that aims to utilize IRIS scanning to secure a new digital currency. Its foundation is built on the World App, a wallet application that was launched on May 14.
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Worldcoin's primary focus, as announced by Altman and The Worldcoin Foundation, is twofold. First, it aims to distinguish between humans and bots to address issues related to [artificial intelligence (AI)](https://en.wikipedia.org/wiki/Artificial_intelligence) job displacement. Second, it seeks to provide a form of [universal basic income](https://en.wikipedia.org/wiki/Universal_basic_income) to offset potential job losses caused by AI advancements.
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The rise of [generative AI models](https://www.techtarget.com/searchenterpriseai/definition/generative-AI) has raised concerns about job displacement, especially in knowledge-based sectors. Altman, who played a significant role in the growth of OpenAI to over 100 million users, sees crypto and [blockchain](https://www.investopedia.com/terms/b/blockchain.asp) as the solution to this challenge. Worldcoin combines biometric IRIS scanning with distributed ledger technology to tackle the problem of AI-induced job displacement, envisioning a better and fairer world.
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To further its mission, Worldcoin has chosen to launch on [Optimism](https://www.optimism.io), a platform working towards the "Superchain vision." The Worldcoin Foundation aims to support Optimism in realizing this vision, leveraging the benefits of blockchain technology.
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Since the release of the World App, Worldcoin has gained significant traction. It boasts over 1.7 million users, with 60,000 daily wallet transactions and 25,000 daily World ID checks.
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Interestingly, as Worldcoin strives for a "Superchain," others have speculated about the potential for ChatGPT, Elon Musk's project X, and Tencent's WeChat to become "Super Apps" with the addition of plugins. This highlights the competition in the AI-powered Super App space, with the OpenAI ecosystem now entering the race with its focus on the "super" blockchain infrastructure.
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With the advancements in AI and crypto, the future becomes ever more uncertain and ever more exciting. Some of the most important events of mankind’s history will occur in the coming decades.


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Major Advancements for Crypto This Week

## Crypto Prices Plummet after Binance halted Bitcoin Withdrawals for Hours

Bitcoin (BTC) started the week on a [bearish](https://www.investopedia.com/insights/digging-deeper-bull-and-bear-markets/) note, dropping below the $27,500 mark during U.S. trading hours. The largest cryptocurrency by [market capitalization](https://www.investopedia.com/terms/m/marketcapitalization.asp) was trading at around $27,350, down over 5.5% in 24 hours on Monday. The recent dip in BTC's price comes amid rising interest in the PEPE meme coin and congestion issues at Binance, which forced the exchange to temporarily halt bitcoin withdrawals over the weekend.
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Binance has since resumed its bitcoin withdrawal service, but the stoppages and the rising price of bitcoin have raised questions about the impact of large [transaction volumes](https://www.investopedia.com/terms/v/volumeoftrade.asp) on the cryptocurrency market. Ether (ETH), the second-largest crypto by market value, followed a similar pattern, dropping below the $1,900 level it had held for much of the past seven days. ETH was trading at around $1,829, down 4.4% in the past 24 hours.
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"Both BTC and ETH haven't tested near-term supports since the rally we saw around mid-March," said Joe DiPasquale, CEO of crypto fund manager BitBull Capital. He added that BTC might test support between $25,000 and $27,000 before bouncing back. However, he believes that the economic outlook is favorable for BTC and the broader crypto market to thrive, and that accumulating BTC and ETH on dips is a sound strategy.
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Most major tokens, including crypto payment-focused XRP and Polygon's MATIC, were trading in the red on Monday. The PEPE craze also appeared to be waning, with its market cap dropping to around $878 million after peaking above $1 billion before the weekend. Multiple crypto market indexes, measuring the overall crypto market performance, were down over 5% for the day.
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Greg Cipolaro, global head of research at bitcoin investment firm NYDIG, wrote in a Friday newsletter that BTC is increasingly serving as a "buy-and-hold asset" based on [on-chain](https://www.investopedia.com/terms/c/chain-transactions-cryptocurrency.asp) data. "With more bitcoins being held for longer, a dwindling [supply](https://www.investopedia.com/terms/s/supply.asp) is available for short-term trading," he wrote. This may result in increased volatility or trading costs through wider spreads. "Given bitcoin's fixed supply nature, this also means that fewer bitcoins are available for others to purchase. This may result in upward pressure on prices if the demand for bitcoin grows."

