Don’t Fight Changes in Global Liquidity Conditions (Core Strategy Rebalance)
Regulatory Threats More Bark than Bite (To Asset Prices)
Last week we discussed that more regulatory actions would be coming – and they certainly were.
- On Monday morning, Paxos was ordered to shut down its services surrounding Binance’s BUSD stablecoin on the grounds that it might be deemed a security. There were worries that there would be additional regulatory action against other centralized stablecoin issuers, but as the week progressed, it certainly appeared that this was a Binance-specific issue.
- Later in the week, SEC chair Gensler proposed expanding federal custody requirements to include crypto assets, which would require crypto exchanges to gain regulatory approval and secure certain federal or state registrations. The changes would apply to all client assets, and the amendment includes a requirement for a written agreement between custodians and advisors, as well as enhanced record-keeping rules and surprise examination requirements. The amended regulation would also require that client assets be properly segregated and held in accounts designed to protect them in the event of a qualified custodian bankruptcy or insolvency.
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