Using courts for every crypto issuance will squash innovation: Grayscale CEO
Grayscale Investments CEO, Michael Sonnenshein, highlighted a potential negative outcome for the United States economy if the Securities and Exchange Commission (SEC) continues to take a one-by-one approach to regulating the cryptocurrency industry.
During a recent interview with Fox Business, Sonnenshein expressed that the SEC could drive crypto firms out of the country by constantly resorting to enforcement actions against the industry.
âIf every crypto issued needs to go to a court of law, then we are squashing the innovation taking place here,â Sonnenshein stated.
Likewise, Ripple CEO Brad Garlinghouse echoed similar comments prior to the partial victory of Ripple, which was decided on July 13.
On June 17 Garlinghouse expressed that the SEC is âlooking to killâ innovation and the cryptocurrency in the U.S. He further explained as the Ripple lawsuit is coming to a close, it is only the beginning for many others.
âUltimately as our law suit comes to a close, for so many others its just starting, so the fight for clarity has to continue,” Garlinghouse stated.
Related: SEC decision on Bitcoin ETFs wonât leave out Wall Street giants
However, Sonnenshein holds a positive outlook regarding the ongoing developments Congress is taking to provide regulatory clarity for the industry.
âA lot of this legislation that this congress could very well pass, could give the industry the actual clarity it needs to move forward in a way that embraces cryptoâ Sonnenshein stated.
On July 31, Cointelegraph reported that the House Financial Services Committee (FSC) approved the Financial Innovation and Technology for the 21st Century Act with a 35-15 vote.
The act aims to establish registration rules for crypto firms under the jurisdiction of either the Commodity Futures Trading Commission (CFTC) or the SEC.
Sonnenshein pointed out that the SEC is assessing the wrong criteria when determining which Bitcoin ETF should be introduced to the market.
âWhen I think about the process that the SEC should be untaking here, itâs really not to pick winners and losers, it is to ensure that all the right disclosures are put out there for investors.â
Sonnenshein further explained during the interview that there is room for several spot Bitcoin products on the market.
âWeâve been ready for a world where there are multiple spot Bitcoin products, where there are multiple bitcoin future products on the market” Sonnenshein stated.
He argued that the SECâs previous approval of the Bitcoin Futures ETF implies it does in fact have an adequate oversight of the Bitcoin market.
âThey do not believe there is sufficient surveillance in the underlying Bitcoin market[…]The SEC already has the tools to approve spot Bitcoin ETFs.”
On Aug. 11, the SEC delayed its decision on the outcome of the spot Bitcoin ETF proposed by ARK Investment Management.
After its publication in the Federal Register, the SEC initiated a public comment period for the ARK 21Shares Bitcoin ETF.
This marks the most recent postponement in the regulatory decision-making process regarding the approval or disapproval of a spot crypto ETF in the U.S.
Magazine: SBF ordered to jail, Bitcoin ETF delayed and SEC to appeal Ripple case: Hodlerâs Digest, Aug. 6-12
Politics
‘More people should be given this chance’: The probation centres transforming offenders’ lives
The combination of full prisons and tight public finances has forced the government to urgently rethink its approach.
Top of the agenda for an overhaul are short sentences, which look set to give way to more community rehabilitation.
The cost argument is clear – prison is expensive. It’s around ÂŁ60,000 per person per year compared to community sentences at roughly ÂŁ4,500 a year.
But it’s not just saving money that is driving the change.
Research shows short custodial terms, especially for first-time offenders, can do more harm than good, compounding criminal behaviour rather than acting as a deterrent.
Charlie describes herself as a former ‘junkie shoplifter’
This is certainly the case for Charlie, who describes herself as a former “junkie, shoplifter from Leeds” and spoke to Sky News at Preston probation centre.
She was first sent down as a teenager and has been in and out of prison ever since. She says her experience behind bars exacerbated her drug use.
Charlie in February 2023
“In prison, I would never get clean. It’s easy, to be honest, I used to take them in myself,” she says. “I was just in a cycle of getting released, homeless, and going straight back into trap houses, drug houses, and that cycle needs to be broken.”
Eventually, she turned her life around after a court offered her drug treatment at a rehab facility.
She says that after decades of addiction and criminality, one judge’s decision was the turning point.
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“That was the moment that changed my life and I just want more judges to give more people that chance.”
Also at Preston probation centre, but on the other side of the process, is probation officer Bex, who is also sceptical about short sentences.
“They disrupt people’s lives,” she says. “So, people might lose housing because they’ve gone to prison⊠they come out homeless and may return to drug use and reoffending.”
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Bex works with offenders to turn their lives around
Bex has seen first-hand the value of alternative routes out of crime.
“A lot of the people we work with have had really disjointed lives. It takes a long time for them to trust someone, and there’s some really brilliant work that goes on every single day here that changes lives.”
It’s people like Bex and Charlie, and places like Preston probation centre, that are at the heart of the government’s change in direction.
“As far as I’m concerned, there’s only three ways to spend the taxpayers’ hard-earned when it comes for prisons. More walls, more bars and more guards.”
Prison reform is one of the hardest sells in government.
Hospitals, schools, defence – these are all things you would put on an election leaflet.
Even the less glamorous end of the spectrum – potholes and bin collections – are vote winners.
But prisons? Let’s face it, the governor’s quote from the Shawshank Redemption reflects public polling pretty accurately.
Right now, however, reform is unavoidable because the system is at breaking point.
It’s a phrase that is frequently used so carelessly that it’s been diluted into cliche. But in this instance, it is absolutely correct.
Without some kind of intervention, the prison system is at breaking point.
It will break.
