Yeah, we get it. Gensler doesn’t like crypto

In Token Issue this week, we look at what SEC chairman Gary Gensler told the US Congress and break down the EU’s new crypto regulations. [Read from your browser]( Token Issue Welcome to Token Issue! Delivered every Friday, this free newsletter breaks down the biggest stories in Asia’s crypto scene and beyond. View past issues [here]( or [sign up here]( to receive future newsletters. Written by Scott Shuey Crypto journalist Hi {NAME} Good news everybody, Gary Gensler just became the first US Securities and Exchange Commission chairman to actually inspire businesses to want to leave the world’s largest economy. Earlier this week, the mercurial Gensler stood in front of the US House of Representatives’ Financial Services Committee and fought with Republicans over how the agency has handled all the misfortune that has hit the crypto industry over the past year. Republicans say Gensler needs to bring in better regulation for the industry, while Gensler pretty much painted the entire industry as thieves and liars. Democrats are supporting Gensler, calling the SEC’s targeting of crypto platforms appropriate. If you want a taste, check out this clip of Congressman Tom Emmer [grilling Gensler](. Emmer at one point asks, “Does it concern you, by the way, that your approach to the digital-asset industry is actually driving this industry out of the United States?” Go watch the clip. It’s brutal. But despite the rhetoric, it remains to be seen if crypto companies really are leaving the US. If they’re staying, it’s certainly not thanks to the effort of foreign countries. In this week’s Deep Dive, we look at how the European Union plans to attract new crypto talent with a new regulatory framework designed to make compliance easier. -- Scott  ---------------------------------------------------------------  🤿 THE DEEP DIVE   [What EU’s new crypto regulation means for US and Asia]( This week, the European Union became the first major economic body to pass regulations specific to digital assets. In a 566-page document, the EU made clear that it wants to create an environment where crypto can thrive. Don’t pat the EU too hard on the back though. The original purpose of the Markets in Crypto Assets (MiCA) regulation was to rein in the development of [Meta's proposed digital currency]( the now-defunct Libra. But will the landmark regulations actually attract business from other crypto hubs? Our analysts say that while it’s a start, it’s unlikely that crypto companies, based everywhere from Silicon Valley to Singapore, will suddenly pack up shop and flood into Paris.  --------------------------------------------------------------- 👀 ALL EYES ON... What everyone’s talking about. 1️⃣ Gensler dodges questions on Ether, labels entire crypto industry as noncompliant US House Republicans ripped into Gary Gensler, chairman of the SECon Tuesday over his agency's [growing list of lawsuits]( against crypto companies. Gensler, speaking before the Financial Services Committee, defended the crackdown, saying the crypto industry routinely breaks security laws. “I’ve never seen a field that is so non-compliant with laws written by Congress and confirmed over and over again by the courts,” he said. Compliance with congressional laws was a recurring point of contention during the hearings. Republicans, echoing a common complaint by crypto firms, accused the SEC of using murky laws that fail to address the specific needs of the industry and then using the resulting confusion as a pretext to launch legal action. Gensler countered that the companies understood the rules but were trying to evade them. This led directly to an argument over whether ether, the second-largest cryptocurrency by market cap, was a security or a commodity. Gensler refused to provide a specific definition, saying it would depend on the facts of the case. Patrick McHenry, chairman of the Financial Services Committee, called it “regulation by enforcement.” “You’re punishing digital asset firms for allegedly not adhering to the law when they don’t know it will apply to them,” McHenry said. “That’s nonsensical.” What insight Gensler did provide was not encouraging to the crypto community. As per Gensler’s logic, as digital assets are mostly classified as securities, all crypto exchanges should be regarded as securities exchanges and therefore subject to governance by US securities laws. While the SEC’s lawsuits have targeted centralized exchanges such as Coinbase, Gensler made it clear that decentralized (DeFi) exchanges were next, since DeFi protocols “likely meet the current criteria” for an exchange. “Calling yourself a crypto platform is not an excuse to ignore the securities laws. Calling yourself a DeFi platform is not an excuse to defy the securities laws,” he said. Brian Armstrong, the CEO of Coinbase, which was recently served a [Wells Notice]( said the firm is considering relocating outside of the US unless regulations get clearer. Following the hearing, reactions to Gensler’s speech were largely negative. Republican congressman Warren Davidson introduced a bill to remove Gensler from his position as chairman and called for restructuring the SEC. It is, however, unlikely to pass in the highly polarized Congress. House Democrats voiced their support for Gensler, but the support seems to be limited - at least regarding crypto issues. Democrats are focusing on other areas of the SEC’s agenda, which includes a climate risk disclosure rule for public companies and new transparency requirements for hedge funds. However, Congressman Jim Himes did call out Republicans for saying the SEC was doing “too much, too quickly” - just weeks after he complained that bank regulators were moving too slowly following the collapse of Silicon Valley Bank. This doesn’t mean that Congress isn’t trying to move forward with crypto regulations. The Financial Services Committee recently published a [draft version]( of a new stablecoin bill, which would be the first major piece of crypto legislation in the US this year. The bill includes a moratorium on stablecoins backed by other cryptocurrencies like TerraUSD (UST). 