BlackRock and bitcoin
Some rare, seemingly, good news in a ravaged crypto economy emerged on Thursday and Friday as BlackRock’s S-1 filing became public for its iShares Bitcoin Trust ETF (Exchange Traded Fund).
According to The Wall Street Journal, BlackRock aims to make its product “the first ETF with the cryptocurrency itself as the underlying asset, rather than futures contracts.” Will this time be different as a dozen companies have tried to register a similar ETF in the past? CoinDesk thinks BlackRock’s surveillance sharing agreement with NASDAQ is the difference maker. Read that one.
BlackRock and bitcoin – reaction
Genesis Head of Market Insights Noelle Acheson tweets her provocative take on the BlackRock ETF filing saying: “BIG news – BlackRock is the world’s largest asset manager; It’s not going to happen; BlackRock knows this; Rather, it is sending a political message; Larry Fink is a prominent Democrat.”
Policy expert Justin Slaughter at investment firm Paradigm reviews Acheson’s take and doesn’t see political intrigue. He begins, “So, I respectfully disagree with Noelle on this one. I think BlackRock is doing this on the merits (seeking to get a bitcoin ETF approved) rather than trying to send a political message. Bear with me, because this is complicated in terms of Democratic politics.” Read Slaugther’s tweet thread.
Later in the thread, he offers a compelling insight on Democrats, “There was a point when I thought a lot of the critics of finance in the Democratic Party would see crypto as an ally against large financial institutions. It’s a story for another day, but that potential alliance seems unlikely now. Instead, it looks like crypto will be vouched for as a ‘real’ industry to Democrats by other parts of finance rather than by financial reformers…”
North of the border, investor and Twitter gadfly Adam Cochran perceives a tectonic shift underway with the BlackRock ETF announcement tweeting: “The largest money manager in the world, with the most politically connected banker in the world, does not simply decide to wake up one day and taking on a losing fight. They lay ground work, call in favors, and shift entire political tides to make it happen.”
Bitcoin ETF: Definition, How It Works, and How to Invest – Investopedia
Doubling down on his sharp rebuke of Securities and Exchange Commission (SEC) Chair Gary Gensler during last week’s House Financial Services (HFS) Committee meeting, Rep. Ritchie Torres (NY), a Democrat, tweeted on Friday, “As I pointed out during a [House Financial Services] hearing this week, members of Congress are elected by and accountable to the American people. We should be the ones deciding the future of regulating digital assets and other emerging technologies like cryptocurrency. Not unelected bureaucrats.” See a video of his HFS statement.
SEC vs Binance
The SEC did not get the TRO (Temporary Restraining Order) it originally requested against cryptocurrency exchange Binance’s US-based subsidiary Binance.US. Instead, according to a mutually-agreed upon proposal, “Binance.US will take steps to make sure that no officials from Binance Holdings, the global exchange, have access to private keys for wallets or hardware wallets, or root access to Binance.US’s Amazon Web Services tools,” according to CoinDesk. Read more. Next step is a District Court judge’s approval.
A Binance spokesperson told the Wall Street Journal, “Although we maintain that the SEC’s request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms.”
Securities Clarity Act
In an opinion piece in Forbes, Lehman College professor Sean Stein Smith argues that the Securities Clarity Act (SCA) re-introduced in the U.S. House of Representatives in May by Majority Whip Rep. Tom Emmer (R, MN) and co-sponsored by Rep. Darren Soto (D, FL) is a step in the right direction for digital assets regulation. “What the SCA would accomplish is create a crypto-specific, unique, and repeatable framework for organizations seeking to issue tokens to work within while entering into dialogue with the SEC.” Read his thesis.
Policy expert John Rizzo at communications firm Clyde Group warns those who seek to ban crypto that it’s simply not gonna happen. In an op-ed in CoinDesk, he writes, “U.S. policymakers can either find a way to make crypto and blockchain technology work in the U.S. or follow Gary Gensler on the fast lane to nowhere.” In spite of the SEC’s current regulation by enforcement approach, Rizzo thinks the U.S. will catch up with its own digital assets framework eventually. Read why.
Hester Peirce updates
On the Unchained podcast, SEC Commissioner Hester Peirce addresses a range of subjects on digital assets regulation. Offering a 30,000-foot view, she opines on the role of the regulator saying, “I’m someone who comes to regulation with a view that the American people should be free to do their own thing and make their own decisions. There are times when regulators have to step in. We have a regulatory framework which I have an obligation to uphold because Congress gave it to us and told us to do it.”
She continues, “But, we should also not be in a world where the government is making merit-based decisions about what people can and cannot do. That’s where I feel that we’re in a world where we’re using regulatory ambiguity to prevent people from doing things that they want to do. I don’t see why I should step in ahead of that. As a regulator, I need a reason to step in. We’re just not approaching this in a way that I think is the best…” Hear it.
Jack Dorsey’s Block (formerly Square) has rolled a new self-custody wallet solution called BitKey with Block’s own CashApp and Coinbase as its first integrations. Coinbase’s blog provides its perspective on the new partnership saying, “Bitkey’s mission is to empower the next 100 million people to truly own and manage their money with bitcoin, without the friction and anxiety that has historically existed around the transition to self-custody and true ownership. This alliance is a key step towards our goal of powering the bitcoin economy.” Read the post.
At a very high level, a centralized exchange promoting self-custody might seem odd. But, Coinbase argues its own success resides in a mission “to provide people with more economic freedom and opportunity.”
How To Take Self-Custody Of Crypto Assets – Real Vision
CoinDesk is bringing its event business to Washington, D.C. on October 23 with “State of Crypto: Policy and Regulation.” See the landing page. The event will be held at Convene and supported by a “State of Crypto: Policy and Regulation 2023 Advisory Board.” Executives from PayPal, Google, Goldman Sachs and Citigroup are among its members. See if you’re on it here
Commodity Futures Trading Commission’s (CFTC) next Market Risk Advisory Committee (MRAC) meeting will be July 10 said the agency in a press release. MRAC is sponsored by Commissioner Kristin Johnson and promises to address “current topics including central counterparty risk and governance, interest rate benchmark reform, market structure developments, climate-related risk, and innovative and emerging technologies affecting the derivatives and related financial markets.” Agenda is “forthcoming.”
On Coinbase response to SEC in court: “We couldn’t wait until our deadline next week to address the SEC’s response to the June 6 order from the Third Circuit. It is unusual for the government to defy a direct question from a federal court. But the SEC’s evasive response goes further, as we set out today…” – Paul Grewal, CLO, Coinbase on Twitter
On new Master Account and Services Database from Federal Reserve Bank (FRB): “Database of pending requests for FRB master accounts. What a great law from @SenToomey – bunch of T3 firms I had never heard of!!” – Zach Wong on Twitter
still more tips
He Went After Crypto Companies. Then Someone Came After Him. – The New York Times
BIS, Bank of England complete CBDC trial using blockchain – Ledger Insights
Courts Put Privacy Over Transparency in FTX, Other Crypto Bankruptcies – The Wall Street Journal
Opinion: Is Crypto Dead? Or can the industry recover? – The Atlantic
Trading teams at Singapore-based exchange Crypto.com raise conflict questions – Financial Times
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