Big exchanges and investors say traditional agencies don’t have the tools or expertise to oversee the sector.
The cryptocurrency industry suddenly found itself in the crosshairs of a host of U.S. state and federal regulators this fall, facing millions of dollars of fines, threats of lawsuits, and warnings of new rules to come. Crypto executives say the abrupt—and sometimes overlapping—spate of enforcement threatens to chill innovation, especially in areas where it’s not clear which laws apply. Their solution? Let the industry help regulate itself.
Major exchanges including Coinbase and Gemini and prominent investors like Andreessen Horowitz have floated the idea of a crypto self-regulatory organization (SRO), arguing it could be better suited to oversee the new and complex industry on some issues than traditional agencies, which have struggled to apply decades-old rules to the new market. Supporters say an SRO could be more agile in deciding on rules around new products, using its members’ expertise and resources.
“The job of a regulator is not easy when you’re confronting something new,” says Greg Xethalis, chief compliance officer at crypto investment firm Multicoin Capital. “The question is, how do you get to an environment where the regulatory infrastructure can be more nimble?”
Self-regulation has a long history on Wall Street. SROs, which are funded and governed by their own members, set rules, perform inspections, and mete out penalties to members, with authority delegated by Congress and regulators such as the Securities and Exchange Commission. A few years after Congress formed the SEC as part of President Franklin D. Roosevelt’s New Deal, the agency delegated some oversight of brokers and brokerage firms to the newly formed National Association of Securities Dealers, an SRO.
Eighty years and a few reorganizations later, the NASD is now the Financial Industry Regulatory Authority, or Finra, with 3,600 employees helping to license, police, and levy penalties on hundreds of thousands of brokers, under the SEC’s supervision. A similar SRO polices commodities brokers, and the major stock exchanges are themselves self-regulatory organizations.
For crypto, an SRO could be responsible to go after at least some infractions—referring serious fraud to agencies like the SEC. For example, the SRO could adjudicate whether a newly issued token should be classified as a security, a commodity, or something else, which proponents say would go a long way toward helping firms issue new ones without fearing an enforcement action years later. It could also handle such mundane tasks as setting product disclosure rules or standards governing how to manage customer data. Its behavior would be overseen by the SEC and other agencies, which would have the final say if they disagree with an SRO’s decisions.
Established SROs such as Finra have been criticized for weak enforcement that caters to their members rather than the public they’re supposed to serve, with some detractors comparing them to cartels. And some crypto skeptics say an SRO wouldn’t be able to adequately address what they see as the industry’s biggest problems: fraud and serious legal violations that are the bread and butter of powerful watchdogs such as the SEC and the Commodity Futures Trading Commission.
Already this year, the SEC has threatened Coinbase with a lawsuit over a proposed product, multiple state regulators have gone after crypto firms for allegedly selling unregistered securities, and the CFTC has fined Tether $41 million for lying about the assets backing its stablecoin. “This is an industry that needs guardrails and potentially structural changes,” says Andrew Park, a senior policy analyst for the Americans for Financial Reform, an investor advocacy group, pointing to stablecoins and other crypto products that have close parallels to the traditional financial system but aren’t following the same regulations. “If there was an armed robbery going on, an SRO is outside giving the getaway car a parking ticket.”
Industry advocates have already tried to form a crypto SRO, but this has yet to gain acceptance from lawmakers. One contender started by Gemini has been inactive for years. Another, called the Association for Digital Asset Markets (ADAM), has members including crypto exchange FTX and investor Galaxy Digital and has developed a code of conduct that could serve as a foundation if it were to gain SRO status.
Most who support forming an SRO agree that such an organization would likely need an act of Congress to allow the SEC, CFTC, or other regulators to register it and potentially delegate authority to it. Although such a bill could take years to pass, senators that include Wyoming Republican Cynthia Lummis have said they plan to create comprehensive crypto legislation that could provide an opportunity for supporters of an SRO to put their plan into action.
“If we can show that SROs would actually increase regulation and registration under the oversight of the SEC and CFTC, it would get buy-in from the agencies and also give the industry an opportunity to have a voice,” says Michelle Bond, chief executive officer of ADAM.
