CCM Blockchain Weekly - Is Crypto a Commodity or a Security?

Blockchain founders, enthusiasts and financiers –

This is CCM’s Blockchain Weekly Newsletter. Today, we take a look at the views on whether cryptocurrencies are securities or commodities, who’s drawing a line in the sand, and the related nuances.

In a recent interview on CNBC’s Squawk Box, SEC Chair, Gary Gensler, said that bitcoin “is the only coin” he is comfortable with labeling as a commodity. This again brings to the forefront the conversation on how to categorize cryptocurrencies and who has regulatory jurisdiction over the asset class.

Prior to Gensler becoming chair, the SEC had stated that neither bitcoin nor ether are securities

• Gensler’s latest comments imply that all other cryptos, including ether, could be categorized as securities
• This follows in the wake of recent regulatory urgency to provide clarity around the regulation of digital assets and the blockchain industry
• Senators Cynthia Lummis and Kirsten Gillibrand recently previewed legislation that would place cryptocurrency regulation under the CFTC
• This would be considered a big win for the crypto industry as it is seen that the CFTC would be friendlier than SEC

Why does this matter?

• The market had been operating under the assumption that ether was also not a security
• Ethereum was launched with a fundraiser in 2014 that most see now as a securities offering
• The question is whether it has become a commodity, and whether that answer provides the regulatory roadmap for other cryptocurrencies (Axios)
• Commodities can be traded by anyone. Securities can only be traded by accredited investors unless they are on public markets, which creates a lot of friction for the issuer of the security

What’s next?

• The SEC does not have any official position on whether cryptocurrencies are or aren’t securities
• The Lummis-Gillibrand bill, which has bi-partisan support, may offer a glimpse into what regulation may look like in the long-run

In this issue we review:

• Some of the week’s biggest news
• Valuation and operating metrics for publicly traded companies
• The latest VC funding metrics
• M&A deal flow
• and often we’ll include deeper dives to help understand various aspects of the ecosystem
• Today we review how a blockchain transaction is processed

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FTX Reaches Deal To Acquire BlockFi for up to $240M (Blockworks)

• FTX closed an anticipated deal with BlockFi to acquire the troubled crypto lender for up to $240M, depending performance triggers plus a $400M credit facility
• The acquisition will likely lead to additional BlockFi layoffs, as FTX is predominantly vying for the lending startup’s technology, investors and counterparties
• Market volatility following the downfall of Celsius and Three Arrows Capital (3AC) put cryptocurrency lenders in a difficult position

Bored Ape owners sign up to hire out their NFTs to brands (CoinTelegraph)

• Owners have signed up to a new nonfungible token (NFT) licensing marketplace that enables holders to rent out their Apne’s IP to brands
• The marketplace called Boredjobs, will list all 10,000 BAYC NFTs on its website for brands to browse through and “indicate interest in hiring for campaigns
• They won’t be available to hire unless the respective BAYC owners sign up and confirm ownership to view offers

Voyager Digital files for bankruptcy (Axios)

• Voyager filed for bankruptcy on Tuesday in the wake of the collapse of the major crypto hedge fund Three Arrows Capital (3AC)
• The Chapter 11 filing comes just days after 3AC filed for bankruptcy — and about a week after 3AC defaulted on a loan provided by Voyager
• Voyager states that it has about $1.3 billion worth of crypto assets on the platform, $110 million in cash and crypto assets on hand, and the $350 million it holds in an FBO (For-Benefit-Of) account for customers

Presentation linked above and here

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