BitGo: Crypto Water Cooler — Aug 30
GM. It’s Wednesday, August 30.
Newsmakers
District Court Rules Against SEC Denial of Grayscale Bitcoin ETF
The U.S. District of Columbia Court of Appeals yesterday handed Grayscale a win in its quest to convert its Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF. The court’s panel of judges vacated the SEC’s denial of the GBTC listing application and granted Grayscale’s petition for review.
The long-awaited result was met with fanfare by crypto proponents who hope it will pave the way for SEC approval of this and other spot Bitcoin ETF applications currently under consideration. These investment vehicles are widely seen as a major stepping stone on the path towards mass adoption of Bitcoin and other cryptocurrencies as they give investors the ability to gain exposure to Bitcoin in their traditional brokerage accounts without having to own Bitcoin themselves.
GBTC, which is traded publicly on the OTCQX, is the market’s first and largest crypto fund with a market cap of $3.6B at time of writing. GBTC is currently underpinned by Bitcoin futures; last year, the SEC denied an application to convert it into an ETF underpinned by Bitcoin, citing concerns about fraud. The SEC has subsequently denied other similar applications from a variety of asset managers. This summer, a spate of new applications attempting to address SEC concerns were submitted.
Proponents have criticized the SEC’s denial of a spot ETF as inconsistent since it has already approved futures based ETFs, which rely on the same fraud surveillance sharing agreements with the Chicago Mercantile Exchange (CME) — the exchange where most Bitcoin futures are traded.
The Court called the SEC’s rejection of Grayscale’s application “arbitrary and capricious” but left the door open for the agency to try again, saying it “never explained why Grayscale owning bitcoins rather than bitcoin futures affects the CME’s ability to detect fraud.” The SEC has forty-five days to appeal the ruling at which point it would go to the Supreme Court or an en banc panel review. Even if it did not appeal or if its appeal was unsuccessful, it could still reject the application(s) on other grounds. The agency has yet to comment.
Read more →Reuters
Behind the Sudden Rise of Web3 Messaging App Friend.tech
As Web3 proponents search for the “killer app” that will spark mass adoption, messaging has been an area of high interest. The vision is that decentralized, peer to peer messaging platforms will connect people around the world while allowing them to own their data and enjoy higher levels of security. Enter Friend.tech, which has taken social media by storm. Is this Web3’s ChatGPT moment? Or is it more of a “Worldcoin” moment, conjuring images of a dystopian future where everything is for sale?
Friend.tech allows creators (so far mostly Crypto X influencers, OnlyFans personalities, online gamers, and esports celebrities) to capitalize on their likeness and popularity by selling shares of themselves (now called “keys” in hopes of avoiding SEC scrutiny) in exchange for access to their private chat rooms. While this in some ways fulfills the Web3 vision of decentralized communications, it’s unclear if users are there because they believe in this principle or because sellers can monetize their online clout while others speculate on it by trading keys.
The app quickly gained traction following its August 10 beta debut. At time of writing, total transaction volume was approaching 1.5MM with 52,610 ETH worth about $85.8MM changing hands. Transactions on the platform incur two fees: five percent for Friend.tech’s treasury and another five for the person whose keys are being traded. According to data from Defi Llama, the application has generated about $7.9MM in fees and brought in $3.9MM in revenue.
Data from Dune Analytics shows approximately 125,000 unique buyers and sellers — not bad for a new app but far off the pace of ChatGPT’s five day sprint to a million users. The pace of adoption has already slackened as transaction volume has plummeted about 90 percent from its August 21 peak.
Some have praised its user experience, which eliminates app downloads and transactional complexity, as a breakthrough. Others have criticized its clunky interface, poor execution, and susceptibility to pump and dump schemes. And, while access to private chat rooms could be considered a utility, and therefore useful in pushing back against the Howey Test, the expectation of profit from creators increasing their clout looms large.
Time will tell if Friend.tech ushers in a new era of decentralized messaging or if goes the way of BitClout, a similar app that debuted to some fanfare in 2019 but has since fizzled.
Read more →Blockworks
Where the Current Republican Candidates for President Stand on Crypto
Last week’s debate between eight Republicans vying for the party’s nomination for president marked the official kickoff for the 2024 election season. The “Bitcoin Election,” as some people have dubbed it, could bring in a more crypto-friendly administration. While the topic didn’t come up during the debate itself, several of the nine presidential candidates that met the requirements to be on the debate stage have previously expressed their views on crypto.
Businessman Vivek Ramaswamy is boldly pro-crypto, seeing this election in part as a “referendum on fiat currency.” He announced his candidacy at Miami’s Bitcoin 2023 Conference and accepts political donations in Bitcoin, which he calls an “American embodiment.”
Florida Governor Ron DeSantis has sent mixed signals. He’s already banned central bank digital currencies in his state, calling them a “massive transfer of power from consumers to a central authority.” He promised to ban them nationally if elected. But, he would protect Bitcoin and has proposed allowing businesses to pay state fees with crypto.
