The Securities and Exchange Commission (SEC) in the United States has deemed recent applications for spot Bitcoin exchange-traded funds (ETFs) as inadequate. The regulator notified the Nasdaq and the Chicago Board Options Exchange that their filings were not “sufficiently clear and comprehensive.” The main issue cited was the lack of information regarding the proposed surveillance-sharing agreement. However, asset managers have the opportunity to resubmit their applications with the necessary details.
One investment firm that appears to be ahead in the race for a spot Bitcoin ETF is ARK Investment Management, led by Cathie Wood. ARK still has a previous application pending with the SEC and has recently amended it to include a surveillance-sharing agreement, similar to BlackRock’s filing. Other investment firms, such as Valkyrie, WisdomTree, and Invesco, have also reapplied for spot Bitcoin ETFs since BlackRock’s application on June 16.
In other news, Binance, one of the largest cryptocurrency exchanges, informed its users that its current euro banking partner, Paysafe Payment Solutions, will no longer support the exchange after September 25. Binance plans to switch to a new service provider for euro deposits and withdrawals via SEPA bank transfer, although it hasn’t disclosed which provider it will be. Binance has been facing regulatory backlash in various countries, which has led to a cessation of operations in some regions.
Meanwhile, FTX, a cryptocurrency exchange, has recovered approximately $7 billion in liquid assets so far and continues to search for additional assets, according to an interim report released on June 26. However, the extensive commingling of funds has complicated the recovery efforts. The FTX Debtors estimate that around $8.7 billion of customer assets were misappropriated, with the majority of the money being in fiat and stablecoins. The report alleges that the former FTX leadership deliberately misused customer deposits.
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In another development, Teneo, the liquidator behind bankrupt hedge fund Three Arrows Capital (3AC), is seeking to recover approximately $1.3 billion in funds from its founders, Su Zhu and Kyle Davies. The debt was reportedly incurred when 3AC was already insolvent, further increasing the losses for creditors. The total debt owed by the company is $3.5 billion, making the potential liability for the founders more than a third of the total debt. The whereabouts of Zhu and Davies are currently unknown, delaying the liquidation process.
In the cryptocurrency market, Bitcoin (BTC) is currently trading at around $30,418, while Ether (ETH) is at $1,928 and XRP is at $0.47. The total market cap stands at $1.19 trillion. The top three altcoin gainers of the week are Compound (COMP) with an 84.33% increase, Bitcoin Cash (BCH) with a 63.16% increase, and eCash (XEC) with a 44.59% increase. On the other hand, the top three altcoin losers of the week are Conflux (CFX) with a -22.38% decrease, Sui (SUI) with a -15.41% decrease, and Stacks (STX) with a -14.81% decrease.
In terms of notable quotations, Mel McCann, the vice president of engineering at the Cardano Foundation, commented on the ultimate blockchain, saying that it doesn’t exist as it depends on various factors. Hester Peirce, commissioner of the SEC, called for a rethinking of how innovation is approached in the cryptocurrency space, stating that the current approach doesn’t reflect the potential of crypto. Meltem Demirors, the chief strategy officer at CoinShares, highlighted that many major financial institutions in the US are actively working to provide access to Bitcoin, showing growing adoption. Davinci Jeremie, a crypto advocate, discussed the potential for individuals to become wealthy through investment in Bitcoin, noting that it has made poor people rich. Simon Callaghan, the CEO of Blockchain Australia, criticized the regulatory approach known as “regulation by enforcement,” stating that it’s not effective.
In terms of predictions, Glassnode, an analytics firm, reported that Bitcoin short-term holders (STHs) are feeling the need to sell their BTC at $30,000. This trend indicates that speculative interest in Bitcoin remains fickle and sensitive to price movements. Once STH profitability reaches an aggregate 20%, selling typically begins, and any price above $33,000 could trigger a significant shift in hodler composition. Currently, STH profitability stands at around 10%.
Moving on to negative news, FTX has filed a lawsuit against a former executive, Daniel Friedberg, accusing him of making payments to prevent staff from blowing the whistle about regulatory issues and the close ties between FTX and Alameda. Over $204 million was lost in decentralized finance (DeFi) hacks and scams in the second quarter of 2023, according to a recent report. This represents a significant increase compared to the same period last year.
Lastly, crypto-friendly neobank Revolut is set to delist tokens like Cardano (ADA), Polygon (MATIC), and Solana (SOL) on its platform in the United States. This move comes as a result of regulatory developments and the SEC’s classification of these tokens as unregistered securities. However, Revolut will continue to support these tokens in other jurisdictions outside the US.
Overall, the cryptocurrency industry continues to face regulatory challenges and scrutiny, with the prospect of a spot Bitcoin ETF in the US still uncertain. Meanwhile, exchanges like Binance and FTX are dealing with their own operational and legal issues. Despite these obstacles, cryptocurrency adoption and innovation continue to grow, attracting interest from major financial institutions.
