Notes 12/2: Benham’s Testimony, Tether Loans

CFTC Chairman Rostin Benham reiterated the case to bring “comprehensive market regulation” to cryptocurrencies and said existing rules are sufficient to rein in hijinks in its ecosystem in his Senate testimony. “We (can) eliminate contagion by applying the same principles of financial regulation that we apply to traditional financial assets,” he said. Benham’s views echo that of SEC Chair Gary Gensler. Media narratives have framed … Continue reading Notes 12/2: Benham’s Testimony, Tether Loans

More Of The Same: SBF’s Appearance at The DealBook Conference

For investors and industry observers, former FTX CEO Sam Bankman-Fried’s (SBF) appearance at the New York Times Dealbook conference this evening was an opportunity to make sense of the FTX train wreck. But the interview, which was punctuated by a brief loss of connection with Bahamas-based SBF, must have left them even more confused.   A Changed Persona. But Same Responses. SBF’s interview persona was … Continue reading More Of The Same: SBF’s Appearance at The DealBook Conference

Notes 11/30: Bitcoin Price, Regulation

Bitcoin price is showing signs of life after remaining range-bound for most of last month, amid a widening crisis in the cryptocurrency ecosystem. The premiere cryptocurrency had been trading in the $15,000 to $17,000 price range as the contagion from crypto exchange FTX’s collapse claimed more victims. Inexplicably, it broke past the $17,000 mark this morning. Some analysts attributed the slight jump price jump as … Continue reading Notes 11/30: Bitcoin Price, Regulation

Notes 11/15: FTX Tremors, GBTC Discount, and An Industry Fund

In a now famous Rolling Stone description of Goldman Sachs after the 2008 financial crisis, journalist Matt Taibbi compared the Wall Street titan to a “giant vampire squid wrapped around the face of humanity.” FTX may not have the same footprint as Goldman Sachs but its high profile within crypto has ensured that tremors of its collapse are still being felt in the crypto ecosystem. … Continue reading Notes 11/15: FTX Tremors, GBTC Discount, and An Industry Fund

Notes 9/21: FOMC and Bitcoin Price, Retail CBDCs, and Tether In Trouble Again

It was unthinkable some years ago. Fed Day – a day when the Federal Reserve Open Markets Committee (FOMC) meets – is fast becoming an important ritual in bitcoin’s calendar because it determines the cryptocurrency’s future price trajectory. Cryptocurrency markets are poised in anticipation of Fed Chairman Jerome Powell’s announcement his afternoon regarding interest rate hikes. Last month, Chairman Powell indicated that consumers should be … Continue reading Notes 9/21: FOMC and Bitcoin Price, Retail CBDCs, and Tether In Trouble Again

Notes 9/16: ETHW Crash, ETH As a Security

The effect of Ethereum’s transition from Proof of Work (PoW) to Proof of Stake (PoS) on the price of its native token ether has receded. Investors bid up ether’s price in the weeks leading up to the merge. It remained flat during the actual event. And now, it is in decline. After reaching a high of $2,007 slightly more than a month ago, ether prices … Continue reading Notes 9/16: ETHW Crash, ETH As a Security

SEC Chief Gensler Will Work With Congress to Ensure CFTC Regulates “Non-Security” Crypto Tokens

There were no surprises in the Securities and Exchange Commission (SEC) chief Gary Gensler’s conversation with Coindesk this morning. He hammered his main talking points – most crypto tokens are securities and crypto services should register with his agency – throughout the interview. In a later industry conference, however, he said that he was looking forward to working with Congress to pave the way for … Continue reading SEC Chief Gensler Will Work With Congress to Ensure CFTC Regulates “Non-Security” Crypto Tokens

Tornado Cash Sanctions Become Rallying Cry For Crypto Privacy Activists

The fallout from the Treasury Department’s sanctions on Tornado Cash continued this week. The department’s Office of Foreign Assets Control (OFAC) claims that the crypto-mixing service, which is a decentralized application (dApp) running off Ethereum’s blockchain, was used by hackers in North Korea to launder more than $7 billion worth of cryptocurrencies. Privacy activists in crypto are decrying the sanctions as an assault on “free … Continue reading Tornado Cash Sanctions Become Rallying Cry For Crypto Privacy Activists

