SEC vs BNB

News broke Monday, June 6th that SEC will be investigating Binance's BNB token ICO launch from 2017. They will try to determine if the token should have been registered as a security with regulators. The public hasn't been able to obtain much more information around the situation since it remains an ongoing investigation.

BNB is the 5th largest cryptocurrency by market cap, hovering around $47 billion. The price of BNB dropped below $300 into the $270's but recovered most of its gains the following day.

It is unclear how long investigations will last or what they will lead to. Situations like these can take several years to resolve. One prime example is Ripple's XRP lawsuit that started late 2020 and is still going on to this day. This has not deterred Binance as they continue to expand licensing in countries all over the world. Binance's cooperation with previous authorities and countries gives hope for them to set the standard for other exchanges and ICOs relatively fast.

Reuter's hits and Binance hits back

The same day as the SEC investigation news, Reuters published an article claiming that Binance was responsible for allowing over $2 billion in money laundering and illicit funds. The article goes into several situations relating to hacking groups and darknet marketplaces.

The full article can be read here

The founder and CEO of Binance, Changpeng Zhao, was quick to respond with numerous tweets and statements on the article and the entire situation leading up to this day.

The next day Zhao touched on a comparison of illicit crypto vs illicit fiat activities stating

Zhao remains focused on bringing the best service to as many people as possible in the world of crypto. He has gotten overwhelming support from the Binance and crypto community on social media during these turbulent times.

Senators Introduce Bill for better crypto oversight

Tuesday morning, senators Kirsten Gillibrand and Cynthia Lummis revealed a Bill bringing to light many questionable areas in crypto. The bill will clarify several areas, including definitions of various cryptocurrencies, stablecoin regulations, department jurisdiction and taxes.

Some of the key aspects to the proposed bill:

• Stablecoins: Will have to be 100% backed by issuer

• Classification: Assets like Bitcoin and Ethereum will be consider commodities and regulated by the CFTC

• Taxes: transactions under $200 won't be taxable

Listen to the senators thoughts on this CNBC interview

Assessing the risks

Recently stablecoins have come into public eye after the collapse of LUNA and UST which lost investors billions. The regulations proposed will allow for more transparency from these issues of tokens. Crypto can be a confusing obscure place to invest, but with new regulations, institutions and individuals will be able to better assess the risks.

The fear of many is that regulations will hinder growth by raising the barrier to entry. Another perspective looks at institutional investors having the opportunity to bring new money into the system. Since barriers to entry and transparency will be higher, it will demand better, higher quality projects.

At this point it's still speculation, since Bills take many months or years to finalize.

Ropsten Testnet Merge

Ethereum has taken another key step towards its long awaited upgrade. Known as "the merge" or "ETH 2.0", Ethereum will soon change drastically. The upgrade will change ETH from Proof-of-Work to Proof-of-Stake blockchain which will significantly reduce the energy consumption on the network.

A quick difference between Proof-of-Work vs Proof-of-Stake

POW: In order to secure the network and put more tokens into circulation, miners use computing power to try and guess the next block on the chain. This is similar to the way Bitcoin operates. This however, requires massive amounts of energy consumption and requires expensive hardware to get up and running.

POS: Staking is a method of securing the network that involves miners/validators putting up tokens as collateral. Validators then earn interest and a fee for securing the network. This uses significantly less energy and will only require someone to have 32 ETH to become a validator and earn interest.

A high risk endeavor

Ethereum is live network supporting applications that transact billions of dollars a day. To make sure that nothing goes wrong, the development team needs to successfully merge several testnet chains.

The Ropsten network was successfully moved over to a POS and gives high hope for the mainnet. Hopefully within the near future, Ethereum will finally be ready for the highly anticipated upgrade.