Thread by @xrpwhitefox87

Crypto Valuations: Examining US regulatory headwinds for #Stocks and #Crypto.

A stocks bears in the middle of crypto winter.

Previously I wrote about how stock market correlation came to dominate the crypto risk factors. Today I want to start the discussion of how this risk factors are multifaceted. Specifically I want to look at stock market correlation when viewed as part of a legal risk factor.

The case for this is very simple to see, the chairmen of the SEC himself is asking congress for additional funding.

Below is a transcript of his speech:

regcompliancewatch.com/sec-chairman-g…

I will summarize as it as such, The US capital markets are important for the economy both domestically and internationally. To ensure that the US markets are the most trusted there is a need to ensure a fair market place as much.

The 1933 and 1934 security laws make our market the "gold" standard but these events challenge that. March 2020 crash, Meme stocks, Crypto, SPACs, and Archegos implosion.

This is a type of regulatory pearl clutching, is important to paint the narrative that the good guys are losing. This is key to the current regulatory push that some democrats are supporting. @GaryGensler calls himself a cop and this speech is like playing up crime stats.

By using these are all valid examples he continues to expand the SEC's reach. Now to dive into each one, March 2020 crash, there is nothing the SEC could have done, this is just fear mongering.

The markets react in fear and uncertainty to a black swan event, having more lawsuits wouldn't of kept P/E ratios low with the past 20 years of QE. Markets are made up emotional people, this is what destroys all models in the long wrong.

Meme Stocks, This one is insane to me. The chairmen of the SEC uses retail investors following fundamentals against hedge funds as a market issue. The reason I take it as such is he names hedge funds that are following apart as a separate problem.

How can the SEC possibly believe going after small investors that shared ideas on public forums as market manipulation. Especially when entities like #JPM pay annual fees in the millions.

Crypto, is clumped in for the sake of inserting the correlation into everyone's thoughts. The Sec has a cybersecurity arm that hired more people for crypto. This is how politicians get everyone to believe the lie. The more we talk about them together the more they are.

The only ground he is willing to give is call #BTC a commodity token. That means the SEC believes they have a right to regulate ( charge gate keeping fees) to 99.9% of the market.

SPACS: This was a alternative way to take companies public. They are getting beat, along with crypto and other start ups, as liquidity and deal making dries up. To me this feels like the type of thing they should of been looking to for years.

wsj.com/articles/stock…

Archegos: Possible market manipulation, they have been charged with fraud recently. They imploded a year ago but other funds had continued since then. Earlier today Melvin capital of GME, Meme stock fame, announced it was closing down.

reuters.com/markets/us/arc…

nytimes.com/2022/05/18/bus…

The #UST meltdown added to the SEC claims that the crypto space needs regulation and unfortunately compared to the claims before they now have more support.

cryptopotato.com/in-light-of-us…

The hawkish fed and the SEC looking to validate is existence are going to have a compounding wet blanket effect on the markets. Fortunately the likely hood of the SEC over reach being limited is increasing.

The 5 the circuit shot down the usage of internal judges as unconstitutional. This feels like it should be necessary for congress to codify an update to the SEC activities.

bloomberg.com/news/articles/…

The SEC continues to muddy the waters by clumping Crypto issues with broader market issues. There is very real fraud and market manipulation that is occurring in the market space. I am even willing to concede that there is a very real possibility that some crypto are securities.

Why are some crypto securities ? Simple there doesn't exist another legal framework by which to examine them. It makes sense that chains and DLT solutions can go from centralized to decentralized over time. But that is much harder for the NFT space and the defi.

a chain developed for a specific nft project and a token used within a closed Defi eco system face decentralization issues. First we need the SEC to come up with standards by which we can measure decentralization against.

The upside to all of these thoughts, its becoming easier to see which chains/DLT solutions should be commodities because of their use cases. Panama was the first to pass comprehensive crypto adoption based on utility.

fortune.com/2022/04/29/pan….

This gives me hope that we are reaching a turning point in which utility tokens break away from the other crypto segments. Defi and Nft's will require a separate regulatory frame work than Utilities tokens. Luckily it seems that the crypto/stock winter is the perfect setting.

Short term regulatory headwinds will hold back the entire crypto space but we are watching the digitalization of the global economy. This will require new laws that will set free the real projects within all of crypto's segments.

In conclusion #Crypto will remain locked with #Stocks as long as the US lacks the regulatory clarity to provide clear market direction. The regulatory hammer will be painful but without it there will not be enough trust in the space to true mass adoption.

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