On Wednesday, the U.S. securities regulator urged lawmakers to reject a proposed bill designed to establish a new legal framework for digital currencies, warning it could undermine existing legal precedents and place capital markets at “immeasurable risk.”

The U.S. House of Representatives is set to consider the Republican-sponsored Financial Innovation and Technology for the 21st Century Act, which aims to clarify the jurisdiction of various agencies over digital assets. Proponents of the bill argue that it will provide regulatory clarity, thereby fostering industry growth.

Despite its uncertain future in the U.S. Senate, the legislation comes at a time when the U.S. Securities and Exchange Commission (SEC) is expected to approve applications for spot ether exchange-traded funds, marking a surprising boost for the crypto industry.

SEC Chair Gary Gensler expressed strong opposition to the bill, stating that it “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.”

The bill has garnered support from crypto advocates and industry groups, who view Gensler’s SEC as a barrier to broader digital asset adoption. Gensler, however, has consistently argued that cryptocurrencies should be regulated under the same laws as other assets, citing numerous high-profile prosecutions, fraud cases, bankruptcies, and failures within the sector.

In his statement on Wednesday, Gensler highlighted that under the proposed bill, investment contracts recorded on a blockchain would no longer be classified as securities, thereby stripping investors of protections afforded by securities laws. Additionally, he criticized the provision allowing issuers of crypto investment contracts to self-certify their products as digital commodities not subject to SEC oversight, giving the agency only 60 days to challenge such certifications.

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AI-generated content poses a significant online disinformation threat, but blockchain technology can help verify and authenticate the truth, according to William Ogden Moore, Research Analyst at Grayscale Investments.

As AI integrates more into daily life, its impact on sectors like finance has been profound, facilitating smarter investments and market analysis. However, the rise of generative AI has also introduced risks, notably the creation of “deepfakes.” These highly realistic digital forgeries use AI to manipulate or generate visual and audio content, such as the deepfake video of Barack Obama created by comedian Jordan Peele to highlight the technology’s potential dangers.

The prevalence of deepfakes is increasing rapidly. A report by Sumsub Research noted that between 2022 and the first half of 2023, deepfakes as a proportion of content in the U.S. surged from 0.2% to 2.6%. Experts warn that deepfakes could sway public opinion and influence events like elections, posing a threat to democracies worldwide.

Public blockchains like Ethereum offer a potential solution. Their transparency, decentralized nature, and focus on network security and immutability make them well-suited to verify content authenticity. Public blockchains record information transparently and accessibly, allowing anyone to verify its validity, such as the creator or timestamp. This decentralized structure reduces the risk of manipulation and ensures tamper-resistant records.

Blockchain technology has already proven its ability to authenticate content, as seen with digital art in the form of non-fungible tokens. Blockchain can similarly authenticate videos, images, and text, laying the foundation for tools to combat deepfakes, such as OpenAI’s Worldcoin, Irys, and Numbers Protocol.

With AI-generated content expected to dominate the internet in the future, protecting against deepfakes is critical. Public blockchains, operated collectively by users, offer promising features to address these challenges. However, the technology is still in its early stages, and widespread adoption remains a challenge.

To uphold truth and transparency, society must remain committed to developing and implementing blockchain solutions as we navigate the risks posed by emerging technologies.

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Cryptocurrency is quickly becoming an election issue, with Ethereum (ETH-USD) emerging as a significant beneficiary. From Monday to Tuesday, Ether surged 21%, marking its best two-day performance since January 2021.

This rally occurred despite initial concerns about the prospects for the next big crypto surge. The government’s hesitation to approve a suite of spot Ether ETFs had dampened enthusiasm. This hesitation contrasted with the excitement over Bitcoin ETFs, which had revitalized the crypto market late last year and sustained its momentum into this year.

The general expectation was that widely available crypto ETFs would facilitate crypto adoption among latecomers, allowing less crypto-savvy investors to allocate a “responsible” portion of their 401(k)s to these new ETFs. However, Jim Bianco of Bianco Research cast doubt on this theory, especially with the Securities and Exchange Commission showing no signs of approving spot Ether ETFs as a crucial deadline approached.