![SEC versus Ripple](https://bitcoinist.com/wp-content/uploads/2022/12/SEC-vs-Ripple.jpg)
## Ripple’s Fight with the SEC to Cost the Company over $200 million, according to the CEO
Ripple, a leading [blockchain](https://www.investopedia.com/terms/b/blockchain.asp) company, has been embroiled in a legal battle with the [U.S. Securities and Exchange Commission (SEC)](https://www.investopedia.com/terms/s/sec.asp) over the past year, which is set to cost the firm an estimated $200 million. According to a report by Cointelegraph on Monday, Ripple's CEO, Brad Garlinghouse, revealed this figure at the Dubai Fintech Summit and advised crypto entrepreneurs against setting up businesses in the U.S. due to the country's preference for politics over policy.
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The SEC sued Ripple and several of its executives in 2020 over the unregistered sale of XRP tokens worth around $1.3 billion. Ripple has since opened its regional headquarters in Dubai. Since the collapse of crypto exchange FTX last year, the SEC has been cracking down on some of the biggest players in the industry over violations of federal securities laws. However, it recently pulled back from officially defining "digital assets." In a congressional hearing a few weeks ago SEC Chairman, Gary Gensler, simultaneously claimed that crypto regulations were clear while refusing to say whether or not the Ethereum token is a security.
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The outcome of the SEC case against Ripple remains uncertain, with a judgment expected in the next three to six weeks, according to the report. Hopes that the lawsuit would go in Ripple's favor caused the XRP token price to surge in March. However, investors have recently been wary of placing too much emphasis on short-term market movements, as the long-term implications of regulatory battles in the crypto industry are likely to be more significant.
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The case also raises broader questions about the regulatory environment for crypto companies in the U.S. Garlinghouse's comments at the Dubai Fintech Summit reflect growing concerns among crypto entrepreneurs about the regulatory risks of doing business in the U.S. The SEC's crackdown on the industry has been seen by some as a sign of hostility towards crypto innovation, which could drive entrepreneurs to seek more favorable regulatory environments elsewhere. Several major crypto companies have threatened to move their business elsewhere in light of SEC hostility such as Coinbase, Gemini, and Ripple.
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Ultimately, the outcome of the Ripple-SEC case could have far-reaching implications for the crypto industry as a whole, as it could set a precedent for how regulators treat digital assets in the future. It is therefore essential for regulators and industry players to work together to establish clear rules of the road for crypto businesses, to ensure that innovation in this space can continue to thrive in a safe and responsible manner.

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Newsletter 7 - Crypto Battles On

## How a US Government Debt Default Might Affect Crypto

Note: Nothing in this article is or should be taken as investment advice.
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Treasury Secretary [Janet Yellen](https://en.wikipedia.org/wiki/Janet_Yellen) warned that the United States government could [default](https://www.investopedia.com/terms/d/default2.asp) on its debt obligations by June 1st, this year. She warned of mass unemployment, payment failures, and broad economic weakness if the United States failed to pay off its debt. The debt ceiling is the maximum amount of debt the government can take on to pay its bills. Raising the ceiling allows the government to continue issuing more debt to generate capital. If the country defaulted on its loans it would likely have catastrophic effects on the world economy. Raising the debt ceiling is a recurring issue that stokes political theater. In the end, one party will likely concede to the other allowing a congressional majority to increase the debt limit. 
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The outcome may end up being positive for Bitcoin and other cryptocurrencies. By the definition of a [decentralized currency](https://coinmarketcap.com/alexandria/glossary/decentralized-currency), any struggle to the United States dollar provides a boost to the strength of Bitcoin and increases the value proposition of a [trustless currency](https://www.bcbgroup.com/what-does-trustless-mean-in-crypto/#:~:text=%27Trustless%27%20refers%20to%20a%20quality,trust%20in%20a%20third%20party.). Some analysts believe that raising the debt ceiling would prompt the Federal Reserve to print more money, which would theoretically boost capital inflows to assets like Bitcoin. One analyst stated,  “...when the debt ceiling is lifted and credit contraction leads to economic crisis, they will have to print money on a massive scale.”
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The global economy is in an unusual predicament riled with uncertainty as banks are struggling, the debt ceiling will be reached within a month, and the strength of the dollar is decreasing. While the long-term effects of these events are to be seen, the short-term effects could be drastic if not addressed promptly. Just this week, First Republic Bank, which saw the removal of over $100 billion of deposits, was taken into [FDIC](https://www.fdic.gov) [receivership](https://www.investopedia.com/terms/r/receivership.asp). The struggles in the banking sector reduce the options the Federal Reserve has to help address the debt crisis. Increases in interest rates or increasing the money supply through quantitative easing will cause large amounts of inflation, and lower interest rates or a decrease in the money supply through quantitative tightening will put the banking system at risk. The actions taken by central banks and governments these next few months will have lasting effects on the stability of the global economy.

