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Wanted: crypto clarity

January 19, 2022, 11:38 AM UTC

Good morning,

The U.S. Securities and Exchange Commission (SEC) hasn’t yet shared its plans for crypto regulation, and it’s causing concern.

“We’re hoping for more clarity around digital assets,” Emily Portney, CFO for Bank of New (BNY) York Mellon Corp told Reuters on Tuesday. “Frankly, it’s a bit confusing about who actually regulates digital assets and especially crypto … and of course exactly what you can or cannot do,” Portney said. Meanwhile, crypto companies in the U.S. remain at the crossroads of regulation.

CFOs, for the most part, have been leery of Bitcoin on the balance sheet. For example, Robinhood Markets CFO Jason Warnick said last week at an event hosted by The Wall Street Journal that “there aren’t compelling reasons strategically for our business to put any meaningful amount of our corporate cash into cryptocurrencies.” But during a time when crypto jobs listings on LinkedIn increased 395% in the U.S. between 2020 and 2021, finance chiefs like Portney are understanding the need to navigate this terrain.

Despite its wild ride, Bitcoin has staying power, says Marc P. Bernegger, co-founder of the crypto hedge fund AltAlpha Digital. “Similar to the COVID crash back in March 2019, Bitcoin seems to correlate heavily with short term bad news of the broader market right now,” Bernegger says. “Mid-to-long-term, I see Bitcoin as a new inflation hedge based on its limited and fixed supply. Every stimulus is endorsing this element by devaluating fiat currencies like the U.S. dollar.” And Goldman Sachs predicted Bitcoin could hit $100,000 if it continues to take market share from gold.

Some experts thought the SEC would provide more crypto guidance by now. At a Fortune event in 2021, Robert J. Jackson, Jr., the Pierrepont Family Professor of Law at New York University and a former SEC commissioner, predicted action before the year ended. “I think you can expect to see some developments in the crypto space” related to investor protections, Jackson said.

When asked on CNBC’s “Squawk Box” on Jan. 10 his view on whether Ethereum is a security or not, SEC Chair Gary Gensler only noted that potential crypto regulation is within the securities laws. “If they call themselves a token, they are still possibly a security,” he said. One can decide whether or not they’ll invest, but “there needs to be some basic disclosures against lies and fraud.” Last month, Gensler announced Corey Frayer was hired as a senior advisor on SEC policymaking related to the oversight of crypto assets. 

Although clear guidance is forthcoming, under Gensler the SEC continues with crypto-related enforcement actions, according to a report released today by Cornerstone Research. In 2021, the agency brought 14 litigation actions in U.S. federal courts against digital asset market participants and six administrative proceedings, the report found. And of the 20 total enforcement actions, about 70% were related to initial coin offerings. “Given the SEC’s continued focus on this space, in 2022 we may see further scrutiny of certain market participants such as DeFi platforms,” Abe Chernin, a Cornerstone Research vice president, said in a statement.


See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

Blockchain company Huobi Group's Crypto Perception Report 2022, released on Jan. 18, takes a look at how the public views cryptocurrencies. Of the respondents who are crypto holders, about 68% said they started investing in 2021, the report found. Although crypto had a boost last year, it's still a niche topic. About 42% of respondents said they didn't know much about crypto. The findings are based on a survey of more than 3,000 U.S. adults in mid-December 2021.

Going deeper

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Leaderboard

Monica Kelsey was named CFO at Antares Capital, a private debt credit manager. Kelsey joins Antares from Madison Capital Funding LLC, where she served as CFO since 2004. Prior to that role, Kelsey was with UBS Global Asset Management as executive director of global finance. Earlier in her career, she worked as an auditor at PricewaterhouseCoopers.

Mike Taylor was named CFO at Gusto, a SaaS company. During his 30-year career, Taylor has led and scaled finance organizations at multiple high-growth companies. He most recently was CFO of GitHub, and prior to that he was a senior finance leader at Tesla for nearly a decade, helping to take the company public and expand to new markets and services.

Overheard

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—AT&T spokesperson Megan Ketterer said in a statement on Tuesday in regards to the company backing off plans to launch several 5G towers near major American airports, as reported by Fortune.

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