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Bitnomial Sues SEC Over XRP Futures, Cites CFTC As Primary Regulator

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5 hours ago

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Bitnomial, a cryptocurrency derivatives exchange, has sued the U.S. Securities and Exchange Commission (SEC) for jurisdiction over XRP futures contracts. This lawsuit is based on the SEC’s position that XRP futures are “Security Futures” and therefore it has the right to regulate. This legal action is taking place at the background of the already existing conflict between Ripple and the SEC over the status of XRP.

Bitnomial Sues US SEC Over XRP Futures

In August, Bitnomial sought approval to list its XRP-USD futures contract after a court decision in the SEC lawsuit against Ripple found that XRP was not a security in exchange transactions. Nonetheless, the SEC kept on insisting that XRP is a security, hence, Bitnomial’s legal proceedings.

The US SEC reached out to Bitnomial after the filing and claimed that XRP futures fall under the purview of both the SEC and the CFTC. The SEC also demanded that Bitnomial should register as a national securities exchange before it could offer XRP futures.

The cryptocurrency derivatives exchange disagrees with such categorization because it holds that XRP is not a security, and thus, the CFTC should be the only regulator to govern XRP futures just like it is with bitcoin and ether futures.

Ripple Vs SEC Case Fuels Broader Disputes

The matter of the status of XRP as security has been one of the key issues in the lawsuit between Ripple and the SEC. In July, a federal judge said that Ripple’s sales of XRP on exchanges were not securities, but institutional sales were considered securities. While the SEC has decided to appeal the decision, Ripple has filed a cross-appeal.

Bitnomial’s case forms part of the increasing list of legal battles that concern the SEC’s control over digital currency. According to Bitnomial’s CEO, Luke Hoersten, this lawsuit is significant not only for XRP but for all digital assets. He emphasized that Bitnomial is in a unique position, as it has not been accused of wrongdoing, to push for regulatory clarity.

Moreover, the CFTC currently oversees futures contracts for bitcoin and ether, which the SEC has acknowledged are not securities. 

The cryptocurrency derivatives exchange has however argued that XRP futures should be treated the same way, with the CFTC having primary oversight. In its lawsuit, it is asking the court to declare that XRP futures are not securities futures and to prevent the US SEC from asserting jurisdiction over the contracts. The exchange believes that clearer regulations are essential for the cryptocurrency market to thrive.

Ripple CEO Take On Crypto Regulation

Ripple CEO Brad Garlinghouse has also condemned the SEC’s recent activities, especially after the SEC charged Chicago-based Cumberland DRW LLC with operating as an unregistered dealer in the crypto market. The SEC alleged that Cumberland conducted more than $2 billion in transactions classified as securities without proper registration.

Moreover, Crypto.com sued the regulator this week, accusing it of exceeding its mandate by classifying several tokens listed on the platform as securities.

This criticism is in line with that of SEC Commissioner Mark Uyeda, who has expressed concerns with the agency’s attitude towards cryptocurrencies. According to Garlinghouse, the SEC’s action against Cumberland is an example of overregulation of the industry, citing the lack of clarity on the laws governing cryptocurrencies.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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24/7 Cryptocurrency News

BlackRock & Metaplanet Buy Bitcoin Dips As Crypto Market Turns Sour

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2 hours ago

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October 11, 2024

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The recent Bitcoin dip under $60,000 has sent jitters across the market triggering more than $53 million long liquidations in the last 24 hours. However, big players like BlackRock and Metaplanet have been buying on every dip in this market cycle highlighting their confidence in the asset class.

BlackRock, Metaplanet Buying the Bitcoin Dips

Over the last fortnight, BlackRock has increased its Bitcoin holdings by a staggering $742 million looking past the market volatility. The world’s largest asset manager has accumulated a total of 12,272 Bitcoin (BTC) in the past 16 days.