2️⃣ [Crypto firm Luno to cease operations in SG starting June]( Global crypto company [Luno]( has announced that it will no longer offer its services in Singapore starting June 20. However, the decision will not affect its operations in Malaysia. Luno said the move was part of a “regular evaluation of its global strategy and presence.” All Luno accounts belonging to Singaporean customers will be closed, and users will need to withdraw all their cryptocurrency or Singapore dollars from their Luno wallets by June 19. According to the firm, customers can transfer their crypto holdings to other “reputable platforms” or private wallets.  --------------------------------------------------------------- ⭐ TO THE STARS Impactful developments and projects in Web3. 1️⃣ [From NFT gating to Web 2.5: how the Nazada’s ex-CEO is tackling crypto games]( Manish Agarwal, a gaming industry veteran and former CEO of Nazara Technologies, is leading the charge to break down the barriers of [NFT gating]( in Web3 games. He aims to simplify the use of NFTs in gaming and make it accessible to a wider audience through his new venture, [Kratos Studios]( which recently acquired gaming community IndiGG. After tinkering with different models, Agarwal has now implemented an approach that fetched IndiGG an annual revenue run rate of US$2.2 million just six months after he took over its operations in mid-2022. 2️⃣ [Bybit opens headquarters in Dubai]( Bybit on Monday announced the grand opening of its global headquarters in Dubai. The crypto firm said that in less than a year, its transaction volume in the Middle East and North Africa has reached US$33.5 billion. The company has more than 10 million users all over the world now. 3️⃣ [MicroStrategy puts payments protocol in email address]( MicroStrategy, a business intelligence company led by CEO Michael Saylor, has integrated the Lightning Network payment protocol into its corporate email address. This allows the address to be used as an identifier that can receive bitcoins. Michael Saylor, CEO of MicroStrategy, says he has already received [satoshis]( via email. The Lightning Network is a Layer 2 payment protocol that speeds up Bitcoin transactions and addresses scalability issues. --------------------------------------------------------------- MORE TO CHEW ON Stuff that’s good to know. 1️⃣ [Failed crypto firm Babel to officially start in-court restructuring]( [Babel Finance’s]( Flex Yang, its co-founder and former CEO, said the company’s moratorium has been heard in Singapore court, officially starting its in-court restructuring process. Yang said the Singapore court extended the creditor protection for the company to last until July 21. 2️⃣ [SEC gets access to Terraform Labs founder’s Singapore filings]( A judge in the US has ruled that the SEC can seek records from the Monetary Authority of Singapore (MAS) to help with the regulator’s lawsuit against failed crypto firm Terraform Labs. The decision follows a request from Terraform Labs and its founder, Do Kwon, to block the SEC from doing so. 3️⃣ [SEC charges Bittrex with operating unregistered securities exchange]( The SEC has charged crypto asset-trading platform Bittrex and its former CEO Bill Shihara with operating an unregistered securities exchange. The SEC also charged Bittrex's foreign affiliate, Bittrex Global, for failing to register as an exchange. From 2017 through 2022, Bittrex earned at least US$1.3 billion in revenue from servicing investors, without registering any of these activities with the SEC. Bittrex and Shihara allegedly coordinated with issuers to delete certain "problematic statements" that would lead a regulator to investigate the crypto asset as a security. 4️⃣ [Singapore judge says cryptocurrency is not money]( A judge in Singapore has ruled against recognizing cryptocurrency as money. [Justice Vinodh Coomaraswamy]( is presiding over a suit submitted by Algorand, a blockchain company, that is attempting to recover US$53.5 million in USD Coin (USDC) from defunct crypto hedge [Three Arrows Capital](. The case was dismissed with Coomaraswamy ruling that Algorand had the right to bring the claim but that crypto was not a legal substitute for fiat currency. 5️⃣ [Bhutan’s sovereign investment arm quietly invests millions in crypto]( Druk Holding & Investments, Bhutan's sovereign investment arm, secretly invested millions of dollars into bitcoin, ether, and other digital assets, according to Forbes. Druk was a customer of bankrupt crypto lenders BlockFi and Celsius, which it never publicly disclosed. Druk was established in 2007 to safeguard Bhutan's wealth for the long-term benefit of its shareholders and oversees 21 domestic companies. BlockFi has accused Druk of defaulting on its repayment of a US$30 million loan in USDC, which Druk reportedly failed to repay in full.  --------------------------------------------------------------- That’s all for this issue - we hope you liked it. WAGMI! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894