![Bitcoin Transaction Record](https://highxtar.com/wp-content/uploads/2021/01/highxtar-bitcoin-record.jpg)
## Bitcoin Sets New Daily Transaction Record the Same Day Banks Struggle
Bitcoin hit a new record for the most transactions in a single day throughout all of its 14-year history on the same day that JP Morgan bought out failing bank First Republic. First Republic bank saw over $100 billion dollars of withdrawals last quarter and wasn’t able to stay alive even after taking on a $30 billion dollar loan from other banks. At the time of writing, the stock prices of all regional banks are down. Months ago, the Federal Reserve put out a report noting that over 300 regional banks had the same asset mismatch problems that took down Signature and Silicon Valley Banks.
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While the two events are not the same, it does suggest some correlation between the current state of the political and financial system and the price of the largest cryptocurrency. The struggles of the current global economy have seemingly helped the adoption of Bitcoin. Explanations for this range from decreasing trust in the dollar to increasing understanding of the value props for self-custody and decentralized global money. The FDIC, in an attempt to protect its reserves, has essentially said that all US banks are too big to fail, a moral hazard that protects elite bankers from the consequences of their decisions. 
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Even more recent news shows other banks struggling to survive as [Pacific Western](https://www.pacwest.com), a bank with around $50 billion in assets, lost 44% of its share price after hours on Wednesday. This is the latest bank to fail in the struggling industry. 


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Centralized Money Powers are Struggling

## Sam Bankman-Fried Accused of $40 million bribe
[FTX](https://restructuring.ra.kroll.com/FTX/) founder, [Sam Bankman-Fried](https://en.wikipedia.org/wiki/Sam_Bankman-Fried) was accused this week of attempting to bribe Chinese officials in an attempt to unfreeze over a billion dollars of [cryptocurrencies](https://www.investopedia.com/terms/c/cryptocurrency.asp). This new account means that the disgraced tech founder now faces at least 13 criminal charges related to the crash of his multibillion-dollar cryptocurrency exchange. 
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Bankman-Fried was arrested a few months ago in the Bahamas and brought to the United States, where he has remained free on a [$250 million bond](https://www.cnbc.com/2022/12/22/ftx-founder-sam-bankman-fried-to-be-released-on-250-million-bail.html) that allows him to stay with his parents in Palo Alto, California.
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The recent indictment stated Chinese law enforcement authorities, in early 2021, froze certain [Alameda Research](https://en.wikipedia.org/wiki/Alameda_Research) cryptocurrency trading accounts on some of China’s largest cryptocurrency exchanges. Reportedly, the accounts contained over a billion dollars worth of crypto assets. 
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After Bankman-Fried failed several attempts to unfreeze Alameda’s accounts through the use of lawyers and lobbying, he ultimately agreed to a bribe to unfreeze the accounts, according to the indictment. The bribe payment, then worth about $40 million, was moved from Alameda’s main trading account to a private cryptocurrency wallet in November 2021, and the frozen accounts were unfrozen at about the same time.
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If found guilty, Sam Bankman-Fried will face more than 100 years in prison.

