AlphaBriefing - Institutional Insights
Strategic Bitcoin Reserve (SBR) Funds Gaining Traction
On February 4, 2025, newly appointed crypto czar David Sacks announced that a bicameral crypto working group is evaluating the feasibility of an SBR, distinguishing it from traditional sovereign wealth funds. This initiative aligns with a proposal by Senator Cynthia Lummis, who introduced a bill in July 2024 advocating for the U.S. Treasury to acquire 200,000 bitcoins annually over five years, aiming for a total reserve of one million bitcoins—approximately 5% of Bitcoin's total supply. The funding for these acquisitions would derive from profits on Federal Reserve banks' deposits and gold holdings, with a mandated holding period of at least 20 years.
SEC Continues Shift Towards Pro Cryptocurrency Regulation
The SEC is scaling back its dedicated crypto enforcement unit, reallocating some of its more than 50 staff members to other divisions. Trump’s appointment of Paul Atkins as SEC Chair and Mark Uyeda as interim president signals a departure from the aggressive enforcement strategy pursued by former Chair Gary Gensler, who cracked down on the industry following the collapses and fraud scandals of 2022. SEC Commissioner Hester Peirce, a well-known crypto advocate, is now leading a task force that is reviewing the agency’s approach, prioritizing clearer token classification, revisions to custody rules, and a potential shift away from enforcement actions based solely on registration violations. Notably, the SEC still has ongoing cases against major crypto firms, including Coinbase, though expectations are growing that such actions may be reconsidered.
A Pivotal Year For Spot Traded ETF Expansion
With spot Bitcoin ETFs now firmly established, with many setting record inflows and outflows in recent weeks, industry leaders are pushing for approvals on funds that track Solana (SOL), XRP, and other altcoins. Franklin Templeton has already filed for a crypto index ETF, signaling that institutional appetite for diversified digital asset exposure continues to grow. Regulatory clarity under the new SEC leadership could pave the way for multiple new approvals, bringing an estimated $30 billion in additional investments into the space. However, challenges remain—futures markets for these assets, a key precedent for SEC approval, are still developing, with firms like VolatilityShares and ProShares racing to establish SOL and XRP futures ETFs.
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U.S. Banks Offering Crypto Custody Services Signals Shift
Historically, strict regulatory measures like the SEC’s Staff Accounting Bulletin 121 (SAB 121) have discouraged banks from entering the crypto custody space by requiring them to report digital assets as liabilities on their balance sheets. Under Trump’s administration, the appointment of pro-crypto figures such as Paul Atkins as SEC Chair and David Sacks as the White House lead for digital assets is driving a more permissive regulatory environment. Atkins and Sacks are expected to push for the repeal of SAB 121, which could significantly lower compliance costs for banks and remove a key obstacle to widespread crypto custody adoption. Additionally, Trump's executive order has established a framework with deadlines for agencies like the SEC, OCC, and FDIC to reassess regulations affecting digital assets, with major policy updates expected by mid-2025.
AlphaPoint and Sumsub discuss pressing topics in compliance for institutions in the digital asset space, focusing on MiCA and Travel Rule.
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