Then, according to Anthony Pompliano in the Pomp Letter, “the game changed.” On Monday, Bloomberg’s Eric Balchunas and James Seyffart increased their odds of spot Ether ETF approval to 75% from 25%, citing “chatter that the SEC could be doing a 180 on this increasingly political issue.”

This sudden shift in the SEC’s stance led to a surge in Ether prices. Matt Hogan, Chief Investment Officer at Bitwise Asset Management, highlighted this development on Yahoo Finance’s Market Domination. He noted a “real sea change in Washington around crypto,” with recent bipartisan crypto legislation and a growing coalition around stablecoins.

Hogan emphasized that “Washington has gotten the message that crypto is good for America and popular with American voters.” This change in sentiment was also reflected in former President Donald Trump’s recent pro-crypto stance.

Whether or not the SEC’s apparent change of heart is related, crypto enthusiasts are energized by the prospect of political support. Pompliano articulated this optimism, stating, “A bunch of people on the internet created a $2.6 trillion industry in the face of government pressure. Imagine what happens when the government is now actively courting these individuals and companies, along with embracing the technology. The headwind becomes a tailwind quickly.”

Spoken like a true crypto bull.

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A surge of enthusiasm permeates cryptocurrency markets as hopes for the approval of exchange-traded funds (ETFs) directly investing in Ether soar, signaling a notable shift in sentiment.

The positive outlook coincides with a flurry of developments involving potential ETF issuers, stock exchanges facilitating their trading, and the US Securities and Exchange Commission (SEC). Sources familiar with the matter revealed that the SEC requested updates to rule change filings from the New York Stock Exchange and Cboe Global Markets, indicating a potential uptick in the likelihood of approval. However, the outcome remains uncertain, underscoring the complexities involved.

Fidelity Investments recently amended its S-1 registration statement with the SEC for its proposed spot-Ether ETF, addressing key concerns such as staking and derivative investments. This move precedes a looming May 23 deadline for the SEC to review VanEck’s ETF application, adding to the anticipation.

Analysts view potential ETF approval as a significant regulatory milestone, with expectations of substantial inflows into Ether upon implementation, akin to the impact observed with Bitcoin ETFs. Geoff Kendrick of Standard Chartered estimates inflows ranging from $15 billion to $45 billion within the first year post-approval.

The Grayscale Ethereum Trust (ETHE) serves as another barometer of market sentiment, with its discount to underlying Ether holdings narrowing significantly, reminiscent of patterns observed before the approval of Grayscale’s Bitcoin Trust conversion.

Ether’s recent price surge, coupled with heightened probabilities of ETF approval, reflects growing optimism among investors. While the SEC refrains from commenting on specific filings, stakeholders eagerly await developments in this evolving landscape.

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Uniswap Labs, the innovator behind Ethereum’s leading decentralized trading platform, refuted the US Securities and Exchange Commission’s (SEC) allegations, contending that crypto tokens do not qualify as securities but are akin to file formats such as PDFs.

The New York-based startup rebuffed claims of operating an unregistered exchange and broker-dealer, following a Wells notice served by the SEC’s Enforcement Division last month, signaling potential legal action.

Marvin Ammori, Uniswap Labs’ Chief Legal Officer, emphasized during a Zoom press conference, “Tokens are simply a file format for value and are not inherently securities. The SEC must unilaterally redefine exchange, broker, and investment contracts to encompass our operations.”

In a detailed 40-page response to the SEC, Uniswap Labs asserted that pursuing legal action against them poses risks to the SEC’s authority over crypto tokens. The company expressed readiness to litigate, confident of prevailing.

SEC Chairman Gary Gensler’s stance that decentralized exchanges fall under regulatory oversight has been challenged by Uniswap Labs, which argued that UNI tokens, serving as Uniswap’s governance token, do not meet the Howey Test requirements for investment contracts.

Additionally, Uniswap Labs refuted the classification of LP tokens as securities, clarifying that these tokens function as accounting tools to monitor users’ provided assets and earned fees, rather than serving investment purposes.

Uniswap Labs’ response underscores the ongoing debate surrounding the regulatory status of digital assets and decentralized exchanges, highlighting the evolving landscape of crypto regulation.

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