![Do Kwon Being Arrested](https://coherence-strapi-media.s3.us-east-2.amazonaws.com/129116807_e51d1870fb93c398fea6fade4e1bece68c43f3e90_0_4247_28311000x667_8d6d6cfdb9.jpg?updated_at=2023-04-26T21:18:23.287Z)
## South Korean Court Acquits Do Kwon, former CEO of [Terraform Labs](https://en.wikipedia.org/wiki/Terra_(blockchain)), of Securities
A South Korean district court has acquitted [Do Kwon](https://en.wikipedia.org/wiki/Do_Kwon), former CEO and co-founder of Terraform Labs, of security violations in a massive ruling that could help shape how regulators view cryptocurrencies in the country. 
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The court declared that LUNA, the native token of the LUNA ecosystem, is not a security under Korea's [Capital Markets Act](http://www.koreanlii.or.kr/w/index.php/Capital_Markets_Act?ckattempt=1), dismissing the prosecution's claims of fraudulent transactions and property-related crimes that breached the Act. The court's decision marks a departure from previous court rulings that had been less definitive in their assessments of native tokens' regulatory status. Previous court rulings had used more cautious language, such as "... there is room for dispute in terms of the law…" and, " it is questionable whether the Capital Market Act can be applied." The latest ruling clarifies the regulatory status of LUNA and other native tokens in South Korea.
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While rejecting the prosecution's request for property confiscation, the court noted that the Terra-LUNA case involved fraud and breach of trust rather than a violation of the Capital Markets Act in South Korea. The ruling is significant because it clarifies the regulatory status of LUNA and other native tokens in the country of South Korea and highlights the need for clear regulatory guidelines for cryptocurrencies on the global stage.
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It is uncertain if this case will affect how United States regulators address the crypto industry. The judgment by the Korean district court is in stark contrast to the stance of the United States Securities and Exchange Commission (SEC) which has [charged Terraform Labs](https://www.sec.gov/news/press-release/2023-32) and its founder with violation of securities law. Kwon's lawyers have denied the SEC's securities fraud allegations. The case is being closely watched by the cryptocurrency community as it will likely have far-reaching implications for the industry.

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More Crypto Founders in Trouble with the Law

Sage Farrenholz

Cryptocurrencies, once hailed as a revolutionary financial innovation, have experienced a tumultuous year in 2022. Many tokens, including Bitcoin, Solana, Dogecoin, XRP, and Cardano, have seen significant declines in value, leaving investors feeling the pinch. However, despite the current market conditions, there are compelling reasons to continue investing in cryptocurrency. In this article, we will explore three main reasons why you should consider staying in the game: market sentiment, practical applications, and the age of the cryptocurrency market.

## Market Sentiment:
Market sentiment plays a crucial role in the performance of any asset, including cryptocurrency. While the recent market downturn may have caused some panic among investors, it's important to consider the bigger picture. According to a recent report by Cointelegraph, the majority of global retail investors have remained relatively unchanged in their level of trust in cryptocurrency, indicating a continued interest in the asset class. Additionally, [a study sponsored by Coinbase](https://www.coinbase.com/institutional/research-insights/resources/education/2022-institutional-investor-digital-assets-outlook-survey) found that 62 percent of institutional investors actually increased their cryptocurrency holdings in their portfolios. These findings suggest that despite short-term market fluctuations, there is still significant confidence and interest in cryptocurrency among both retail and institutional investors.

## Practical Applications:
Cryptocurrency has more to offer than just speculative trading. It has real-world practical applications that can provide value in various industries. One such example is anonymous transactions powered by cryptocurrencies like Monero. Monero is known for its focus on privacy and anonymity, making it an ideal choice for those who prioritize security and confidentiality in their transactions. Unlike traditional payment methods, which may require personal information and leave a traceable trail, Monero transactions are shielded, providing users with enhanced privacy and security.

Another practical application of cryptocurrency is cross-border transactions. Traditional payment methods often come with high fees and lengthy processing times when it comes to sending money internationally. Cryptocurrencies, on the other hand, offer the potential for instant transfers at a lower cost. This can be especially beneficial for those in developing countries or for those who have limited access to traditional banking services. Cryptocurrencies can provide financial inclusion and empower individuals to transact globally without the need for intermediaries.

