1/ Tomorrow, Congress will hold a historic joint hearing between both the Agricultural and Financial Services committees on creating new, fit-for-purpose rules for crypto.
I'll testify live.
Bitcoin mining consumes roughly the same amount of electricity as Washington state—putting pressure on our power grids and worsening the
#ClimateCrisis
. We need to protect our planet and crack down on environmentally wasteful crypto mining practices.
Today, the Federal Court for the Northern District of California ruled, as matter of law, that none of the tokens trading on Kraken are securities.
This is a significant win for Kraken, for the principle of clarity and for crypto users everywhere. It also confirms Kraken’s
1/ 🚨 BREAKING: US Office of the Comptroller of the Currency proposes rule prohibiting large banks from discriminating against "legal but disfavored" customers like oil & gas biz, independent ATM operators and of course...
crypto companies.
🚨🚨🚨*BREAKING*🚨🚨🚨
@Krakenfx
just won approval to create America’s first crypto bank.
World, please meet Kraken Financial. Kraken Financial, world.
Wait, a what? Kraken is a BANK?! How did this even happen?!
Allow me to threadeth. 👇
Last week: You read
@krakenfx
's motion to dismiss the SEC’s case against crypto.
Today: You’re reading about “a regulatory power grab,” how “the SEC has appointed itself crypto regulator“, and that ”the SEC… puts consumers at risk”
But wait. That’s not Kraken talking.
1/ 🚨🚨🚨BREAKING: UK Securities regulator rejects the SEC's "fully decentralized" test for utility tokens in new guidance, says utility tokens are not securities within their jurisdiction, regardless of functionality.
In the next three months, I will hire thirty (30) lawyers at
@krakenfx
.
I'd like to hire sixty but honestly I don't know how to get it done.
Can I acquire a law firm?
Last night,
@krakenfx
fired back at the SEC with its final brief in the motion to dismiss the SEC’s complaint.
The SEC had its opportunity to tell the Court what, precisely, is the investment contract that supposedly trades on Kraken.
But they couldn't. 1/🧵
1/ BREAKING: The NYSE/ICE group officially announces they're taking Coinbase, Bittrex, Gemini & Polo head-on. Starbucks announces they'll be accepting crypto. This is the Wall St. troll of the century, folks.
"Senator thinks crypto market will hit $20 Trillion by 2020"
.
.
Let that headline sink in.
.
.
Now think back to 2012. How would your 2012 self have reacted to this?
🚨🚨Double siren🚨🚨
The Senate is about to pass a bill that would require KYC for essentially all crypto transactions.
Those who can't report get shut down.
DEXes? shut down.
Miners? right to jail.
Click here, call your senator, and stop it.
Kraken has published its response to the Treasury’s midnight rule on self-custodied wallets. The response is not short. It is not polite. It concludes with an important message:
Regulating crypto companies punishes the regulator.
How? Read on. 1/
1/ 🚨 NEW LAW ALERT. A federal court in California just ruled against the SEC in an ICO case, explaining what a plaintiff will now have to prove for an ICO to be a security. If you care about whether ICOs create securities, read on. If not whatever im not the boss of you
1/ Today, in a speech at the Yahoo Finance Summit, SEC gave landmark guidance on token sales. It finally answered the question “When is a token sale a security?” It’s a Really Big Deal™ and I’m going to break it down here. SPOILER: It's really good and totally reasonable.
I'm honestly considering unfollowing folks who start using the word "nocoiner" regularly. It started as kind of a joke but has a bitter us-vs-them flavor to it reminiscent of people who use the words "leftist" or "antifa". It smacks of partisan tribalism.
I am thrilled to announce that I am joining
@blockchain
as the company's President and Chief Legal Officer! I couldn't be more proud to join the team building an open, fair financial future for all of us.
1/ 🚨🚨🚨 Today, the US Treasury published MASSIVE new guidance on crypto regulation. It has *major* implications for wallets, exchanges, ICO issuers, dApps, DEXes... OH MY 🚨🚨🚨 (um I'm gonna tweet about it)
6/ The SEC unqualifiedly lost on this “tokens are securities” theory, and will not be permitted to rely on it going forward.
Instead, it will need to prove, for every alleged transaction on Kraken, that the Howey Test factors are satisfied.
They aren’t, and we look forward to
1/ This morning, the Federal Court for the Southern District of New York ruled that XRP is not a security.
As such, just a few minutes ago, Kraken re-enabled trading in XRP for US users.
Switzerland's financial regulator just issued landmark guidance on ICOs. Here's brief tweet tempest breaking down the high points and how it fits into the big picture.
In May, 2023 I testified before Congress on behalf of my client,
@krakenfx
, that America needs a comprehensive and balanced regulatory framework for digital assets.