Senator Tim Scott (R-SC), a member of the Senate Financial Innovation Caucus and also the Committee on Banking, Housing and Urban Affairs, is in favor of bipartisan legislation enacting consumer protections, but he’s not a fan of the SEC’s current approach. He co-sponsored the Equal Opportunity for All Investors Act, which failed to gain traction.
North Dakota Governor Doug Burgum has discussed his state’s emergence as a crypto mining hub, but he’s said little else. Former U.S. Ambassador Nikki Haley, former New Jersey Governor Chris Christie, and former Vice President Mike Pence haven’t publicly put forth opinions. That’s also true of former Arkansas Governor Asa Hutchinson, but he did create a Technology and Innovation Council in 2019 to manage the state’s “work around cybersecurity, blockchain and data analytics.”
Former president Donald Trump, who did not join the debate, tweeted in 2019 that he preferred the U.S. dollar and was “not a big fan of Bitcoin and other cryptocurrencies.” He’s even said crypto might be fake. Recent reporting, though, indicates he owns $2.8MM in ETH. He’s also earned nearly $5MM in licensing fees for his NFT collection.
Read more →Grayscale
领英推荐
News In Brief
Regulation and Security
Business of Crypto
DeFi and Web3
Midweek Market Pulse
Total Market Cap: $1,092,741,252,305–7 day change as of Tuesday 8/29/23 Noon EST: +4.7%
Breaking news of Grayscale’s District Court win against the SEC midday Tuesday pulled the crypto market out of its summer doldrums. The global market cap stands at $1.09 trillion, representing a 4.7% gain from last week. The news sent Bitcoin (BTC, +5.3%) and Ethereum (ETH, +5.2%) up by over 5% in a matter of minutes on hopes that listing of a Bitcoin ETF could come much sooner than previously thought.
Elsewhere, Solana (SOL, +5.2%) rose on news that Solana Pay will integrate with Shopify, becoming a payment option enabling transactions in USD stablecoins compatible with the Solana network. Cardano (ADA, +6.9%) rallied on founder Charles Hoskinson’s proclamation at Denver’s Rare Evo 2023 blockchain conference that the number eight crypto will one day become the world’s top digital asset. Hoskinson is also a co-founder of Ethereum.
Worldcoin (WLD, -9.1%) is now down more than 50% over the past month. Toncoin (TON, +18.3%), now the thirteenth-largest digital asset by market value, stood out as one of the week’s big winners as it unveiled its new Tact programming language, which enables smart contracts on the Toncoin network.
The Last Word
en banc panel
Noun
: translated from French, it means “on the bench” and refers to a special procedure where all the judges of a court hear a case
/ en banc panels are typically used in complex cases where an important principle is at stake.
About BitGo
BitGo provides the most secure and scalable solutions for the digital asset economy, offering regulated custody, borrowing and lending, and core infrastructure to investors and builders alike.
Founded in 2013 — the early days of crypto — BitGo pioneered the multi-signature wallet and later built TSS to improve upon other companies’ MPC offerings. Between multi-sig and TSS, BitGo offers the safest technology on the market and safeguards over 600 tokens across a wide variety of blockchains.
Over the years, BitGo has expanded from offering wallets into providing a full-suite solution that lets clients hold assets safely and then put them to work.
BitGo launched BitGo Trust Company in 2018, providing fully regulated, qualified cold storage to complement BitGo Inc’s original hot wallet solution. In 2020, BitGo launched BitGo Prime, which allows its clients to trade, borrow, and lend. Moreover, BitGo also provides access to DeFi, staking, NFT wallets, and beyond, and serves as the world’s sole custodian for WBTC, or wrapped Bitcoin.
Today, BitGo is the leader in digital asset security, custody, and liquidity, providing the operational backbone for more than 1500 institutional clients in over 50 countries — a list that includes many regulated entities and the world’s top cryptocurrency exchanges and platforms. BitGo also processes approximately 20% of all global Bitcoin transactions by value.
For more information, please visit www.bitgo.com.
?2023 BitGo Inc. (collectively with its affiliates and subsidiaries, “BitGo”). All rights reserved. BitGo Trust Company, Inc., BitGo Inc., and BitGo Prime LLC are separately operated, wholly-owned subsidiaries of BitGo Holdings, Inc., a Delaware corporation headquartered in Palo Alto, CA. No legal, tax, investment, or other advice is provided by any BitGo entity. Please consult your legal/tax/investment professional for questions about your specific circumstances. Digital asset holdings involve a high degree of risk, and can fluctuate greatly on any given day. Accordingly, your digital asset holdings may be subject to large swings in value and may even become worthless. The information provided herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. BitGo is not directing this information to any person in any jurisdiction where the publication or availability of the information is prohibited, by reason of that person’s citizenship, residence or otherwise.