I sit a bit pressed, uncertain what's upsetting me.
The clamor outside might be the result of haste. The phrase certainly rings true as I look down at the street below from my window. Traffic on our two way street brought out several inquisitive neighbors, as a crash resounded down the road.
One vehicle slipped away, while the other unable to move from the shattered front end, drags the hanging piece off to the side to clear the road. Another vehicle almost in adolescent defiance, drove onto the curb and around the ruckus only to pick up as it drove away. The involved parties can be heard and seen with papers, most likely discussing insurance matters.
If I had to guess what happened, I would say this: Oncoming traffic must bear off to the side, in order to allow the opposite direction egress. Think when you enter a doorway- one person must yield to the other, since the space doesn't allow passage side-by-side.
With vehicles though, the stakes are higher- for keeps. One side certainly did bear off to the left to let the other go, but the speed or the reaction- someone miscalculated a certain timing, so the one car leaning to one side to let the other go, collided with a parked car with a force so great, the front-end hangs off like an unclipped fingernail.
Adult decisions have adult consequences, I remember my college writing professor saying. I wonder who considers themselves a safe driver. I myself do not yet, but watch the roads and signs of the times to navigate nonetheless.
Take the resolution between the SEC and NEXO, the digital assets platform.
From one perspective, that of the investments firm, we hear the hopeful language: "landmark resolution". From the government body comes words along the lines of, "pay $45 million in penalties" and "cease unregistered offering". From the host of opinions and self-proclaimed pundits online, we do not hear a peep. Let's explore why so much has been said or even unsaid.
Social Media Mouthing Off
'Bad news makes headlines.' Unfortunately, the saliency of negative news provokes our bias. "Did you hear? XYZ dropped so much afterhours!" "It's rat poison." "I wouldn't go near that stuff." Everyone has something to chime in the event of a downturn or failure- perhaps a collective schadenfraude grips people. After all, evolutionarily, our awareness of danger maintains our safety- back then, it protected our lives. Yet, I feel social media won't chime in on this subject because there isn't an angle by which to grift or market their wares, "peddle their arts", as Musashi might have said. Why is the peanut gallery not uttering a peep?
This is good news.
The SEC and any firm coming to an agreement clears the air about regulation. Answering to the government bodies' challenge, NEXO acquiesced gracefully, suspending their product line, no longer offering it in the U.S. and other wise complying with the Commission's directives. It's nothing to write home about... unless you have an interest in the longevity of an industry ripe for as much disruption digital assets and ledger technology. In the manner that the Internet proliferates information in this day and age, so too will blockchain proliferate value for networks, individuals and applications we use today.
Nexo's Not Done Yet
The bulletin from the firm remained hopeful and with good reason. Here are the points of note, that form the basis for that optimism.
- The settlements are on a no-admit-no-deny basis.
- The sole allegation has been that Nexo’s Earn Interest Product (EIP) was an unregistered securities offering.
- This closes all multi-year-long inquiries into Nexo, looking at various aspects of the business, following the company’s voluntary decision to stop offering its EIP in the U.S., Nexo’s proactive exit from the U.S. market in an orderly fashion, and an agreement to pay a monetary penalty, payable over a 12-month period.
- The U.S. Federal Regulators do not contend that Nexo engaged in any fraud, or misleading business practices, or that any Nexo customers have been harmed or misled about Nexo’s financial health.
The last bullet point hammers home the significance. In their email, Nexo compared themselves to industry incumbents like Airbnb and Uber. Their disruptive nature riled up industries and even legislations, as Uber ended up in hot water in San Francisco.
The comparison holds in terms of potential, but Nexo differs from Uber's strategy to "seek forgiveness rather than permission".
Ultimately, meeting the SEC at their allegations and answering them with transparency bodes well for the firm, investors and the industry, a fact that many alarmists will attempt to diminish.
SEC Seizes the Pace
The SEC, in the interest of the common stakeholder, charged Nexo Capital Inc. with 'failing to register the offer and sale of its retail crypto asset lending product'. Nexo, without admittance or denial, agreed to pay penalties and cease the offering. Gary Gensler remained a staunch advocate for compliance, as an individual in his office would.1
“We charged Nexo with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors.”
“Compliance with our time-tested public policies isn’t a choice. Where crypto companies do not comply, we will continue to follow the facts and the law to hold them accountable. In this case, among other actions, Nexo is ceasing its unregistered lending product as to all U.S. investors.”
Gensler holds that legality is not a privilege, but an imperative. While some argue that legislation may 'kill' the industry, giving up America's role as the leader in global financial innovation, a word of temperance is encouraged. Nexo's response to the charges by the SEC indicate a volition and transparency from their side, suggesting the firm does indeed do good business. As is the duty of the SEC to protect stakeholders, their course of action remains somewhat expected. Gensler may be satisfied in his task to regulate innovative technologies, but I believe the general public may also rest assured Nexo stands among the 'golden eggs' of opportunity in today's age.
Watching the space and its developments remains a task for the interested, dedicated and risk tolerant. Yesterday's developments highlight that drawing media attention to volatility in investment portfolios may paint a myopic narrative, one that doesn't see better business continuing to build upon progress, step by step.
Post Summary
- Decisions have consequences, as is in driving and legal deliberation.
- Social media zooms in on bad news, to sell a story.
- Nexo rises to the SEC's challenge, a good sign for those serious about the industry.
- The SEC continues to do its duty to the public, checking out firms, making sure they're up to snuff.
Posted Using LeoFinance Beta