This significant acquisition comes after a period of reduced buying activity between August 27 and September 24, when Bitcoin traded below $60,000 for an extended time. However, since September 24, BlackRock has once again resumed its BTC purchases, taking its total holdings to more than 369,822 BTC, valued at approximately $22.4 billion. This continuous acquisition shows that asset managers have growing confidence in the long-term value of BTC.

Last week, BlackRock advised buying Bitcoins as the US Dollar loses strength over the period of time and thus loses the purchasing power. On the other hand, Bitcoin positions itself as an inflation hedge, and a strong alternative to counter the declining purchasing power of the US dollar.

Apart from BlackRock, Metaplanet is also buying the Bitcoin dips. Metaplanet has made another significant Bitcoin acquisition, purchasing approximately 108.99 BTC for ¥1 billion at an average price of ¥9,174,396 per Bitcoin. The latest purchase comes within four days of Metaplanet buying Bitcoins earlier this week. As of October 11, the company now holds a total of 748.50 BTC, acquired for ¥6.965 billion at an average price of ¥9,304,655 per Bitcoin.

BTC Whales Panic Sell

The recent BTC price volatility has led experts to believe the possibility of another 75% correction, per the historical trends. While BlackRock is buying, crypto whales have also been panic selling in this recent correction.

As per the latest data from Lookonchain, a crypto whale recently panic-sold 800 BTC ($48.5M) following a drop in Bitcoin’s price. Since June 19, this whale had accumulated 11,659 BTC ($727M) at an average price of $62,362 and sold 10,345 BTC ($619M) at $59,847, resulting in a loss of around $26M. Despite the losses, the whale still holds 8,936 BTC valued at $540M.

The BTC price took a dive under $60,000 earlier today following the US CPI data for September and the red-hot inflation numbers. The current movements have made bulls lose the hope for a ‘Uptober’ rally ahead.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast with a keen understanding of financial markets. His interest in economics and finance has led him to focus on emerging Blockchain technology and cryptocurrency markets. He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Fidelity Steps Into Blockchain With New Money Market Fund

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8 hours ago

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October 11, 2024

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Fidelity Investments, an asset management giant, is reportedly preparing to launch a blockchain-based money market fund. This move comes in the wake of other big financial institutions such as BlackRock integrating blockchain technology in an effort to enhance their financial services. Fidelity has made this decision to adopt blockchain at a time when the company is also facing a data breach incident that involved customer data.

Fidelity Blockchain Money Market Fund

According to documents filed with the U.S. Securities and Exchange Commission (SEC) on September 26, 2024, Fidelity is planning to introduce a blockchain-integrated money market fund. This will be the first fund of the company that rely on the application of blockchain technology for increasing fast and effectiveness of the transactions. The new fund is expected to optimize the financial procedures making it possible for more investors to gain from its simplicity.

The initiative positions Fidelity against BlackRock, the largest asset manager globally, which has started a comparable blockchain fund. BlackRock’s fund has gathered more than half a billion dollars in capital, proving that more investors are willing to invest in this sector to apply blockchain in mainstream finance.

This is something the company is aiming to do in the asset management business where it has $4.9 trillion in assets under management

Data Breach Raises Security Concerns

As Fidelity Investments prepares to advance its blockchain-based platform, the company is also struggling with the repercussions of a recent data leak. In the period between August 17 and August 19, 2024, a third party breached two newly created customer accounts. In its report to the Maine Attorney General, this incident was claimed to have affected more than 77,000 individuals’ personal data.

The asset manager, in reaction to the incident, has closed down the unauthorized access and conducted an internal investigation. The company has moved quickly to come out and state that no customer accounts were shut out and the breach only impacted a limited number of users. Nevertheless, Fidelity has come under pressure from customers over the exposure of their details, including names, and has offered them free credit monitoring and identity restoration services for two years.

 

This is not the first time the asset manager is experiencing a security risk. In the year 2024, the company faced its another data breach issue with third party service provider known as Infosys McCamish System (IMS). In that breach, information related to the customers of Fidelity Investments Life Insurance was stolen including their names, social security numbers and their bank account information. Approximately 28,000 people were impacted in that particular case.

