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The United States Congress could either simply classify ether (ETH) in the same commodity category as bitcoin (BTC) or put it into a new “other category” with less burdensome regulations than securities, according to JPMorgan strategists.

It is “possible that a new ‘other category’ is introduced specific to Ethereum and other cryptocurrencies that are decentralized enough cryptocurrencies to avoid being designated as securities,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note on Thursday. “This ‘other category’ that would involve more restrictions and investor protections than currently envisaged for commodities but less onerous than those required for securities.”

‘Hinman documents’

JPMorgan’s comments come after some U.S. Securities and Exchange Commission (SEC) officials questioned key details of a 2018 speech that said ETH isn’t a security in documents released earlier this week as part of an ongoing enforcement lawsuit against Ripple Labs by the SEC. The speech was given by Bill Hinman, then director of the SEC’s division of corporate finance, where he had mentioned that ETH is not a security with Ethereum being a “sufficiently decentralized” blockchain network.

Some SEC officials at the time had brought up concerns on the ETH mention in comments to the draft speech, the released documents showed. One comment, for instance, said that “the fact that tokens on a sufficiently decentralized network are no longer securities” creates a “regulatory gap.”

“The speech acknowledges that there is an ‘other’ category,” the comment continued. “It’s not a security because there’s no ‘controlling group’ (at least in the Howey sense) yet, there may be a need for regulation to protect purchasers.”

SEC Chairman Gary Gensler recently refused to say whether ether was a security during a nearly five-hour hearing when he testified before the House Financial Services Committee. In February, Gensler told New York Magazine that “everything other than Bitcoin” is a security.

Ethereum boost

The release of the “Hinman documents” may explain why the SEC has been avoiding taking action against ether while targeting this year almost all major competitor tokens, JPMorgan strategists said.

“The ‘Hinman documents’ are likely to influence the direction of the current U.S. congressional effort to regulate the crypto industry in a way that Ethereum would avoid being designated as security,” they added.

Overall, the release of the documents will benefit Ethereum, according to strategists. The documents “boost the Ethereum case to avoid being designated as security but it does not necessarily have direct implications for Ripple,” they said.

“If Ripple wins the fair notice argument, however, that would have implications for current and future SEC enforcements, as crypto entities targeted by the SEC would similarly argue that the agency failed to give them fair notice,” the strategists concluded.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A survey by Nomura’s digital asset subsidiary shows investors overwhelmingly say digital assets represent an important diversification opportunity.

Crypto trader Avraham Eisenberg’s criminal trial over his involvement in the Mango Markets exploit in October 2022 has been set for December 4, according to Bloomberg.

The exploit saw $116 million taken from the DeFi protocol Mango Markets due to an oracle price manipulation attack. Following the attack, the exploiter agreed with the DAO to repay $67 million of the funds.

Shortly afterwards, Eisenberg stated that he was involved in a team that carried out the attack, arguing that it was a legal trade using the protocol as it was designed.

“I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are,” he said, at the time.

The wire fraud charges carry sentences of up to 20 years in prison. Eisenberg was also sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.

This article was produced with the assistance of OpenAI’s ChatGPT 3.5.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance, the world’s leading cryptocurrency exchange, has announced it is leaving the Dutch market with immediate effect after failing to receive regulatory approval. 

Binance will no longer accept new users who reside in the Netherlands and from July 17, existing Dutch users will only be able to withdraw assets from the platform, with no further purchases, trades or deposits permitted, according to a statement.

“Existing Dutch resident users are being sent an email with comprehensive information about what this means for their accounts and any assets they currently have on the Binance platform, alongside any steps they will need to take,” Binance said in the statement.

Binance said it had been engaged in a comprehensive registration application process as a virtual asset service provider (VASP) with the Dutch regulator. Despite exploring various options to comply with the regulations and continue serving Dutch residents, Binance was unable to obtain a VASP registration in the country.

Binance said it is already compliant with EU standards for anti-money laundering and counter-terrorism financing in other EU countries where it holds registrations, including France, Italy, Spain, Poland, Sweden and Lithuania. Binance also said it is actively preparing to ensure full compliance with the new EU rules on crypto-assets (MiCA).

Binance said it would “continue striving to obtain authorizations to provide our products and services to users in the Netherlands.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

An API layer could facilitate a wide range of central bank digital currency payment scenarios, a Bank for International Settlements and Bank of England experiment has shown.

Coinbase announced an increase to its USDC rewards program on Thursday, now offering customers a 4% return on their stablecoin holdings. 

Previously, the company offered a 2% rewards rate on USDC that customers hold on its platform. The increase aims to incentivize more users to use Coinbase services to store their USDC.

Coinbase said the reward rates were subject to change and “customers will be able to see the latest applicable rates directly within their accounts.”

Separating USDC rewards from SEC allegations

This move comes at a time when the company faces scrutiny from the U.S. Securities and Exchange Commission (SEC), which sued the crypto exchange earlier this month, alleging it had violated securities laws. 

One of the claims Coinbase faces from the SEC is that its staking service is an investment contract that the company failed to register. Coinbase has distanced the rewards program from the targeted services, clarifying that “you cannot stake USDC, but customers in certain regions may be eligible to earn rewards on USDC” on its USDC page.

Coinbase also tried to offer 4% APY on USDC deposits via its proposed Lend program in 2021. However, it canceled the plan after the SEC said it intended to sue the company over Lend.

In contrast, Coinbase finances the USDC rewards from its own funds, according to its FAQs, and does not lend or redeploy the assets without permission from users. 

USDC is the second-largest U.S. dollar-pegged stablecoin behind Tether’s USDT, with a circulating supply of $28.2 billion.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The crypto exchange’s attempt to secure a virtual asset service provider (VASP) license from the Dutch regulator was unsuccessful.

Total crypto market capitalization rose nominally with dogecoin (DOGE) leading gains among major tokens.

The platform will allow for users to set up fully regulated on-chain funds.

OKCoin must scrub misleading statements that suggest its customers’ accounts are protected by the U.S. Federal Deposit Insurance Corp. (FDIC), the U.S. banking regulator ordered late Thursday, complaining the company is making false claims.