Dow Jones Falls, Growth Stocks Crushed; Bitcoin Dives Again; Bank Of America Does This As Financials Thrive – Investor's Business Daily
BREAKING: Stock Market Correction Intensifies; Bitcoin Extends Losses Saturday
The Dow Jones Industrial Average fell late as growth stocks got spanked. Bank of America (BAC) passed a buy point as financial stocks flourished. Bitcoin was diving again, hitting Coinbase (COIN) and Grayscale Bitcoin Trust (GBTC). Discovery (DISCA) popped on an upgrade but New York Times (NYT) plunged.
The stock market struggled following a disappointing jobs report. The Labor Department reported U.S. employers added 199,000 jobs in December. That was about half what economists polled by Econoday had expected. It was also a big decline from the 249,000 jobs created in November.
The unemployment rate dropped to 3.9% from 4.2% the prior month. Economists had forecast 4.1%.
The tech heavy Nasdaq the worst hit major average, falling 1%. China e-commerce play Pinduoduo (PDD) was doing well again, closing up more than 7%. Payments stock MercadoLibre (MELI) lagged, falling 6.2%.
The S&P 500 also fell again, closing down 0.4%. Housing play D.R. Horton (DHI) lagged most, falling 6.2%. Homebuilder stocks in general struggled. The SPDR S&P Homebuilders ETF (XHB) surrendered 3.4%.
A majority of the S&P 500 sectors closed lower. Energy and financials performed best while technology and consumer discretionary were the worst laggards.
Small caps were also getting mauled by the bears. The Russell 2000 was down 1.2%.
But it was growth stocks that were given the worst thrashing. The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, fell 2.7%.
The Dow Jones Industrial Average looked set to close positive before reversing late. It ended the session basically flat, ceding about five points.
Boeing (BA) was one of the top performers, rising 2%. It remains stuck beneath its 200-day moving average.
Walgreens Boots Alliance (WBA) was the top stock on the Dow Jones today. It closed up 2.7%. Home Depot (HD) was the biggest laggard, falling more than 2%.
Financial stocks are continuing to rally on the prospect the Federal Reserve will raise interest rates faster than previously expected.
Banking giant Bank of America managed to break past a cup-without-handle base buy point of 48.79. It ended the day above this entry after gaining 2.2%.
It formed an orderly looking pattern despite a volatile market, MarketSmith analysis shows. BAC stock’s relative strength line has just hit a new high, a bullish indicator.
While its volume is not ideal, the fact it is rising amid broader downward action is impressive.
Another stock worth watching is regional banking play Western Alliance Bancorp (WAL). It is currently building a new cup base with a 124.98 buy point.
Volume has been spiking as it forms the right side of the base, which is a good sign. It bullishly reclaimed its 50-day moving average Tuesday.
Western Alliance operates in areas including Arizona, Nevada and Southern California.
Underlining strength among financials, the Invesco KBW Bank ETF (KBWB) rose 1.6%.
Bitcoin-related stocks were falling as the cryptocurrency continued to slide. Bitcoin was trading under $42,000 after falling about 3% in the past 24 hours, according to CoinDesk.
One crumb of comfort was the fact it was off lows for the day.
The digital currency has now given up almost 40% from the levels it reached in early November.
Bitcoin plays such as Coinbase Global, Grayscale Bitcoin Trust and Riot Blockchain (RIOT) were all hit.
Cryptocurrency exchange COIN closed off lows, giving up 0.7%. GBTC fared worse, falling nearly 4%.
Bitcoin miner RIOT also ended the day off lows, giving up 0.6%.
There was some interesting movement in the media space amid upgrade and acquisition news.
Discovery roared 16.9% higher after Bank of America upgraded the stock to buy due to its mooted merger with WarnerMedia.
Analysts believe the new firm could create a strong rival to media powerhouses Netflix (NFLX) and Walt Disney (DIS) in the streaming space.
Meanwhile shares of the New York Times plunged on news it plans to buy sports news site The Athletic for $550 million. It is expected that transaction will close in the first quarter of this year.
New York Times stock ended the day near lows as it gave up 10.7%. It is now near 12-month lows.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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Can I Buy Cryptocurrency With A Credit Card? – Forbes
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Updated: Jul 27, 2021, 9:00am
Like gold in the 1850s and .com stocks in the 1990s, it seems everyone is trying to get their hands on crypto. Purchasing cryptocurrency with a credit card is possible but can be a dangerous undertaking. Cardholders can expect fees from both sides of a transaction involving cryptocurrencies and credit cards, plus face the potential to lose money quickly due to volatile currency values and high interest rates.
We’ve combed through the leading exchange offerings, and reams of data, to determine the best crypto exchanges.