Increasing Focus on Digital Assets

This shift by the asset manager to invest in blockchain and digital assets is a similar trend being seen across other financial services. In the first half of the year 2024, Fidelity International which is different from Fidelity Investments, rolled out a Physical Bitcoin ETP on the London Stock Exchange. This product was to mirror the price of Bitcoin and was the firm’s first foray into the digital asset space in the UK.

This came after the FCA announced that it had permitted the use of cryptocurrency-backed Exchange Traded Notes (ETNs) for professional investors only. Subsequently, the fund will likely cement the company’s position in the emerging digital finance sector in the US.

Fidelity has had numerous exposure to the cybersecurity threats and this becomes a concern especially when the company is experimenting on the blockchain technology. Although blockchain is praised for its security features that include the provision of increased transparency as well as immutability, the shift to this technology demands more safety measures to prevent any further breaches.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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US IRS Faces New Lawsuit Over Crypto Staking Tax Policy

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11 hours ago

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October 10, 2024

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The US Internal Revenue Service (IRS) is again under legal pressure in relation to taxation of cryptocurrency staking rewards. On October 10, 2024, Josh Jarrett filed a new lawsuit with support of Coin Center and against the agency’s approach of taxing block rewards as income at the time of receipt.

US IRS Faces New Lawsuit Over Crypto Staking Tax

In a filing on Thursday, the IRS is in the spotlight over its position on block rewards, which are newly minted tokens of a cryptocurrency given to validators who add blocks to a blockchain. The agency currently considers these rewards taxable income at the moment they are received, a policy that Jarrett and Coin Center argue is unjust. 

The lawsuit states that the block rewards should be considered new property and should not be taxed as income, and such income should only be taxed when sold or exchanged for cash.

According to Jarrett, the same should apply to other forms of newly created property, for example crops or minerals, which are taxed only when sold. The lawsuit alleges that taxing staking rewards before they are sold leads to overtaxation and places additional and unnecessary regulatory burdens on cryptocurrency node operators.

Previous Attempts to Challenge Policy

This lawsuit is Jarrett’s second shot at trying to sue the IRS for its position on the taxation of staking rewards. He filed another similar case in 2021 when the IRS failed to explain how staking rewards are taxed. The US IRS issued a refund to Jarrett for the previous year’s tax payment but offered no instruction for subsequent tax years.

Instead, in 2023, the agency came out with new guidelines stating that staking rewards would be considered as income when received, in contrast to the refund decision.

Jarrett relies on the Tezos network where validators receive new tokens for the purpose of validating transaction. By the end of the year 2020, he got around 13,000 Tezos tokens through staking. He points out that such tokens must not be considered as income at the moment they are received, as they are new property that cannot be considered as earnings until they are sold.

The current Internal Revenue Service stance on taxing staking rewards affects many bitcoin users and those using other cryptocurrencies that use the proof-of-stake system such as Tezos. The lawsuit points out that the policy is cumbersome to the taxpayers, who are forced to value every reward they acquire for the purpose of the policy regardless of their plans to sell it.

Legislative Efforts and IRS Policy Changes

Concerns have been raised that this treatment is anti-competitive and hinders the deployment of the decentralized networks and innovation. In the networks where a large number of users are engaged in staking, the revenue from staking is split among many stakeholders, thus it is less reasonable to tax the entire value of the newly created tokens as an income.

This move has been made at a time when there is still a debate on the correct legal framework that should govern taxation of digital currencies. In the first half of 2024, a bill that was proposed before the House of Representatives stated that taxes on staking rewards would only be applied when the tokens are sold. 

The lawsuit will seek to make the US IRS change its policy before the legislative process to make it more reasonable.

Moreover, from 2025, the Internal Revenue Service will impose new information reporting obligations on crypto brokers, including exchanges, and other providers of wallets to report customer transactions and gains. These rules will encompass high-value non-fungible tokens (NFTs) and specific stablecoins transactions, which will extend the taxation of digital asset transactions.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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