The Week After the Securities and Exchange Commission Paid fee JPMorgan Chase lashes out against Kim Kardashian (allegedly) for illegally promoting cryptocurrencies
The problem goes beyond traditional securities and banking regulation. They are also influencing the newly formed fintech industry.
It’s entirely possible JP Morgan was trying to avoid political controversy by removing Kanye West as a client, but exactly what West did to anger JP Morgan remains unclear. (For what it’s worth, it looks like JP Morgan sent a letter to Ye before his recent controversial comments. ) perhaps All clickbait headlines He started an amazing anti-inflation tirade at JP Morgan headquarters.
whatever the reason, JP Morgan and West want to cut tiesit is between them.
But some people are not surprised suspect political motives Could be behind the breakup. (Between JP Morgan and Ye, not Kim and Ye.) Again, I really don’t know what happened.
Federal regulators can eventually cancel the federal deposit insurance of banks and close them down.For example, regulators may decide that loans to fossil fuel companies are reputation at risk or by doing so Unsafe or Unsound Behavior, they can force the bank to change the counterparty. They have enormous power to do so.
This kind of influence has excited many climate change activists, but it needs to be reconsidered.As soon as people with different views run an agency, the exact same powers can be used to target popular activities today. When Activist.United States Leading most developed countries down the same path for decadesdownplays basic principles in the name of preventing mistakes, financial crises, money laundering, tax evasion and terrorist financing.
Federal regulators could easily use their powers to target groups involved in constitutionally protected political protests. (Fourth Amendment protection, e.g., badly boned.)
The details of Kim Kardashian’s accident are a little different. capital market regulator.
As reported by wall street journalThe SEC believes Kim Kardashian violated securities laws when he used his Instagram page to promote a crypto token (EMAX) by failing to disclose that he was paid $250,000 for the post. I’m here. After her post, EMAX lost most of its value.
To be more specific, the problem wasn’t that EMAX plummeted or that Kim advertised a crypto token that is security (according to the SEC).the problem is she did not disclose She was being paid to promote EMAX.
their Wall Street Journal articleLaw professors M. Todd Henderson and Max Ruskin explain:
Section 17(b) of the Securities Act of 1933 requires persons who advertise the sale of securities to disclose their remuneration for such sale. The SEC aggressively enforces this no-advertisement rule, filing lawsuits against people who publish perfectly accurate Internet posts about companies in exchange for undisclosed gains.
On the other hand, if Kim Kardashian didn’t disclose that she was getting paid, it would appear to be a clear violation of securities laws. On the other hand, this law seems strange. no similar law Prevent celebrities (or anyone else) From a bank that sells regularly gambling services.
Also, like Henderson and Ruskin Point out:
SEC jurisdictional restrictions allow the SEC to track her down. [Kim Kardashian] And Floyd Mayweather, Crypto.com’s Matt Damon Super Bowl ad, part of a $65 million campaign, escaped enforcement because it was promoting the platform, not its security.
Leaving aside all these technical and legal arguments, and ignoring whether securities laws provide a false sense of security, the bigger issue here is whether federal officials are trying to discourage people from making “bad” investment choices. Having overly broad discretionary powers to act in the name of “protecting”… In other words, the guiding principle behind federal securities law is that federal authorities should not allow Americans to make mistakes and lose their money. This means that the SEC must prevent the loss of Far beyond fraud prosecution.
Congress should not have given securities regulators so much discretion and should not have enacted securities laws based on these principles. The same criticism applies to US banking law. But what Americans have is a complex web of rules and regulations that blunt innovation, competition, and the ability to raise private capital.
so parliament should do it Instead, these same ideas and the same pernicious consequences are being deployed now as the House tries to make new ones. stablecoin legislation.
Financial Services Commission Chairman Maxine Waters (D-California) and ranking member Patrick McHenry (Republican-North Carolina) have been negotiating a bill to regulate stablecoins for months. Negotiations seem to have broken down Based on the discussion draft, it’s probably a good thing.
During DC Fintech Week, Yahoo! McHenry reported told his audience “this [the bill] It doesn’t look like a modern regulatory regime. It actually looks pretty backwards. ” he then characterized “The current state of the law as an ‘ugly baby,'” he added, adding, “It’s still a baby and we want it to grow and thrive into something more attractive.”
me and my companion A Cato scholar wrote in early October“The best part of the draft is that the House is not seeking to enact a presidential working group recommendation to … ‘require stablecoin issuers to be insured depository institutions.’” But the problem is , parliament is debating What assets should a stablecoin be backed by, who can hold a stablecoin, what people can do with a stablecoin in their digital wallets, and which regulator should be held responsible.
Congress should make laws to protect Americans from fraud and theft. However, that goal does not require Congress to dictate which assets can legally back stablecoins. Let fintech companies and other financial institutions experiment and let people risk with their own money. Most people wouldn’t use something called a stablecoin if it wasn’t stable.
Moreover, Congress should not shield legacy companies and most connected start-ups from competition. That’s how free enterprise fails, not the best way for the greatest number of people.
The idea that Congress and other groups of federal officials know how best to create a stable and secure asset is far less than a stable and secure market is completely false. . History proves the opposite to be true. Countless government regulations create and escalate stability and safety issues.
Hopefully, McHenry’s wish will come true and Congress will introduce a more attractive bill.
Unfortunately, unless Congress changes its fundamental approach, the results are nothing more than wishful thinking. But this time a failure could leave the U.S. payments system stuck somewhere in her 20th century, while the rest of the world is ahead. With or without Kim and Ye.