## Age of the Cryptocurrency Market:
Compared to traditional financial markets, the cryptocurrency market is still relatively young. The US stock market has been around for over two centuries, while Bitcoin, the first cryptocurrency, was launched less than two decades ago. Ethereum, another major cryptocurrency, only launched in 2015. This youthfulness of the cryptocurrency market indicates that there is still ample room for growth and potential for long-term investment opportunities.

Historically, cryptocurrencies have shown resilience and have bounced back from market downturns. While there may be short-term volatility, the long-term trend has been one of growth and adoption. As more companies, institutions, and governments show interest in cryptocurrency and blockchain technology, the potential for increased mainstream adoption and higher valuations becomes more apparent.

## What should you do about it?
Despite the recent market turbulence, there are compelling reasons to consider staying invested in cryptocurrency. Market sentiment, practical applications, and the age of the cryptocurrency market all contribute to the potential for growth and value in this asset class. It's important to remember that cryptocurrency, like any investment, comes with risks, and it's crucial to do thorough research and make informed decisions. However, for those who believe in the long-term potential of cryptocurrency, staying the course and remaining invested may prove to be a prudent strategy. 

_Disclaimer: The above content is for informational purposes only and should not be considered as legal advice. It's important to consult with a qualified legal professional before making any investment decisions or taking any legal actions related to cryptocurrency._

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Why You Should Keep Investing in Cryptocurrency Despite Market Volatility

## Gary Gensler Shredded in Congressional Hearing about His Regulation of Crypto
Securities Exchange Commission Chairman Gary Gensler faced down a barrage of criticism from House Republicans over his crackdown on cryptocurrency platforms. The hearing lasted over 4 hours and contained heightened emotions and frustration on the part of many politicians.
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Throughout the hearing Gary Gensler danced around answers, was addressed rudely, and refused to give clear and intelligible responses. Despite claiming that regulations were clear regarding cryptocurrencies he refused to identify Ethereum as either a security or commodity. If the head of the regulatory body will not publicly define the law, it is impossible for the rest of the industry to follow it. Some of the questions the regulator head faced during the hearing covered whether or not his agency was too hard on proposed cryptocurrency rules, provided enough time for public feedback on rules, and if proposed disclosure rules around climate data was within his agency’s authority. 
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The lack of regulatory definition in crypto seems to be nearing an end, however, as the Committee Chairman Patrick McHenry said “Congress must provide clear rules of the road to the digital asset ecosystem because regulators cannot agree.” This is evidenced by the differing opinions of the CFTC and the SEC on which tokens are securities or commodities. The Chairman also told Gary Gensler, “regulation by enforcement is not sufficient or sustainable. Your approach is driving innovation overseas and endangering American competitiveness.”
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The SEC Chairman’s governance of the agency was also brought into question by the oversight committee citing his lack of responsiveness to congressional inquiries. As a result of this and other claims of incompetence, Congressman Warren Davidson has officially introduced a bill that seeks the removal of Gary Gensler as SEC Chairman. In Davidson’s statement, he attributes the Chairman’s “failure to protect investors and abuses of power” as reasons for the proposed overhaul of the regulatory body. The legislation seeks to replace the Chairman’s role with an Executive Director, who would be held accountable by the board. All former SEC Chairmen would be excluded from consideration.
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It is too early to see if Gary Gensler could actually be removed from his position at the SEC, but it’s unlikely. The bill to actually make this happen has yet to be officially put forward other than mentions of it publicly. While the financial committee dug into the SEC chairman for the entirety of the hearing it will take many more months before clear regulation is created, leaving the future of crypto still very much uncertain.

