The SEC plans to investigate all the cryptocurrency exchanges operating in the United States besides Coinbase and Binance. As proposed in two recently introduced bills, the CFTC may have more jurisdiction over crypto asset regulation.

The cryptocurrency exchanges operating in the United States will not escape regulation, according to the staff of Senator Cynthia Lummis.

Coinbase, the largest cryptocurrency exchange in the country, is under the scrutiny of the US Securities and Exchange Commission (SEC). The federal agency also plans to investigate Binance, the crypto asset marketplace with the highest trading volume.

Concerning Binance, it has even had to operate a separate division for US customers, seeking to appease the SEC. Coinbase has also struggled to prevent being subject to tighter regulations by the federal agency.

Regardless of the efforts of both exchanges, the SEC considers this is not enough. However, the Commodity Futures Trading Commission (CFTC), a more crypto-friendly regulator, might use an approach not based on enforcement and lawsuits.

According to Forbes, the staff of the SEC investigates all cryptocurrency exchanges operating in the United States at various levels.

The SEC Does Not Consider Cryptocurrencies Securities Yet

The SEC is operating beyond its jurisdiction, as it has not yet officially classified cryptocurrencies as securities.

In July, Republican Senator Tom Emmer talked about the federal agency and its anti-cryptocurrency chairperson, Gary Gensler. He said they want to expand their crypto enforcement division by unconstitutionally expanding their jurisdiction.

However, an anonymous official said the SEC still needed to settle its dispute with the CFTC over jurisdiction over the crypto market. He explained that lawmakers would have to interfere and that Congress might support the CFTC if they did not solve the issue internally.

The CEFT might have more jurisdiction over cryptocurrencies, as stated in two recently introduced bills. However, an anonymous official said the probabilities of Congress passing it this year were below 50%.

The introduction of the Lummis-Gillibrand bill in June preceded the recently announced Digital Commodities Consumer Protection Act.

The SEC Expresses Its Position against Crypto Assets

A cryptocurrency exchange executive believes many US-based platforms have received SEC Wells Notices. The federal agency uses them to inform companies when they will take action against them. The anonymous executive highlighted that these measures go against the standard procedures of the SEC.

Over the last week, the SEC caused Binance to delist the AMP token, which the former deems a security. That has affected those investors putting their money in that crypto asset.

Regulatory agencies will continue fighting for regulatory control over cryptocurrencies in the United States. However, that might not conclude soon, thus prolonging the uncertainty for the exchanges struggling to comply.

Cryptocurrencies have become crucial in the economic system, which regulators do not overlook. The SEC is only one example of what happens in many countries, where the authorities seek to control or ban those assets.

Bitcoin is trading at around USD 23,119 and has accumulated a 2.4% loss over the last week. While its trading volume is above USD 26.62 billion, its market capitalization is about USD 441.87 billion, according to CoinGecko.

By Alexander Salazar

According to a new study, more traditional financial products like stocks and bonds are seen by retail investors as more complicated than cryptocurrencies.

According to a World Economic Forum (WEF) survey, 29% of investors reported that they did not understand cryptocurrencies, while nearly 40% said the same about stocks and bonds.

The privately funded survey, conducted in collaboration with BNY Mellon and Accenture, included more than 9,000 people in nine countries.

The study revealed a growing generation gap, as 70% of retail investors are currently under the age of 45. Although most of the respondents said they were looking to build long-term wealth, another 40% of them had not yet invested because they did not know how to, or found it too confusing.

Impact of Retail Investors

“With the global adoption and trading volumes of cryptocurrencies increasing substantially in recent years, there is a lot of buzz about it, which is likely to influence investors’ product awareness,” said Meagan Andrews, Investment Leader at WEF:

“Less coverage by more traditional products like stocks and bonds can also have the opposite effect on awareness.”

In addition, retail investors in the countries surveyed that are considered emerging markets (i.e. Brazil, China, South Africa, and the United Arab Emirates) reported they feel more confident in their ability to understand markets and build generational wealth through the financial markets.

The survey reveals that retail investors are moving markets, influencing institutional investors, and having macro effects: “From 2021’s meme stock saga to the rise of cryptocurrency, they are making their influence felt throughout the capital markets ecosystem.”