24 hours later, down to the hour, the SEC called to say they were going to sue.
Today, the White House says
🚨NEW: The
@WhiteHouse
says it opposes passage of FIT 21 in its current form but also says it’s eager to work with Congress to “ensure a comprehensive and balanced regulatory framework for digital assets.”
Preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color traditional big banks have is critically important. That's why I'm proud to introduce the
#STABLEAct
with
@RepChuyGarcia
and
@RepStephenLynch
.
1/ 🚨BREAKING🚨: SEC Commissioner
@HesterPierce
today publicly proposed a safe harbor for token sellers building decentralized networks.
It is an elegant solution to the most complex legal challenge of this crypto era.
Thread is go.👇
16. Did I say months? I meant inches. Here it is – in all its glory – I present to you an exclusive copy of
@krakenfx
’s actual bank charter application!
10/ To deliver clarity to the industry, to protect consumers and foster the growth of blockchain technology, Congress must pass a comprehensive market structure framework.
We applaud all of those in our government working tirelessly to make this a reality and we thank the Court
2/ Furthermore, the Court found the SEC’s self-serving invention of the “crypto asset security” concept to be “unclear at best and confusing at worst.”
2/ Crypto OGs know the single greatest impediment to widespread adoption has been and continues to be the lack of access to banking services.
In its early days, Bitcoin was caught up in Operation Chokepoint, and crypto more broadly is still caught up today
What a nightmare this is. SEC says "all ICOs" its seen are sales of securities, but FinCEN says they are "generally" money transmission.
But by law, they can't be both.
As an industry, we must do a better job of educating our governments.
…
@coincenter
1/ 🚨🚨🚨 SEC Publishes its long-awaited guidance on ICOs, the Howey Test, and everything else. A "baby steps" no-action letter released as well. Thread below for analysis 👇
I confess, I doubted I'd see a definitive statement from SEC clarifying that a great swath of potential token sales would not be securities... even giving examples! What a day. ETH has a clear, legal use case.
6/ Today, the OCC, led by
@BrianBrooksOCC
is making a bold effort to curtail the practice by prohibiting banks from discriminating against politically disfavored but otherwise legal businesses
3/ The Court called out the SEC’s straw man tactics, too, wondering aloud and on the record why the SEC consistently mischaracterizes Kraken’s position as requiring a “written contract” for there to be a security.
Well, we're off to the races: "I believe that initial coin offerings – whether they represent offerings of securities or not – can be effective ways for entrepreneurs and others to raise funding, including for innovative projects." - SEC Chairman today.
WAP
Weak
Administrative
Procedure
Others have objected on procedural grounds. I want to explain why the proposed rule is itself shameful:
It outlaws sending money to the poor.
Kraken blogged. I share further thoughts in this thread👇 1/
Square buys bitcoins, and now the prices of both Square stock and bitcoin are up 2%.
I'm just a simple country lawyer but I think this is what the cityfolk call "Synergy".
1/ Today, the US Department of the Treasury, through the Office of Foreign Assets Control (OFAC) took the historic step of adding two Bitcoin addresses to its list of sanctioned parties. In this thread, I'll break down what that means.
3/ Operation Chokepoint is a long-standing effort by political powers to cripple the growth of industries that were perfectly legal, but that they found distasteful.
4/ Plain talk:
Kraken doesn’t broker, trade or settle “expectations”.
It doesn’t list a single “investment concept”.
The exchange has never passed an “ecosystem” on from a seller to a buyer.
The SEC’s theories here are nonsensical.
Senator Lummis has asked me to host her fireside chat at
@TheBitcoinConf
in Miami! What should I ask her? Maybe...
🎙️Are proof-of-stake bag holders secretly lobbying against BTC?
🎙️Is bitcoin doomed to be a partisan issue?
🎙️Does the Hill distinguish between bitcoin & "web3"?
BREAKING: Ether not a security under US law, according to SEC. Lots of new thinking and analysis here on how SEC is thinking about token sales. Will do a quick breakdown in short order once I've reviewed.
Charlie Munger's "I wish cryptocurrencies had never been invented" really is the final objection to crypto, isn't it.
I wish this toothpaste had never left the tube.
I wish the genie would just get back in that damn bottle.
1/ Today, the SEC published an order in an administrative proceeding against the owner of a decentralized exchange, EthereDelta. It's important for what it says but, maybe moreso for what it doesn't say.
7/ But more importantly: Applying this standard across the industry under the SEC’s regulation-by-enforcement approach will require extensive, expensive, and time-consuming discovery for each of the millions (billions?) of transactions in a given asset.
First Gensler at SEC.
Then Barr at OCC?
