House Republicans are accusing SEC Chair Gary Gensler of political favoritism in hiring, and allege that senior roles at the SEC were filled based on political affiliations. Meanwhile, the UK has introduced a bill to classify crypto as personal property, and the UAE has streamlined its crypto licensing by integrating Dubai’s Virtual Assets Regulatory Authority (VARA) with the Securities and Commodities Authority (SCA). In Brazil, Nubank suspended trading of its native crypto, Nucoin (NUC), after a 97% price drop in the past year.
Gary Gensler Accused of Political Favoritism
House Republicans are scrutinizing SEC Chair Gary Gensler, and are accusing him of potentially violating federal law by hiring based on political affiliations. In a letter dated Sept. 10, GOP lawmakers Jim Jordan, Patrick McHenry, and James Comer claimed the Securities and Exchange Commission (SEC) filled senior roles with people from left-leaning organizations.
Screenshot of the letter accusing the SEC of hiring based on political affiliations (Source: Judiciary House)
They specifically referenced email correspondence that surfaced in an SEC rulemaking comment, which they believe shows Gensler’s hiring of Dr. Haoxiang Zhu, the SEC’s director of trading and markets, may have been politically motivated. The lawmakers also referred to emails from May of 2021 in which Zhu reportedly mentioned to Gensler that he was "in the right place on the political spectrum," after which Zhu was hired six months later in November 2021.
The letter suggests that the SEC might be unlawfully considering political ideology when hiring, which breaches the Civil Service Reform Act. The lawmakers have requested all documents and communications related to SEC hiring decisions, as well as any evaluations of applicants' political affiliations, dating back to April of 2021. Gensler has also been given a deadline of Sept. 24 to provide these materials to the House Judiciary Committee.
Gensler’s tenure has been riddled by aggressive enforcement actions against crypto firms, with a record 46 actions in 2023, which was double the number from 2021. These actions have drawn a lot of attention in political circles, with former President Donald Trump even pledging to remove Gensler from office if he wins the upcoming presidential election.
Gensler was a Biden nominee, and would typically be expected to resign if there’s a shift in presidential leadership. So far, the SEC has not responded to the requests for comment on the allegations made against it.
UK Introduces Bill to Classify Crypto as Property
Meanwhile, the United Kingdom has introduced a new Property Bill that is aimed at determining whether Bitcoin (BTC), cryptocurrencies, and non-fungible tokens (NFTs) can be considered personal property under UK law. The legislation was announced on Sept. 11, and will create an additional category for property, classifying digital assets as "things" under UK law.
The bill wants to clarify the legal status of digital assets, including carbon credits, while offering legal protection against fraud and scams. It will also help courts manage complex property cases involving digital holdings, like those related to asset division in divorce cases.
Labour MP and Minister of State Heidi Alexander believes it is very important to update laws to keep pace with technological advances. This could also position the UK as a global leader in crypto assets.
The proposed law stems from a report that was commissioned by the Ministry of Justice in 2023. The report identified that some digital assets do not fit into existing property categories but are still treated as personal property under English and Welsh law.
Report findings (Source: Law Commission)
This legislation is one of the first moves by the Labour government to address digital asset policies since taking office after the July 4 election. However, due to parliamentary recesses and party conference season, experts suggest that any major progress on crypto legislation may still be delayed for several months.
Meanwhile, in the United States, a similar shift could happen after the 2024 election, which could result in changes to the control of the Presidency, House of Representatives, and Senate.
UAE Streamlines Crypto Licensing
The United Arab Emirates (UAE) has taken a big step toward regulatory cohesion in the crypto sector with a new cooperation agreement between the Securities And Commodities Authority (SCA) and Dubai’s Virtual Assets Regulatory Authority (VARA). The agreement aims to streamline the licensing regime for virtual asset service providers (VASPs) across the country.
VASPs licensed by VARA in Dubai will now be registered with the SCA, which will allow them to service the wider UAE. However, those operating outside Dubai still have to obtain a separate license from the SCA.
The agreement outlines mutual supervision of crypto providers, covering areas like penalty imposition, information sharing, and employee training. His Excellency Helal Saeed Al Marri, Chairman of VARA’s executive board, said the collaboration ensures efficient passportability of regulated services while still providing market risk assurance across the UAE.
His Excellency Mohamed Ali Al Shorafa, Chairman of the SCA, believes it is important to foster growth and stability in the virtual assets sector, with more focus on enforcing Anti-Money Laundering (AML) laws.
In addition to this regulatory cohesion, the UAE’s judicial approach to crypto also saw a major development in August. The Dubai Court of First Instance recognized crypto as a valid form of payment under employment contracts. This, coupled with other pro-crypto measures, has led the UAE to rank third globally in crypto adoption, according to a study by Henley & Partners. This also allowed it to surpass countries like the United States.
Nubank Stops Trading Nucoin
Nubank, one of Latin America’s largest crypto banks backed by Warren Buffet’s Berkshire Hathaway, has suspended trading of its native cryptocurrency, Nucoin (NUC). The decision was made after a massive price drop of over 97% in the past year.
The suspension was announced on Sept. 10, and customers with at least 10 reals in Nucoins have been given the option to convert them to Bitcoin or stablecoin USDC by Dec. 9. If no action is taken, the cryptocurrencies will remain for potential future benefits in the bank’s rewards program. Nubank shared that market volatility is the reason for the immediate suspension.
Nucoin was launched on the Polygon blockchain in October of 2022, and had an all-time high price of $0.59 in April 2022. However, the price of the crypto has since fallen to $0.0158.
NUC’s price chart since launch (Source: CoinMarketCap)
Nubank introduced its cryptocurrency services in May 2022, and allocated 1% of its assets to Bitcoin, as well as partnered with Paxos to enable crypto trading for its customers. By July of 2023, Nubank had 100 million customers across Brazil, Mexico, and Colombia, offering 14 cryptocurrencies in addition to Nucoin.
In a broader context of Latin American crypto adoption, Argentina has emerged as a key player because of its extreme inflation rate of 276%. A Forbes report revealed that Argentina accounted for 2.5 million visitors to major global exchanges in 2023.
However, distrust of traditional banks is still very prevalent, leading many Argentinians to store physical cash. Despite these challenges, fintech firms are driving a revolution in financial inclusion across Latin America, Asia, and parts of Africa. This is why regulatory reform is seen as essential when it comes to building consumer trust in these financial systems.
