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Happy FRIDAY! This is Bitcoin Culture, and we are sending you into the weekend with the most recent updates about Bitcoin & financial markets. Here's what's going on:
SEC vs. Coinbase
FOMC Meeting
New crypto bill introduced
SEC INVESTIGATES COINBASE
The U.S. Securities and Exchange Commission (SEC) is investigating if Coinbase unlawfully let people trade digital assets that should have been registered as securities. Here's a hint: They probably did. The SEC uses the Howey Test as a set of standards to classify investments as securities. Under the Howey Test, a transaction qualifies as a security if it involves all four elements:
A party invests money
In a common enterprise
With expectation of profiting
Derived from the efforts of others
Some common examples of securities include stocks, bonds, and mutual funds. BTCulture's Take: Most, if not all, cryptocurrency projects (except Bitcoin) pass the Howey Test and should be classified as securities. This is not a bad thing...securities law protects investors from misrepresentation and fraud. There are over 10,000 active cryptocurrencies and 150+ listed on Coinbase. It's about time the SEC starts developing some sort of regulatory framework. Bitcoin, however, is different than the rest because it is resistant to change and has no central company making critical decisions behind the scenes. Gary Gensler, SEC Chairman, has confirmed this by saying that ONLY Bitcoin is a commodity. I'll repeat what needs to be said: there is crypto, and then there is Bitcoin. They are not the same.
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FOMC MEETING
On Wednesday, Jerome Powell and the Federal Reserve raised interest rates by 0.75%, which is the highest single hike since 1994. This is the first time in FED history that the central bank has raised rates by 75bps twice in a row. All in an effort to bring inflation down from its 40-year highs. Here is how the market reacted:
BTC: 11%
ETH: 15%
S&P: 3.5%
It was also announced this week that GDP fell (-0.9% in Q2) for the second consecutive quarter, which would put the U.S. officially in a recession by the textbook definition. However, it interesting to see our active government officials consistently preach to the public that we are, in fact, NOT in a recession...?
Even the Wikipedia page for defining a recession has been changed and locked. Hmmm... With the FED aggressively hiking interests rates, inflation through the roof, and fears of a recession upon us, these are certainly unprecedented times. While I am not sure if popcorn was appropriate, I am sure that Wednesday's FOMC meeting had one of its highest viewer ratings ever! There's nothing more exciting than watching a small group of old people discuss interests rates and control financial markets.
NEW CRYPTO BILL BROUGHT TO U.S. SENATE
Two Senators, Pat Toomey and Kyrsten Sinema, introduced a new crypto bill called the Virtual Currency Fairness Tax Act. The main goal being to eliminate taxes on small crypto payments up to $50. Under current legislation, crypto assets are treated as property and transactions as investments. This means people are subjected to capital gains tax anytime crypto is sold or exchanged.
This bill is a big step in the right direction because (if accepted) it will accelerate crypto's usage as a medium of exchange and support the industry's next stage of growth. Nobody wants to pay a capital gains tax when purchasing a Starbucks coffee with crypto.
APPETIZERS
Japanese Bank ($471B+) approved to launch BTC & crypto services in Dubai. Read more.
Senators send letter to Fidelity on 401(k) BTC plan. Read more.
Charles Schwab ($8 Trillion in assets) to launch crypto ETF next week. Read more.
Santander Bank in Brazil to offer BTC & crypto trading to 55M customers. Read more.
Nubank (Brazil) reaches 1M+ crypto platform users one month after launch. Read more.
UPCOMING EVENTS
August 10th – Release of July CPI data August 26th – CME Bitcoin futures and options expiry September 21st – Next FOMC interest rate meeting
Enjoy the Friday - see you next week! Scott Bruner, BTCulture
DISCLAIMER: Nothing in this email is intended to serve as financial advice. I am not a financial advisor. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets. Please be careful and do your own research.