Summary:
Judge Orrick states crypto assets are not securities in SEC vs. Kraken case.
Former SEC Chair Gensler strengthens agency’s crypto litigation team.
XRP sees a decline of 2.74% amidst market downturn.
Bitcoin holds above $100K despite selling pressure from executive orders.
Senator Lummis proposes acquiring one million BTC through the Bitcoin Act.
On January 24, Judge Orrick, presiding over the SEC vs. Kraken case, made significant comments regarding the classification of crypto assets. He stated:
“The SEC refers to these assets as the ‘Kraken-Traded Securities.’ As I made clear in my previous order, I will not entertain any theory of liability wherein the SEC asks this court to treat the crypto assets themselves as though they are securities. I am considering the theory that those crypto assets, once sold/traded/exchanged on the Kraken Trading Platform, are investment contracts that form the basis for securities. I will warn the SEC once more to be careful of this distinction.”
This aligns with Judge Torres’ position that crypto assets themselves are not securities. Judge Orrick will apply the Howey test to determine if the trading of cryptos on Kraken constitutes an investment contract, dismissing the SEC's broader classification.
Former SEC Chair Gensler’s Pre-Departure Moves Challenge Withdrawal Hopes
The latest remarks from Judge Orrick highlight the challenges faced by Acting Chair Uyeda in managing the agency’s crypto litigation. Before his departure, former SEC Chair Gary Gensler bolstered the agency’s legal enforcement division, promoting experienced crypto litigators. This suggests the SEC will continue its efforts to classify cryptos as securities despite an overhaul.
XRP Price Trends:
On January 26, XRP fell 2.74%, closing at $3.0226, underperforming the broader crypto market, which dropped by 2.31%.
Explore our expert analysis on the SEC’s next moves and their implications for XRP’s future.
Bitcoin Holds Above $100K:
Meanwhile, Bitcoin (BTC) is facing selling pressure amid investor reactions to President Trump’s executive orders. On January 23, Trump signed an order establishing the Presidential Working Group on Digital Asset Markets, tasked with evaluating a strategic national digital assets stockpile.
This order did not specifically mention a Strategic Bitcoin Reserve (SBR), leaving uncertainty regarding BTC’s status as a strategic reserve asset. Attorney John E. Deaton emphasized the procedural differences between a stockpile and an SBR:
“What’s your definition of a SBR? President Trump, via EO, can order that all seized BTC (or any other seized digital asset for that matter) be held in escrow and not sold. If you call that a SBR, then I’m confident we get one.”
The Bitcoin Act: Work in Progress
Senator Cynthia Lummis introduced the Bitcoin Act, proposing that the US government acquire one million BTC over five years with a mandatory holding period of 20 years. Approval depends on consensus among Congress, the Federal Reserve, the Treasury Department, and the President, highlighting the need for a Presidential Working Group to support an SBR.
Anthony Scaramucci speculated about a potential US SBR, suggesting:
“They’ll probably buy another four or five hundred thousand BTC. Let me tell you why I think it will happen. Trump wants it to happen.”
Despite BTC's struggles, US BTC-spot ETF inflows reflect market optimism regarding a potential SBR. The week ending January 24 saw net inflows of $1,758 million, totaling $15,704 million since Trump’s election.
Bitcoin Price Outlook
On January 26, BTC declined by 2.09%, closing at $102,656, but has maintained above $100K for six consecutive sessions. The demand for BTC suggests confidence in a potential US SBR. The price trends of BTC will largely depend on the developments surrounding Trump’s executive orders and BTC-spot ETF flows, with potential for BTC to surpass its record high of $108,231 if progress toward an SBR continues.
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