## Stablecoin Regulation Debate Reignited
House lawmakers are reviving their focus on stablecoins under new Republican leadership. A draft bill was released earlier this month that establishes a foundation for a federal framework, however, Republican Patrick McHenry acknowledged that the bill still required a lot of work. Democrat Maxine Waters, however, said that the recent draft is the result of uncompleted negotiations between her and McHenry and that the draft should be completely discarded. “Unfortunately a lot of things have happened in between,” she said, “I think we’re starting from scratch.” Republicans apparently are planning on writing their own bill, which would result in Democrats doing the same. Eventually, the two sides would need to come together to hash out a compromise.
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Stablecoin regulation, specifically, became a hot topic of discussion last year after the collapse of Terra. Terra was designed different than most traditional stablecoins because it was pegged by a computer algorithm instead of being backed by actual reserve assets. The head of global policy for stablecoin giant Circle said that it’s imperative for the US to create a federal framework to prevent any other major stablecoin failure like Terra. He also pointed out that “the rest of the world is not waiting for the US to issue a comprehensive regulatory approach to payment stablecoins and the broader digital asset market. If the US wants to maintain its status as a global leader in financial technology and innovation, it needs to figure out its position on regulation for crypto; fast.

## Conclusion
We are finally starting to see moves be made in the regulation for crypto, but it will still take a lot of time before laws are set in stone. There is utter turmoil between some members of Congress and the Securities and Exchange Commission with the Chairman of the regulatory body at risk of losing his job. The actions of policymakers in the next few months will decide the future of crypto in the United States.

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Progress for Crypto Regulation

## SEC Begins Open Hostilities Towards Coinbase
Coinbase’s stock price has barely been affected despite the looming risk of an impending litigation battle with the [SEC](https://www.sec.gov).
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Just a few days ago, Coinbase announced that it received a [Wells Notice](https://www.investopedia.com/terms/w/wellsnotice.asp) from the SEC regarding an undefined list of unregistered [securities](https://www.investopedia.com/terms/s/security.asp). A Wells Notice is just the SEC’s way of signaling to a company that the agency is preparing an [enforcement action](https://www.sec.gov/about/offices/oia/oia_enforce/overviewenfor.pdf) against them. This case, if it comes to fruition, may have a major impact on Coinbase and the industry at large. 
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The SEC has long said that almost all cryptocurrencies are securities, but up to this point there has been no definitive answer on how to regulate digital assets, except for [Bitcoin](https://bitcoin.org/en/) which has been deemed a [commodity](https://www.investopedia.com/terms/c/commodity.asp). A security is simply a financial instrument that needs to be regulated by the SEC. As there has been no official action taken by Congress up to this point, the only way to create more certainty in crypto regulation is for the SEC to take enforcement actions or lay out a rough framework for companies to use. The latter has not happened, and the SEC remains seemingly hostile towards most of the industry.
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Coinbase responded to the SEC Wells Notice by writing an open letter to the crypto community explaining the situation, as they view it, in more detail. You can find that letter [here](https://www.coinbase.com/blog/we-asked-the-sec-for-reasonable-crypto-rules-for-americans-we-got-legal). Coinbase sells the narrative that they have spent millions of dollars and many years attempting to assist the SEC in creating fair regulations for the crypto industry, but that they have been mostly ignored. It will be interesting to see how this will play out in court, if the SEC goes through with their legal action. One important thing to note is the lack of coherence between government agencies on how to regulate crypto. This can be seen as how the [SEC sued Kraken](https://www.sec.gov/news/press-release/2023-25), stating that Ethereum was a security, while the CTFC is suing Binance and stating that Ethereum is a commodity.
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The notice exploded on Twitter and was one of the largest trending announcements of the day, with many crypto enthusiasts voicing support for Coinbase’s defense. The entire industry is seemingly preparing to go to war to protect itself. If the SEC succeeds in deeming most tokens as securities, rather than creating a new way of regulating digital assets, we may see innovation in [Defi](https://www.investopedia.com/decentralized-finance-defi-5113835), the [Metaverse](https://www.wired.com/story/what-is-the-metaverse/), and many others stifled or greatly slowed in the United States; a tragedy in and of itself.
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## Binance in Genuine Survival Risk after Announcement of CFTC Complaint
Even with high regulatory pressures against the entire crypto industry Bitcoin is still up by over 20%, proving itself to be resilient.
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The [CFTC](https://www.cftc.gov), the regulator of derivatives in the United States, announced a complaint against Binance early on Monday morning this week. The CFTC alleges that Binance offered crypto derivatives, like futures and options contracts, to U.S persons without registering as a [futures commodity merchant](https://www.nfa.futures.org/registration-membership/who-has-to-register/fcm.html). This is just the latest of the legal actions against crypto companies by United States regulatory agencies and it definitely will not be the last.
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One important thing to note about this case is that it is brought forward by the CFTC and not the SEC. The SEC tends to make many smaller enforcement actions. The CFTC, however, tends to mostly go after big fish and its regulatory action often proves fatal for crypto companies. While the likelihood of Binance being taken down entirely by the CFTC is low, it is a possibility that should be taken into consideration as the event would likely put the industry back years. 
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There is no debate on the fact that U.S regulators have been incredibly hostile towards crypto companies with legal action having been taken against virtually all major crypto exchanges. This action took many by surprise, however, and some have argued that this could be a politically motivated move for the CFTC to show the SEC that this is a commodities issue rather than a securities issue. Many experts expect that the SEC will come out with their own legal action against Binance as a counter.
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This CFTC action follows many other legal actions against crypto in what, [Gabby Kusz](https://www.linkedin.com/in/gabriella-kusz-5545872/), the CEO of the [Global DCA](https://global-dca.org) has described as a “targeted attack” against crypto. The Global DCA is a self regulatory association in the cryptocurrency space and works to help advocate for crypto companies globally. In the last few months we’ve seen Gary Gensler of the SEC label all of crypto, except Bitcoin, a security, we’ve seen the [SEC block a Bitcoin ETF](https://www.coindesk.com/policy/2023/01/13/grayscale-slams-secs-unreasonable-barring-of-spot-bitcoin-etfs/), and we’ve seen the [White House describe cryptocurrencies as unstable, unusable, and without fundamental value](https://www.coindesk.com/policy/2023/03/21/white-house-takes-aim-at-crypto-in-scathing-economic-report/). While much of the U.S government seems to be hostile towards crypto, the industry still shows itself as resilient and continues to grow, as Bitcoin is up over 22% on the month.