Now Brummer at CFTC?
Three crypto-savvy individuals are likely to take the three most powerful financial regulator positions in America
at the same time.
Dear CEOs: Beef up those legal budgets.
The first standalone crypto bill has passed the US Congress.
An historic day.
The SAB 121 accounting guidance is punitive politics and has no business being on the books. We should all commend the House and Senate's leadership in ensuring crypto users are treated fairly under
A whopping 11 Dems, including Schumer, just voted to hand crypto and banks a win by undoing SEC guidance on crypto accounting.
21 House Dems helped approve the resolution last week. It heads next to Biden, who said he will veto it.
With
@Jasper_Goodman
:
1/ BREAKING 🚨 popular crypto app Abra charged by and settles with SEC for offering securities swaps. This is interesting for a few reasons. Short thread follows.
1/ Put on your parachute pants because today we're diving into AIRDROPS. Are they illegal? Can they be an alternative to an ICO? Did the SEC say yesterday that they’re forbidden? Is this all FUD??? Read on because this is gonna be a weird one.
5/ Fundamentally, the Court in Kraken’s case made the same distinction as in the Ripple case: A token isn’t a security, but agreements around a token could be.
6/ This is an historic day for
@blockchain
,
@Ledger
@BRDHQ
,
@EdgeWallet
and all the rest. I'll confess to personal delight here, too. Advocating for the protection of noncustodial, open-source software publishers has been a personal goal of mine for the better part of a decade
13/ Trouble is, there are already cops on that beat. Enter the states. Eight of them, actually.
-Montana
-Arkansas
-Iowa
-Mississippi
-Nebraska
-Ohio
-South Dakota, and
-Texas.
In a new amicus brief, all are urging the court not to endorse the SEC’s power grab.
🚨 New Guidance from the state of Pennsylvania: Crypto exchanges (even custodial matching engines!) are not money transmitters and do not require a license.
6/ Sad to see a federal agency deploy a straw man fallacy so brazenly.
All the more reason for Congress to put in place a regulatory framework that doesn’t require sophistry to enforce.
1/ Now that I’ve had a minute digest: While yesterday’s SEC announcement was helpful clarity for the industry as a whole, it is really, remarkably, exceptionally bad news for a) custodial providers, b) exchanges and c) OTC desks who trade tokens today.
Kraken Legal is now 56 deep.
After reviewing over a thousand resumes, I now present to you a thread 🧵 of my most crotchety observations on legal hiring.
Disagree? Find me at
@money2020
later this month and lawyer-fight me. We're still hiring so bring a resume with you.
In the next three months, I will hire thirty (30) lawyers at
@krakenfx
.
I'd like to hire sixty but honestly I don't know how to get it done.
Can I acquire a law firm?
4/ Instead of getting congress to pass a bill outlawing the industry, they just got regulators to make their lives tough by leaning on the banks to shut down their accounts.
9/ I will do a deeper dive in short order but at the outset this strikes me as an idea whose time has come.
If you want to make law, go to congress and get it made.
Don't weaponize the whims of unelected, unaccountable officials to persecute the powerless.
5/ Let's dive in. First up: Wallets.
Noncustodial wallets are not money transmitters in the US. They are unregulated. Nice to see FinCEN confirm what most commentators have been thinking for a long time.
24. With
@Kinitsky
at the helm, Kraken hopes to offer:
-Digital asset custody
-Checking and savings accounts
-Wire transfers
-Trust accounts
-Online and mobile banking UIs
-Debit cards
-Account management services
-Little chained-up pens; and
-Deposit verifications
1/ Kraken is now hiring IN-HOUSE COMMERCIAL COUNSEL to negotiate big deals. HUGE DEALS.
and also to occasionally do the catering contracts because lets face it sandwiches and chips are important too maybe even more important sometimes
As Commercial Counsel…
🚨 BREAKING: SEC Issues second-ever no-action letter to the seller of a token ...which doesn't seem to have even a single indicator of security status except that it happens to be a token wait why did we need a no-action letter for this 1/
14/ This proposed rule reads like a basic bill of rights for bank customers - one that you'd be shocked to hear didn't already exist.
Given the broad monopoly granted to banks today, we should be asking ourselves why on earth this bill of rights doesn't already exist.
This comes at a frustrating time for Treasury, in particular, as it has initiated a series of public calls for comment on its plans to expand its collection of Americans' private identifying information, and is even rumored to be prohibiting privacy-preserving transactions.
5/ Worse, they’re disingenuous. Kraken’s position has always been straightforward:
Investment contracts must be contracts.
The SEC tries to rebut this by arguing:
“There is no requirement that an investment contract be a written contract.”
Well yeah. Kraken never said a