Weekly Recap
April 29, 2023

Crypto Fundamentals #026

Coinbase sues the SEC, Mastercard announcements at Consensus 2023, Hong Kong plans to release crypto regulatory framework

Jimmy Zheng
COO

gm friends

here’s what happened in crypto this week👇

🌞 Coinbase sues the SEC

💫 Mastercard makes blockchain product announcements at Consensus 2023, teams up with Aptos, Avalanche, Solana and Polygon

🤝 Hong Kong plans to release crypto regulatory framework in May

The crypto markets saw sideways chop this week with an average and median WoW price increase of 2.8% and 1.8%, respectively. OP saw the largest drop with a ~5.6% WoW decline, while SOL and ATOM saw the largest WoW gains of ~9.1% and ~8.9%, respectively. Stablecoin volumes also stayed relatively flat (median WOW increase of ~0.5%) with continued inflows into several major networks including ARB (up 4.4% WoW), AVAX (up 2.7% WoW) and MATIC (up 4.4% WoW).

let’s jump right in

🌞 Coinbase sues the SEC

Per CNBC, “Coinbase took legal action against the SEC on Monday [April 24], asking a federal judge to force the regulator to share its answer on Coinbase’s July 2022 petition on whether existing securities rule-making processes could be extended to the crypto industry” (CNBC).

On the same day, Coinbase released a blog post detailing the rationale behind this action. This week’s legal action was a follow-up to Coinbase’s July 2022 petition to the SEC that requested whether the SEC could use its “formal rulemaking process to provide guidance for the crypto industry” (Coinbase). Basically, Coinbase’s follow-up legal suit is intended to compel the SEC to respond to the initial petition in July 2022. Coinbase cites the Administrative Procedure Act (APA) which requires the SEC to respond to the rulemaking petition “within a reasonable time” (Coinbase). Given that the SEC has not yet provided a formal response to the initial petition, Coinbase is unable to take the matter to court to dispute the SEC’s decision.

The tricky bit here is that while the SEC hasn’t yet provided a decision on the petition, they have gone after Coinbase with other enforcement actions such as the issuance of a Wells Notice back in March. Coinbase’s most recent legal action takes the stance that Coinbase expects the SEC to share its denial of the petition (given the SEC’s recent enforcement actions), and that Coinbase will take the SEC to court when that happens.

This action appears to be the culmination of years of uncertainty stemming from a lack of clarity around US regulation for digital assets. @exlawyernft lays out a summary of the Coinbase response to the Wells Notice, noting that Gary Gensler previously stated that neither the SEC or its sister agency, the CFTC have a regulatory framework in place to regulate cryptoassets, and that Congress would likely need to address the industry before federal regulators could step in (which has not happened). @exlawyernft concludes that the flip flopping and bad faith of Gensler’s behavior will fully come to light if the SEC moves forward with its public litigation.

The SEC vs. Coinbase situation continues to be one of the highest profile crypto regulatory fights in the United States and we’ll be watching closely to see what develops 👨🎓

💫 Mastercard makes blockchain product announcements at Consensus 2023, teams up with Aptos, Avalanche, Solana and Polygon

This week saw a flurry of Web2 <> Web3 partnerships announced as part of the Consensus 2023 crypto conference (Coindesk).

Mastercard was a prominent participant at the conference, making multiple product announcements regarding blockchain technology. The payment company introduced its “Mastercard Crypto Credential” and its collaboration with blockchains such as Polygon, Avalanche, Solana and Aptos, as well as partnerships with wallet providers "Bit2ME, Lirium, Mercado Bitcoin and Uphold. The team states that these partnerships will aim to “enhance verification in NFTs, ticketing, enterprise and other payment solutions.”

Additionally, Mastercard stated that it aims to seek more partnerships with various crypto exchanges in order to expand its crypto card program (WaterGuru). Last month, Mastercard announced a partnership with Stables and Circle to allow for USDC payments in the Asia Pacific region. For further context, Stables is a stablecoin-only wallet, which automatically comes with a card serviced by Mastercard. The current integration is planned to go live in Australia in Q2 2023, and subsequently branch out to other geographies (WatcherGuru).

🤝 Hong Kong plans to release crypto regulatory framework in May

Julia Leung, CEO of Hong Kong’s Securities and Futures Commission (SFC) stated on Thursday that final guidelines for Crypto Exchange Licenses will be issued in May, with the new licensing legislation coming into effect on June 1st (Bloomberg).

The SFC had previously launched a public consultation process that aimed to determine the best way to allow retail investors access to cryptocurrency investments, as well as the possibility of providing exchange-traded funds (ETFs) tracking digital assets (Decrypt). Since launching the consultation, the SFC has seen 150+ public responses as well as ~80+ crypto-related businesses including exchanges, wallet providers, blockchain infrastructure firms and payment providers indicating interest in operating from Hong Kong (CoinJournal).

The planned implementation of formal regulatory framework in Hong Kong follows the European Parliament’s approval of the Markets in Crypto Act (MiCA) earlier this month. 2023 is shaping up to be the year of clear legal frameworks for the crypto asset class in ex-US markets.

that’s all folks

Detailed L1 dashboard for people who love more numbers in smaller font:

Note: Revenue represents fees that go to the protocol’s treasury or are returned to tokenholders via a burn mechanism (source: Token Terminal). Weekly commits and weekly dev activity as of 4/15/23.

The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments.

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