Today’s edition of the weekly recap covers multiple announcements from the U.S. Securities and Exchange Commission (SEC), Circle’s initial public offering and the fallout of President Trump’s tariffs.
SEC to revisit guidance on digital assets, security laws
- Acting SEC Chair Mark T. Uyeda has instructed agency staff to review multiple prior statements on cryptocurrency investment and securities laws, in alignment with Executive Order 14192 aimed at deregulation.
- This includes revisiting guidance on determining whether digital assets are securities under the Howey test, which has been a contentious legal issue, and a 2021 warning about Bitcoin (BTC) futures investments in mutual funds due to their speculative nature and volatility.
- Other documents under review include 2022 guidance on crypto-related risks and disclosures following major bankruptcies, as well as risk alerts about digital asset trading from 2021 and 2020.
SEC says ‘covered stablecoins’ not under its jurisdiction
The SEC has issued guidance to clarify how federal securities laws apply to stablecoins, specifically focusing on “Covered Stablecoins.” These stablecoins are defined as USD-pegged tokens that maintain a 1:1 value ratio with the U.S. dollar and are redeemable for USD on a 1:1 basis.
The SEC specifies that Covered Stablecoins are backed by low-risk, liquid assets with reserves matching or exceeding the redemption value of all circulating tokens. The guidance excludes algorithmic, yield-bearing, and non-USD-pegged stablecoins. The two primary stablecoins fitting this definition are Tether (USDT) and USDC (USDC).
Circle anxious about IPO
- Circle, the company behind the USD Coin (USDC) stablecoin, filed for an IPO with the SEC, planning to list its Class A common stock on the New York Stock Exchange under the ticker “CRCL.”
- Crypto.news reached out to various experts to explore how the IPO might impact institutional adoption and stablecoin market dynamics in the future.
- While JPMorgan Chase & Co. and Citigroup Inc. were busy preparing as lead underwriters, the Wall Street Journal reported that Circle was reassessing its IPO timeline due to economic uncertainties.
Tariff uncertainty
- The decision to delay the IPO reflects broader market conditions. Markets reacted swiftly to Trump’s tariff announcements, with U.S. small caps leading a broad equity sell-off and crypto weakening.
- The U.S. dollar declined against major currencies, while the yield curve bull-flattened, signaling increased recession fears. Nansen analysts believe that markets had priced in a stagflation scenario, anticipating slow growth alongside rising inflationary pressures.
Crypto funding rates plunge
- Traders are exercising extreme caution in the crypto markets, as Trump’s tariffs spark widespread bearish sentiment.
- The rapidly escalating trade war between the U.S. and most of its major trading partners is striking fear into traders. On Friday, April 4, funding rates on most centralized and decentralized exchanges dropped below the 0.005% threshold, a signal of extreme bearish sentiment.
- At the same time, liquidation rates are down 42% over the past 24 hours. While this may seem like good news, it likely indicates that traders are hedging and staying on the sidelines. This aligns with a sharp decline in trading volumes, which dropped by 22.71% in 24 hours to $247.6 billion. Altogether, these figures point to plummeting market activity.
CLS Global sanctioned in sting op
- A federal court in Boston sentenced CLS Global on criminal charges for manipulating trading volumes of NexFundAI token. NexFundAI is a bait token launched by FBI in March 2024 as part of a sting operation called “Operation Token Mirrors.”
