1/

Tuning in late to the banking committee hearing but will dump anything interesting here.
2/

Sen Warner specifically notes that he has *never* seen a community so well organized and in strong communication as the crypto community.
3/

Gensler suggested that crypto is a problem for subverting AML laws and references some matter of intelligence debriefings that aren't public.

Seems a stretch.
Gensler now being asked about the legality of front-running and competitiveness.

Says he is pro-competition and should examine payment-for-order-flow.

Seems like origins for his view on clearing houses, that everything should be centralized market competition
5/

Gensler says the problem with gamification is that platforms optimize towards revenue and not whats best for your family.

Sure, that's a private business.
6/

The SEC jobs is to protect against negatives, not optimize private business for public benefit.

If you want to do that, then that's fine just make a publicly owned broker infrastructure so people can take part in an open market.
7/

Sen Menendez pushing Gensler to bring to the SEC reporting requirements on diversity in brokers...

While I'm in favor of ESG transparency and diversity, that's waaaaay outside the SEC jurisdiction...
8/

Everyone talking about how important 'market participation and financial opportunity for everyone'

Meanwhile accredited investors protections exclude investors, and free systems like crypto get hammered.

Odd disconnect.
9/

Sen Scott points out the positive side of payment-for-order-flow makes the market accessible and pushes Gensler on how we balance this accessibility.
10/

Sen Warren has starting in with some really loaded questions about financial inclusion and crypto.

First one hammering Coinbase for being offline for during a market crash.
11/

The worst part of her questions:

"How could the user sell during this time if Coinbase was down"

"How could small investors sell on a decentralized exchange if fees spiked by $500"

"Small investors are the ones who need to withdraw when the market crashes"
12/

...

When a market crashes you probably don't want to be just market dumping, that's how markets ruin public investors.

You lock in losses as markets shift profit from the impatient to the patient.
13/

Gensler suggests that "crypto won't persist" if it "stays outside the regulatory framework"

Says these platforms just "need to register" and that its trivial.

Clearly misunderstanding the burden of AML on a decentralized market.
14/

Gensler suggesting they need both additional funding and regulation for pursuing the crypto market. Oof.

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More from @adamscochran

16 Sep
1/21

At this point I'm convinced that the SEC's current regulatory stance on crypto is more someone's personal political agenda.

Highly technical, educated people, informed on this space cannot reach the conclusion that defi platforms can simply 'come in and register'
2/21

First take @brian_armstrong's post about the SEC blocking Coinbase aggressively, something the entirely doesn't align with a department that should be acting in good faith to support innovation while protecting consumers.
3/21

Then we factor in Gensler's history at MIT where he spent so much time looking into crypto and decentralized systems.

Yet the statements he makes in hearings don't align with his knowledge.

Read 21 tweets
14 Sep
1/24

One thing really stands out about @GaryGensler's written testimony that he submitted before his banking committee hearing later today.

His continued use of the phrase: "stable value coins"

Why is that relevant?
2/24

Gensler is well informed of the industry and likely knows the jargon we use around 'stablecoins' choosing to repetitively name them something else signals either:

1) He is trying to frame a difference between name expectation and reality.
3/24

2) He is trying to make stablecoins seem closer to something else that he already has clear jurisdiction and guidance on.

or

3) He is trying to widen the definition to catch more things under existing regulation.
Read 24 tweets
14 Sep
1/9

Part of the problem Evergrande is in their balance sheet.

They've listed properties *under development* as an asset and not a liability.

That means empty, unfinished or unrented buildings were used to help them secure loans.
2/9

These buildings could range from completed and operating, nearly complete but empty, right up to being only land or concrete shells of a building.

Using this they became extremely overleveraged.
3/9

The whole predicament kicked off when their subsidiaries in electric vehicles and financial products failed to meet payment obligations, which lead to questions about cash flow in the company.
Read 9 tweets
14 Sep
1/4

Chinese commodities like coal, nickel and aluminum starting to show weakness in the afternoon session as well.

2/4

Meanwhile the Shanghai Composite Index at a moderate day showing a loss of momentum compared to its long run up
3/4

The composite index has been on a tear up since 2019 and just retouched its 2020 highs despite concerns with Evergrande, commodities and inflation, leaving it well off all moving average points
Read 4 tweets
14 Sep
1/31

Evergande and other Chinese developers stocks dropping off a cliff in the HK morning session today.

Here is what you need to know about why Chinese Real Estate may impact crypto and even US markets.
2/31

Evergande ($3333.HK) is a major Chinese real estate developer, who through leveraged properties and issuing US denominated junk bonds, built up a real estate empire making it the second biggest in the country.
3/31

Assets and equity boomed over the past decade, but net income struggled. The reason is debated, but it seems they were over leveraging properties that were getting very little actual revenue to grow their empire.
Read 34 tweets
13 Sep
1/24

Gensler's approach here makes it feel like the SEC still thinks its 1934 when the Securities Act was passed and that the US is the only country that matters in a digital era.
2/24

Look, I'll echo again, I *strongly* support investor protections. The *GOAL* of the SEC is noble, but outdated frameworks like the Howey test and accredited investor status do not take into account the realities of today, nor the technologies they hope to govern.
3/24

Yes, the SEC has the responsibility to protect American investors, and that is exactly what they should be doing.

But protection isn't a single problem.
Read 25 tweets

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