Inside Preston Prison
Ahead of the government’s Sentencing Review, expected to recommend more non-custodial sentences, I’ve been talking to staff and inmates at Preston Prison, a Category B men’s prison originally built in 1790.
Overcrowding is at 156% here, according to the Howard League.
Sophy Ridge talking outside Preston Prison
One prisoner I interviewed, in for burglary, was, until a few hours before, sharing his cell with his son.
It was his son’s first time in jail – but not his. He had been out of prison since he was a teenager. More than 30 years – in and out of prison.
His family didn’t like it, he said, and now he has, in his own words, dragged his son into it.
Sophie is a prison officer and one of those people who would be utterly brilliant doing absolutely anything, and is exactly the kind of person we should all want working in prisons.
She said the worst thing about the job is seeing young men, at 18, 19, in jail for the first time. Shellshocked. Mental health all over the place. Scared.
And then seeing them again a couple of years later.
And then again.
The same faces. The officers get to know them after a while, which in a way is nice but also terrible.
Sophy Ridge talking to one of the officers who works within Preston Prison
The ÂŁ18bn spectre of reoffending
We know the stats about reoffending, but it floored me how the system is failing. It’s the same people. Again and again.
The Sentencing Review, which we’re just days away from, will almost certainly recommend fewer people go to prison, introducing more non-custodial or community sentencing and scrapping short sentences that don’t rehabilitate but instead just start people off on the reoffending merry-go-round, like some kind of sick ride.
But they’ll do it on the grounds of cost (reoffending costs ÂŁ18bn a year, a prison place costs ÂŁ60,000 a year, community sentences around ÂŁ4,500 per person).
They’ll do it because prisons are full (one of Keir Starmer’s first acts was being forced to let prisoners out early because there was no space).
If the government wants to be brave, however, it should do it on the grounds of reform, because prison is not working and because there must be a better way.
Inside Preston Prison, Sky News saw first-hand a system truly at breaking point
A cold, hard look
I’ve visited prisons before, as part of my job, but this was different.
Before it felt like a PR exercise, I was taken to one room in a pristine modern prison where prisoners were learning rehabilitation skills.
This time, I felt like I really got under the skin of Preston Prison.
It’s important to say that this is a good prison, run by a thoughtful governor with staff that truly care.
But it’s still bloody hard.
“You have to be able to switch off,” one officer told me, “Because the things you see….”
Staff are stretched and many are inexperienced because of high turnover.
After a while, I understood something that had been nagging me. Why have I been given this access? Why are people being so open with me? This isn’t what usually happens with prisons and journalists.
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That’s when I understood.
They want people to know. They want people to know that yes, they do an incredible job and prisons aren’t perfect, but they’re not as bad as you think.
But that’s despite the government, not because of it.
Sometimes the worst thing you can do on limited resources is to work so hard you push yourself to the brink, so the system itself doesn’t break, because then people think ‘well maybe we can continue like this after all… maybe it’s okay’.
But things aren’t okay. When people say the system is at breaking point – this time it isn’t a cliche.
They really mean it.
Censorship-resistant âdark stablecoinsâ could come in increasing demand as governments tighten their oversight of the industry.Â
Stablecoins have been used for various groups to store assets due to a lack of government interference; however, with regulations pending, that could soon change, Ki Young Ju, CEO of crypto analytics firm CryptoQuant, said in a May 11 X post.
âSoon, any stablecoin issued by a country could face strict govt regulation, similar to traditional banks. Transfers might automatically trigger tax collection through smart contracts, and wallets could be frozen or require paperwork based on government rules,â he said.
âPeople who used stablecoins for big international transfers might start looking for censorship-resistant dark stablecoins instead.â
On the heels of US President Donald Trumpâs crypto-friendly administration assuming power earlier this year, lawmakers are weighing stablecoin legislation, which seeks to regulate US stablecoins, ensuring their legal use for payments.Â
The European Union has already brought in its Markets in Crypto-Assets (MiCA) regulation, which, among other measures, mandates that stablecoins be regulated and transparent.
Ju speculates that a dark or private stablecoin could be created as an algorithmic stablecoin, with the value maintained through algorithmic mechanisms rather than being pegged to an external asset like gold, which makes it susceptible to interference from authorities.Â
âOne possible example could be a decentralized stablecoin that follows the price of regulated coins like USDC using data oracles like Chainlink,â he said.
Another way would be stablecoins issued by countries that donât censor financial transactions, or, for example, if Tether chooses not to comply with US government regulations in the future.
âUSDT itself used to be considered a censorship-resistant stablecoin. If Tether chooses not to comply with US government regulations under a future Trump administration, it could become a dark stablecoin in an increasingly censored internet economy,â Ju said.
Privacy technology in crypto is already being used
Zcash (ZEC) and Monero (XMR) â while they arenât stablecoins âalready shield transactions and allow users to send and receive funds without revealing their transaction data on the blockchain.
Related: Russia finance ministry official floats country making own stablecoins: Report
Several projects are also working on using similar technology for stablecoins, such as Zephyr Protocol, a Monero fork that hides transactions from being revealed on the blockchain. PARScoin also hides user identities, transaction values, and links to past transactions.
The market cap of US dollar-denominated stablecoins has continued to grow, crossing $230 billion in April, a report from investment banking giant Citigroup found. Thatâs an increase of 54% since last year, with Tether (USDT) and USDC (USDC)Â dominating 90% of the market.
Meanwhile, total stablecoin volumes hit $27.6 trillion in 2024, surpassing the combined volumes of Visa and Mastercard by 7.7%.Â
Magazine: Ridiculous âChinese Mintâ crypto scam, Japan dives into stablecoins: Asia Express
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