BitGo: Crypto Water Cooler — Nov 13
GM. It’s Wednesday, November 13.?
Newsmakers
Crypto Wins Big in the 2024 U.S. Election
The crypto industry won big in last week’s U.S. elections, unleashing euphoria in the market. President-elect Donald Trump, during the campaign, vowed ($) to make the U.S. “the crypto capital of the planet and the Bitcoin superpower of the world.” Meanwhile, one of the most aggressive efforts in history to promote candidates favoring industry interests swept at least 220 pro-crypto candidates from both parties into Congress and unseated one of the industry’s most powerful opponents.?
Candidate Trump pledged that the government would never sell off seized Bitcoins, using them instead to establish a national Bitcoin reserve. He said that all remaining Bitcoin will be mined in the U.S., and he will create a favorable environment for startups. Additional promises include blocking the establishment of a CBDC; protecting Americans’ rights to mine and store crypto assets; and creating a Bitcoin/crypto advisory council. He also promised to commute the life sentence of Silk Road founder Ross Ulbricht for online criminal activity and fire SEC Chairman Gary Gensler (see below).
Questions have been raised about conflicts of interest and about the viability of some of these proposals but, for now, the industry is celebrating.
Crypto PACs Fairshake, Protect Progress, and Defend American Jobs combined to raise and spend ($) more than $130MM on congressional races. That included $40MM in Ohio where it scored one the biggest wins . Crypto skeptic Sen. Sherrod Brown (D-OH), who held the Senate Banking Committee chair, was defeated by Bernie Moreno, a blockchain entrepreneur. Sen. Elizabeth Warren (D-MA), one of the industry’s most outspoken critics, held on to her seat.
?Digital asset legislation has been on pause during the election year. Bills that may gain new life include the Digital Commodities Consumer Protection Act from 2022, proposed by Sen. Debbie Stabenow (D-MI), which would give the CFTC exclusive oversight of the spot digital commodity market, and the Bitcoin Act of 2024, proposed by Sen. Cynthia Lummis (R-WY), which would establish a Bitcoin reserve and make the U.S. the first country to use Bitcoin as “savings technology.”
?Read more →Cointelegraph
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The Uncertain Fate of SEC Chairman Gary Gensler
?Although SEC Chair Gary Gensler’s term lasts through 2026, his days heading the agency are now numbered. Gensler, who was appointed by President Biden in 2021, has been widely criticized for leading an aggressive enforcement campaign against crypto firms while refusing to make crypto-specific rules. President-elect Donald Trump was cheered at a July Bitcoin conference when he called firing ($) Gensler a day one priority.?
?While it’s not clear how Trump can actually fire Gensler, it probably doesn’t matter. If Gensler follows tradition, as he has implied ($) he will, he’ll resign. The president will then designate a new commissioner and name one of the commissioners as chair.?
?If Gensler resigns, SEC would have a two-two party split until that happens, which Bloomberg says would “stymie further aggressive enforcement.” Possibilities for a new chair include current commissioners Hester Peirce and Mark Uyeda although multiple sources say Peirce plans to step down when her term ends in 2025. Other candidates could include Robinhood CLO Dan Gallagher; former SEC Commissioner Paul Atkins; former CFTC chairs Chris Giancarlo or Heath Tarbert; or former SEC general counsel Robert Stebbins. All except Stebbins have ties to the crypto industry.
?So far, no SEC chair has refused to leave, so the question is untested. According to attorney Marc Elovitz , “it is a surprisingly complicated, nuanced and unsettled matter of law as to exactly whether the president can remove the chair of the SEC.” Meanwhile, crypto court cases currently in progress will most likely continue.
?Read more →Bloomberg ($)
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What’s Next for Polymarket??
?During the 2020 U.S. presidential election cycle, Shayne Coplan was building Polymarket from a makeshift office in his bathroom, using a laundry hamper as a desk and running out of money fast. Four years later, the prediction market of which he is the sole founder generated $3.2B from user betting on the presidential election and found itself hailed as an alternative to traditional polling with its data included on the Bloomberg Terminal. It also earned plaudits for correctly predicting the outcome while most pollsters had it too close to call.?
?How will the platform generate revenue going forward? Sports is an obvious possibility with wagers on the Super Bowl ($735MM ) and soccer’s Champions League ($396MM ) generating considerable revenue. However, this puts Polymarket into the sports gambling market, which has fierce competition and strict regulations. Outside of major sporting events, interest and revenue drops off steeply.?
?Also, data from Dune Analytics shows that ~85% of users have lost money. Data from Layer Hub shows that about 4,000 unique wallets—about 1% of users —have realized profits of over $1,000 or more.?
?Polymarket’s new high profile may also increase legal and compliance costs. French regulators are investigating gambling rules violations after a French whale won $50MM betting on Trump. Polymarket is currently unavailable to U.S. users, having been fined $1.4MM and ordered to cease and desist by the CFTC in 2022 for failing to register as a Swap and Execution Facility among other violations.
?Coplan says Polymarket is planning to return to the U.S. market. If and when it does, it will find increased competition. Kalshi, a CFTC-regulated prediction market, saw a record $25MM in deposits after allowing users to add USDC to their accounts. And, after Kalshi was given the go-ahead to list election futures contracts, major brokers like Robinhood and Interactive Brokers jumped into the market.?
?Read more →Fortune ($)
News In Brief
Business of Crypto
Regulation and Security
DeFi and Web3?
Midweek Market Pulse
Total Market Cap: $2.91T – 7-day change as of Tuesday 11/12/24? 12 PM EST: +24.9%
The crypto market soared 24.9% to $2.91T, a one-week gain that almost looks like a typo. Bitcoin (BTC, +24.2%) carried the market as it surged to a series of all time highs. The fuse was certainly lit by optimism about the positive impact of a pro-crypto U.S. president, a bevy of pro-crypto lawmakers, and an interest rate cut by the Fed. It ignited a market primed to catch fire due to the steadily increasing drumbeat of institutional interest, the maturing of the industry, and the halving earlier this year, all of which have conspired to tighten supply.
?The sudden spike in demand drove a face-melting rally. When the stock market closed at 4PM EST on Friday, Bitcoin was trading at $76,784 , already up 14.1% over the previous four sessions. By Sunday, Bitcoin broke through $80,000 for the first time, surpassing $89,000 on Monday, briefly overtaking silver as the world’s eighth most valuable asset by market cap. U.S. Bitcoin ETFs collectively pulled in a gargantuan $1.37B in inflows on Thursday, November 7.?
?Ethereum (ETH, +32.3%) also rallied, passing $3,000 for the first time in over three months--despite another SEC delay on a decision on options for spot ETH ETFs. ETH ETFs notched a record $295.5MM in inflows on Monday.?
Solana (SOL, +26.1%) hit a two-year high , flipping BNB (BNB, +9.9%) to become the fourth most valuable cryptocurrency. The coming changes in Washington D.C. have reignited optimism about the possibility of U.S. Solana ETFs coming to market.
The Last Word
?PAC (Political Action Committee)
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: In the U.S., PACs aggregate financial contributions from donors and spend them to support specific political candidates or issues.
/ There are three different types of PAC with different legal structures governing how they collect and spend money.
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 700 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 .
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