## Conclusion
The crypto market is proving itself to be resilient in times of turbulence and hostility as many tokens such as Bitcoin and Ethereum are increasing in value despite industry run-ins with regulators. The SEC is ramping up its enforcement and examinations into the crypto industry and even recently asked for an increase in budget to help them in this regard. According to SEC chairman, Gary Gensler, the agency is currently [“stretched thin”](https://appropriations.house.gov/legislation/hearings/budget-hearing-fiscal-year-2024-request-us-securities-and-exchange-commission) when it comes to investigating emerging crypto issues. It will be interesting to see how the lawsuits with Coinbase and Binance turn out as these could play a major role in how crypto progresses for the next few years. There is a risk that large functions of the crypto market could be banned in the United States, such as staking, which would simply export innovation and capital accumulation to other countries. Many crypto enthusiasts understand the dire consequences of the next few months, if they do not end well, and are gearing up to assist in the war of self defense against regulators.


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The Crypto Industry Prepares for All Out War

## USDC Loses Peg After SVB Collapse
USDC lost its dollar peg over the weekend with the fall of Silicon Valley Bank.
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USDC, which is supposed to be one-to-one with the dollar dipped as low as 87 cents over the weekend. This occurred after [Circle](https://www.circle.com/en/), the firm behind USDC, announced that $3.3 billion of USDC’s [backing](https://marketbusinessnews.com/financial-glossary/backed-currency-definition-meaning/) was locked in [SVB](https://www.svb.com) and at risk of disappearing. Circle said the token would continue to operate normally while the firm waited for clarity on what would happen to depositors in the fallen bank.

