Five Important Crypto Developments This Week: Gensler Questioning, Crypto Exchange-Traded Funds, and Increased Scrutiny

Key Points:

• SEC Chairman Gary Gensler questioned by the Financial Services Committee. 
• Lawmakers express heightened concerns about Central Bank Digital Currencies.
• SEC delays BTC-Spot ETF evaluations; ETH-Futures ETFs given the green light.

SEC Chair Gary Gensler grilled by the Capitol Hill Financial Services Committee  

SEC Chair Gary Gensler faced tough questioning from the Financial Services Committee on Wednesday, with Committee Chairman Patrick McHenry and Rep. Ritchie Torres posing challenging inquiries. Rep. Torres used a Pokeman analogy to simplify his questioning, prompting Gensler to reference the SEC playbook in his responses.

During the hearing, Rep. Torres sought cases where an investment contract was established without a formal agreement, using a Pokeman analogy to illustrate his point. Gensler acknowledged that purchasing a Pokeman card does not constitute a securities transaction, but expressed the need for further details when purchasing a tokenized Pokeman card via a blockchain on a digital exchange.

The Financial Services Chairman, Rep. Patrick McHenry, set the tone for the eventful hearing by cautioning Gensler that the SEC is not exempt from the law. He emphasized the significance of the occasion and declared his reluctance to become the first Committee Chairman to issue a subpoena to the SEC.  

Coinbase CEO Brian Armstrong made a return to Capitol Hill  

On Wednesday, 40 cryptocurrency founders accompanied Coinbase (COIN) CEO Brian Armstrong to Capitol Hill. Armstrong has increased efforts to encourage US legislators to enact cryptocurrency regulations that foster innovation while safeguarding investors.

Notably, Coinbase initiated the #StandWithCrypto campaign, advocating for the 52 million American crypto holders. As part of the crypto awareness initiative, Coinbase distributed coffee cups on Capitol Hill, urging US lawmakers and the crypto community to "Wake Up."

Coinbase is embroiled in a legal dispute with the SEC, and investors are awaiting a court decision on Coinbase's motion to dismiss. The SEC alleges that Coinbase is operating as an unregistered securities exchange, broker, and clearing agent.

In the week ending September 29, Coinbase's (COIN) share price increased by 5.81%, partially reversing a 13.62% decline from the previous week.  

SEC Postpones BTC-Spot ETF Evaluations in Anticipation of US Government Shutdown  

The SEC delayed the assessment of crypto-spot ETFs this week, dimming prospects for a BTC-spot ETF in 2023.

On Thursday, the SEC postponed the review of Blackrock's (BLK) iShares Bitcoin Trust ETF. Additionally, the SEC deferred the application reviews for spot ETFs from Bitwise, Invesco, and Valkyrie.

While promptly announcing the delay for crypto-spot ETFs, the SEC approved multiple ETH-Futures ETFs.

BTC and ETH experienced differing performances on Friday, with BTC declining by 0.44% and ETH gaining 0.90%.  

MicroStrategy has raised its BTC holdings to 158,245 BTC

On Monday, reports surfaced of MicroStrategy (MSTR) purchasing 5,445 BTC, increasing their total holdings to 158,245 BTC.

The NASDAQ-listed BTC holder raised $147.3 million through a Share Sale agreement to acquire the cryptocurrency at an average price of $27,053 per BTC.

MicroStrategy's (MSTR) stock price increased by 1.69% in the week ending September 29, partially reversing a 5.27% decline from the previous week.  

Central Bank Digital Currencies and Increased Government Surveillance  

Central Bank Digital Currencies (CBDCs) were a major focus this week. ECB President Christine Lagarde defended the EU CBDC Project before the Economic and Monetary Affairs Committee of the European Parliament. She mentioned that the pilot CBDC project might take an additional two years and emphasized that digital money will not offer complete anonymity, similar to a banknote.

Previously, the US Financial Services Committee forwarded the CBDC Anti-Surveillance State Act to the full House on Capitol Hill. The act mandates US Congressional approval for the issuance of CBDCs.