blockchain tipsheet

TradFi backing crypto

Calling itself a “first-of-its-kind digital asset marketplace designed to enable safe and compliant trading of digital assets through trusted intermediaries,” EDX Markets launched yesterday with backing from a number of traditional finance (TradFi) players such as Charles Schwab, Citadel Securities and Fidelity Digital Assets. Read the release.

Is this another Bakkt, which is backed by the New York Stock Exchange’s parent, ICE?

The Wall Street Journal breaks down the new entrant: “One major difference: EDX is a ‘noncustodial’ exchange, meaning it doesn’t directly handle its customers’ digital assets. Instead, EDX runs a marketplace where firms agree to execute trades of coins and dollars, using its platform to agree on prices. Then the firms move crypto and cash between each other to settle the trades. Later this year, EDX plans to launch a clearinghouse to facilitate the process of settling trades, but even then…” Read more.

Collins Belton of Brookwood P.C. commented on Twitter about the announcement, “Not surprising but a few takeaways: 1. Recreates exchange / broker split of TradFi. Good for mitigating risk of customer funds abuse; but arguably some needless intermediation + higher fees…” Read the others. Continue reading “EDX Markets Collects TradFi Interest In Crypto; Feds Target Darknet’s Digital Currency”

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. Continue reading “BlackRock Bitcoin ETF Reaction; CoinDesk Launches DC Event”

Prometheum – post-hearing buzz

Ever since Tuesday‘s House Financial Services (HFS) Committee meeting on the market structure and stablecoin bills, the participation of Aaron Kaplan, Founder and Co-CEO of alternative trading system Prometheum, has been the talk of Twitter. His support of the Securities and Exchange Commission’s (SEC) approach to digital asset regulation, i.e. enforcement, and his company’s business model are getting the “side eye.”

The top line is: what is really behind the strategy for the Prometheum trading platformm which doesn’t even trade Ethereum or Bitcoin? Did Democratic HFS members not realize what they were stepping into with Prometheum? Some of Kaplan’s answers felt scripted… by someone not Kaplan.

Beyond Rep. Mike Flood (R, NE) admonishment of Kaplan at Tuesday’s hearing, Matt Walsh of crypto venture firm Castle Island breaks down the mystery in a Twitter thread that has seen nearly 3.5 million views as of publication.

Walsh begins: “In the midst of the SEC bringing cases on Coinbase + Gemini, and giving the stiff arm to Robinhood and others, Prometheum gets approval for a first-of-its-kind Special Purpose Broker-Dealer (SPBD) for digital asset securities… Then Prometheum’s CEO somehow gets a seat in front of Congress yesterday and starts reading off pre-written notes clearly coordinating narratives with Democratic members of Congress (or the SEC).”

Prometheum – scripting

The Prometheum mystery is reminiscent of the SEC’s Investor Advisory Committee and it’s April 6 letter which neatly (or clumsily) recommended to SEC Chair Gary Gensler that his agency continue to do exactly what it’s doing with its digital assets strategy of regulation by enforcement. This was in spite of a healthy list of committee members who must have some differing opinions including IAC’s Chair, Christopher Mirabile, who said he supported a regulatory framework for digital assets in December. Read more about it. Continue reading “Prometheum’s Hearing Appearance Getting Scrutiny; Polygon’s New Use Case Database”

FSOC, stand down please

House Financial Services (HFS) Chair Patrick McHenry (R, NC) wasted no time after his HFS committee hosted U.S. Treasury Secretary Janet Yellen on Tuesday.

Yesterday, he sent Secretary Yellen a letter that began, “I am writing to express my strong concerns with actions taken by the Financial Stability Oversight Council (FSOC) this past April seeking to make it easier to subject nonbank financial companies to prudential supervision by the Federal Reserve. The actions are contrary to the due process protections afforded by the Constitution and mark a sea change in the longstanding principles the Council uses to review these entities.” See the letter.

McHenry wants Secretary Yellen to “revisit [FSOC’s] April decision to evaluate risks posed by non-bank financial entities based on size, rather than the activities they undertake.” Read the release.

And, read the U.S. Treasury press release for “Financial Stability Oversight Council Meeting on April 21, 2023.”

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Meanwhile, Politico reports that McHenry wants to put the market structure bill up for a vote after July 4 in spite of Democratic push back. Read a bit more. Continue reading “McHenry Requests Secretary Yellen Rein In FSOC; Flyover Fintech In August”

Hinman on crypto -or not

At long last, “certain documents” from William Hinman, the former director of the U.S. Securities and Exchange Commission (SEC)’s Division of Corporation Finance from 2017 to 2020, have been released. Amidst the Ripple lawsuit by the SEC, pro-Ripple forces believe his public statements around what makes a cryptocurrency a security were misguided and, indeed, disputed internally at the SEC.

The story starts with a speech Hinman made in 2018 at a “Yahoo Finance All Markets Summit: Crypto.” See it.

“Prior to making the speech, Hinman said in an email to multiple SEC employees that the speech suggests ‘we do not need to see a need to regulate Ether, as it is currently offered, as a security,'” according to The Block, which concludes, “The public release of the Hinman documents may ignite a significant debate about the classification of cryptocurrencies as securities…” Read more.

The upshot of the Hinman notes from pro-crypto forces: Congress needs to step up with regulation. Continue reading “Hinman Documents Released; Market Structure Bill Seeks Bipartisan Support”

Gensler – speaks

In a speech before the Piper Sandler Global Exchange & Fintech Conference in Washington, D.C., Securities and Exchange Commission (SEC) Chair Gary Gensler gave perhaps his most prolonged defense of the his position on crypto and its oversight – which is especially relevant given last week’s enforcement actions against Binance and Coinbase.

On staking-as-a-service, which has been popularized on the Ethereum blockchain, he sees only a security: “It doesn’t matter what kind of assets investors put into a lending or staking-as-a-service platform-cash, gold, bitcoin, or anything else. It’s what the intermediary says that they are going to do with the assets that determines what protections are provided by the law. Customers invest their assets with the platform, which then onlends them or pools and stakes them, in each case promising a return. These are classic securities, irrespective of whether crypto is involved.” Read the speech. Continue reading “Gensler Makes Impassioned Crypto Speech; House Republicans Seek His Removal”

tomorrow’s hearings

With the United States digital assets ecosystem in the dumps following the Securities Exchange Commission’s (SEC) lawsuits against Coinbase and Binance, tomorrow’s House Financial Services hearings could offer some uplifting highlights.

Morning – At the 10 a.m. hearing, what’s Treasury Secretary Janet Yellen thinking about digital assets legislation? She told CNBC last Thursday she wants to see legislation. To which some Members may ask at tomorrow’s hearing,  “What exactly are you looking for, Madame Secretary?” See the hearing page. The Committee Memorandum notes that particular focus will be on the International Monetary Fund (IMF).

Afternoon – Beginning at 2 p.m., the stablecoin (PDF) and market structure (PDF) bills being pushed forward by Republicans will be the subject of the afternoon hearing.  See the hearing page.

tomorrow’s hearings – Dems

The big question is where House Democrats will land on these bills. Continue reading “Digital Market Structure And Stablecoin Hearing Tomorrow, RFIA Returns This Month”