Based on the study results, retail investors have been able to take greater control of their investments due to several factors, such as the following:

Economic environment: most markets showed a relatively consistent bull run over the past decade. Meanwhile, central banks gradually lowered interest rates, further encouraging people to turn to the markets to invest their money, rather than save it.

Technology advancements: more individuals had gradually been granted access to retail investment services and products, as a result of the rise of online trading platforms. Nowadays, low- or no-fee trades are offered by many online brokerages globally.

COVID-19 impact: the pandemic unique circumstances allowed more individuals the freedom and spare time to learn how to invest. In addition, some governments provided financial stimuli, thus allowing people to gain more discretionary funds to invest.

Decreasing defined benefit pensions: this made individuals more responsible for their retirement savings, thus interacting with the capital markets through employer-sponsored retirement accounts, rather than through traditional state-owned pension plans.

Taking into account other sources of information, according to a report by VandaTrack, crypto-related stocks saw inflows of nearly $1 billion recently, due to the return of retail investors.

Last month, Marathon Digital Holdings, Coinbase Global, and Riot Blockchain were among the top assets bought by Fidelity.

Cryptocurrency-Based ETFs and Indices

The NYSE FactSet Global Blockchain Technologies Index was headed for its biggest monthly gain since February 2021, while the Bloomberg Galaxy Crypto Index, which tracks the largest digital assets including Bitcoin, had risen about 35% since the beginning of the year.

Meanwhile, half of the 20 best-performing US exchange-traded funds (ETFs) since the end of June, were crypto-related. Ed Moya, senior market analyst at Oanda Corp, said, “Retail traders are definitely surfacing here.”

By Audy Castaneda

The transparency of decentralized platforms is something that can benefit CeFi. Analysts consider that the best solution may be to merge them into CeDeFi.

The adoption of cryptocurrencies and blockchain technology has continued to grow despite the prolonged collapse in the industry. The market has over 300 million users and holders of cryptocurrencies worldwide, while over 18,000 companies accept them for their products or services.

Analysts consider the profitability of cryptocurrencies as one of the main drivers of mass adoption. Users are aware that keeping their holding in the long term is just one strategy, far from being the most profitable.

Investors can grow their digital wealth by lending their assets, borrowing money against crypto collateral, or engaging in yield farming.

Returns are the main driver of the crypto economy as it helps users maintain financial stability amid bearish markets. However, experts indicate critical flaws in the wealth management models of yield farming.

CeFi and DeFi Compared regarding Security, Flexibility, and Volatility

CeFi is reportedly safer and more reliable, but DeFi offers the possibility of higher profits despite high risks and volatility.

When holders stake their cryptocurrencies on CeFi platforms, borrowers receive it as a loan with fixed repayment rates. That creates an excellent financial cycle that contributes to the stability of the model.

On the other hand, DeFi platforms use variable rates, which may vary depending on the liquidity pool or the issuance rate of the token.

The Estimation of Risks Allows Increasing Liquidity

An increasing number of lenders flock to a platform as it gains popularity, hoping for higher returns. That causes the liquidity in the liquidity pools to increase and the premiums to decrease.

On a CeFi platform, fixed interest rates allow maintaining liquidity by sacrificing capital or limiting the deposit amount for lenders. Besides, the complexity and volatility of DeFi make it harder to integrate new users.

However, drawbacks in the CeFi model show the need for an upgrade, explained in the following lines.

It Is Necessary to Reboot Centralized Finance to Benefit Users

CeFi platforms may maintain a fixed interest rate by spreading their capital across different types of assets. That involves DeFi protocols, liquid assets (stablecoins), and long-term crypto institutional loans (3ACs).

However, centralized platforms risk losing much of their capital and compromising user funds and wallets. In addition, there is the issue of trust as a centralized platform trades assets through a third party, which retains control over them. On a DeFi platform, investors are the only ones controlling private keys and wallets.

CeFi offers many opportunities for sustainable investments in cryptocurrencies. Its high-interest fixed model allows considerable returns, impossible with DeFi, and keeps financial stability.

However, the above issues may pose significant risks to user assets. The transparency of decentralized platforms can benefit CeFi if it adopts it. The best solution would be to combine both platform types into CeDeFi to help those trading cryptocurrencies better.

By Alexander Salazar