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Ultimately, USDC showed itself to be resilient as it regained its [peg](https://www.investopedia.com/terms/c/currency-peg.asp) soon after regulators announced a solution to keep SVB depositors whole. This, however, was not before Coinbase had disabled dollar to USDC conversions for the weekend as regulators rallied over finding a solution for SVB. As the USDC sell-off was occurring, another major [stablecoin](https://www.investopedia.com/terms/s/stablecoin.asp), DAI, also dipped below $1. This came after DAI received an overwhelming increase in its trading volume from the day before; a growth of 922%. DAI’s price dropped as low as 89 cents, but it regained its peg a few days later. 
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This episode of chaos and panic highlights the need for stablecoins to be battle tested in times of high price volatility. As was seen months ago with the failure of [Terra](https://www.coindesk.com/learn/the-fall-of-terra-a-timeline-of-the-meteoric-rise-and-crash-of-ust-and-luna/), these tokens are not necessarily guaranteed to keep their pegs. The ability of these tokens to regain their peg and not fail completely is a positive sign of the integrity of stablecoins. Though there may be periods of volatility, confidence can be bolstered over time as these tokens survive more and more market changes.

## Crypto Prices Skyrocket after Regulators Step In To Help Banks
Many crypto prices, especially Bitcoin, climbed this week after the collapse of Silicon Valley and Signature Banks was addressed by regulators. Bitcoin is up over 20% with other major tokens like Ethereum up well over 10%.
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This past weekend saw the collapse of both Silicon Valley (SVB) and Signature Banks. SVB was a massive partner for most venture backed startups in the United States while Signature was a major player in servicing crypto exchanges. Prices for both Bitcoin and Ethereum tokens fell to nearly two-month lows on Friday following the collapse of the two banks.
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However, Bitcoin remains up over 20% over the last week  with Ethereum up around 15%. This price movement may be attributable to fear in the banking system. The ability for people to custody their own funds is an important value proposition in crypto, and could have acted as a solution to prevent such chaos. Credit Suisse, one of the largest banks in the world, has purportedly begun having liquidity issues. Governments and central banks all over the world have stepped in to address systemic banking problems and to provide emergency [liquidity](https://www.investopedia.com/terms/l/liquidity.asp). The real question to be answered here is if the steps being taken will solve the problem or only push it back a few months. It is too early to tell, but these worries should be taken into consideration when making personal financial decisions.

## The Ups and Downs of a Virtual World
[Metaverse](https://www.wired.com/story/what-is-the-metaverse/) tokens are up big this week with STX leading the charge, up a whopping 80%. The Metaverse collection is in the green by over 15%.
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While turmoil exists in traditional markets, cryptocurrency markets are performing relatively well. Major tokens in the Metaverse sector have seen price increases this week, such as THETA which is up over 20%, alongside both SAND and MANA which are up almost 10%. It is unclear if disruption in the banking system could be leading people to invest more in crypto.
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The gains in the Metaverse tokens are exactly the opposite of what was expected for the week as large companies like Meta have recently reduced their Metaverse focuses to side priorities. In a recent interview Mark Zuckerberg talked about Meta’s new focus on Generative AI and reduced the Metaverse as an “also” while Microsoft announced that it would be shutting down its Metaverse Division. Last year, Metaverse companies raised over $2 billion through March while this year only raising a little more than a quarter of that amount. According to an internal presentation shared with the Verge last month, Meta’s Quest 2 is struggling to acquire new users and only 1 in 10 users consistently use the product. 
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However, it’s not all gloom and doom for the industry. Metaverse technology is likely to play some major role in the future, though it hasn't yet been determined what that role will be. Meta is still dedicated to a robust hardware roadmap with new VR headsets, AR goggles, and many other products on the horizon. After most people discounted the early days of the internet it is too early to tell what will become of the Metaverse, but it is sure to turn some heads.
![AI Generated Child](https://cdn.pixabay.com/photo/2023/03/03/19/19/ai-generated-7828310_1280.jpg)

## Conclusion
This was a difficult week in both crypto and the traditional markets. The banking sector, led by fear, was heavily impacted as many banks lost more than 50% of their market value within  days. Trading was repeatedly suspended on several stocks during the week.
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While one of the core premises for Bitcoin and crypto is the idea of [self custody](https://medium.com/blockchain/self-custody-explained-a96f0bf63c88), the price of Bitcoin still fell after the fall of the two depository organizations and recovered as regulators stepped in. It would be reasonable to suspect that Bitcoin’s price would rise as more evidence is given to the value propositions for crypto, but it appears that this did not happen as expected.