It’s best to check with a credit card issuer to find out whether it allows cardholders to purchase any type of cryptocurrency. American Express currently allows such transactions with a few strict terms. Bank of America recently changed its tune in 2020 when a Reddit user shared an image of a letter they received that stated cryptocurrency purchases would be treated as cash advances. (Note: Bank of America’s terms on this are still unclear.)
In addition to double-checking with a credit card company, crypto holders should also look for a cryptocurrency exchange willing to accept credit cards for deposits or purchases. Some only allow direct deposits from banks, cash deposits or debit card purchases. Coinmama, CEX.io and Paxful are all exchanges currently accepting credit cards.
Limitations also exist as to what types of credit cards are accepted by exchanges. Some exchanges may only take Visa or Mastercard credit cards. Paxful, for example, has a variety of Bitcoin vendors from around the world who sell on the exchange website. It’s one of the few exchanges currently accepting American Express credit cards, but acceptance on the exchange also greatly depends on the selected vendor.
Major U.S. credit card companies may not allow cardholders to purchase cryptocurrency with a credit card. Citibank, for example, blocked cardholders from using credit cards to purchase Bitcoin and other cryptocurrencies in 2018 fearing its volatility and the potential for fraud. Some credit card companies may even issue cash advance fees if a cardholder attempts to make a crypto purchase.
Note that some major U.S. credit card companies don’t make information on their websites easy to find regarding whether or not they allow cardholders to purchase cryptocurrencies. It’s best to call the number on the back of the card and speak to a representative. Ask clearly, directly and specifically whether or not purchasing crypto is allowed, and, if so, what types of fees will be incurred.
Some cryptocurrency exchanges don’t accept credit cards as payment, such as eToro and Coinbase.
Cardholders can expect to pay fees to both the exchange the currency is purchased with and the credit card issuer. Before making any purchases with an authorized credit card, research the exact cost for each purchase and what the monetary benefit will be (or will not be) before incurring the charge.
The exchange may charge a commission fee and/or a service fee for using a credit card to purchase or deposit crypto. For example, CEX.io is an exchange offering a handful of cryptocurrencies for purchase, including Bitcoin. Users are allowed to purchase crypto using a Visa or Mastercard credit card, but U.S. cardholders are subject to a 2.99% commission fee with a minimum purchase of $20.
Depending on the exchange, vendors within the exchange may also design fees for purchasers depending on a few factors, like where the vendor is located, the purchase amount and what type of credit card is used.
Some credit card companies allowing cardholders to make crypto purchases treat the purchases as a cash advance (cash advances usually refers to when a cardholder uses a credit card to withdraw money from an ATM). This has several disadvantages.
Let’s use common card terms as an example for the types of fees a cardholder can incur:
Other credit card risks may include:
As the cryptocurrency market evolves, so does the standard financial market. There are a few start-up credit card issuers who offer Bitcoin or other cryptocurrencies as bonuses or rewards. For example, BlockFi, a younger card company, offers 1.5% Bitcoin rewards for every purchase made. They also boast Bitcoin welcome bonuses and more rewards from trading and client referrals.
Using a credit card to purchase cryptocurrency won’t make sense for most. Cardholders should consider the major disadvantages before deciding to buy crypto using a method involving a credit card. Purchasing crypto is often best accomplished using direct deposits, debit cards or wire transfers.
Credit card purchases often come with high fees that lessen the value in a good investment or reduce returns by a significant margin. Cardholders also face a high risk of burrowing themselves into deep debt that can be hard to come out of. For those who insist on using a credit card, we advise contacting a credit card representative to discuss what the repercussions will be with a specific credit card issuer and look for a cryptocurrency exchange with the best credit card rates.
We’ve combed through the leading exchange offerings, and reams of data, to determine the best crypto exchanges.
Chauncey grew up on a farm in rural northern California. At 18 he ran away and saw the world with a backpack and a credit card, discovering that the true value of any point or mile is the experience it facilitates. He remains most at home on a tractor, but has learned that opportunity is where he finds it and discomfort is more interesting than complacency.
Dia Adams is a noted family travel expert and a real-life Mom of two teens in the DC Metro area. She has visited over 45 countries and lived in Thailand, China, and Ireland (where her son was born). Her kids have over 20 stamps in their own passports. Her passion lies in showing families how to travel more while keeping their savings and sanity. Her guidebook, Disney World Hacks, is a bestseller on Amazon.
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