Notes 8/16: Crypto Banks

Establishing an interface with banks has been one of the biggest problems for cryptocurrency businesses in the last ten years. Bitcoin’s dubious utility, an absence of regulatory guidance and volatility in crypto markets has made mainstream banks wary of processing transactions that involve cryptocurrencies. Crypto companies have, instead, turned towards smaller institutions. Three banks – Silvergate Bank, Signature Bank, and Customers’ Bank – have garnered … Continue reading Notes 8/16: Crypto Banks

SEC Wants More Information About Digital Assets Holdings From Hedge Funds

The Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) want to know more about trading strategies employed by hedge funds and their digital asset holdings, according to multiple reports this morning. The two agencies have approved a proposal that will change Form PF – filed by private funds – to require more disclosures about these holdings. Currently, digital asset holdings are reported … Continue reading SEC Wants More Information About Digital Assets Holdings From Hedge Funds

What Does The Future Hold For GBTC?

Among the limited number of bitcoin-related investments available to investors, the Grayscale Bitcoin Trust (GBTC) is the most well-known. It was the first publicly traded investment vehicle in public markets and has the biggest number of assets under management. In the last year, however, GBTC’s popularity has waned. Its shares, which traded at significant premiums to its net asset value, are trading at a discount. … Continue reading What Does The Future Hold For GBTC?

Notes 7/13: NFT As Collateral, Bitcoin Price, And Celsius

Because TradFi isn’t enough. Because DeFi isn’t enough. We now have the imaginatively titled NFTfi. The South Africa-based firm makes cryptocurrency loans using NFTs as collateral. NFTs or non-fungible tokens are digital artifacts for artworks currently but are expected to represent many other assets, such as real estate, in the future. They exploded in popularity during the pandemic, with some NFTs becoming worth as much … Continue reading Notes 7/13: NFT As Collateral, Bitcoin Price, And Celsius

Notes: 7/8: Voyager and Alameda, Celsius, and Grayscale ETF

Last month, as the crypto contagion was beginning to spread, FTX CEO Sam Bankman-Fried, who believes in “effective altruism”, talked about his “responsibility” to crypto with National Public Radio (NPR). “I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion,” he said. He has rescued many companies that have fallen … Continue reading Notes: 7/8: Voyager and Alameda, Celsius, and Grayscale ETF

Miner Extractable Value: A Source of Profits and Future Regulation

I have written about Ethereum’s expensive gas fees earlier. The fees are an important source of revenue for miners in a volatile crypto market where double-digit price swings are not uncommon. But they are not the only source of profits. The Bank of International Settlements (BIS) released a bulletin last month highlighting the need to design regulations pertaining to Miner Extractable Value (MEV) – another … Continue reading Miner Extractable Value: A Source of Profits and Future Regulation

Notes: 1/7: BlockFi Valuation, EU Crypto Regulation, and More CoinFlex Drama

According to reports, lending firm BlockFi is being sold in a fire sale to FTX. The firm, which was seeking a valuation of $5 billion in its previous funding round has a price tag of $25 million now. The reasons for a crash in its valuation are not clear. BlockFi CEO Zac Prince yesterday linked to a podcast he did with Castle Island Ventures last … Continue reading Notes: 1/7: BlockFi Valuation, EU Crypto Regulation, and More CoinFlex Drama

Notes: 6/30: Grayscale’s SEC Rejection, Celsius Ponzi Scheme, and Genesis Losses

Pop quiz: What is common between a lawsuit, a Ponzi scheme, and “hundreds of millions” dollars’ in losses? If you guessed cryptocurrencies, then you are on the right track. Bitcoin price fell below $20,000 this morning after news came out that the SEC had rejected Grayscale’s Bitcoin ETF application. For crypto enthusiasts, approval would have been a vote of confidence for the ecosystem. It would … Continue reading Notes: 6/30: Grayscale’s SEC Rejection, Celsius Ponzi Scheme, and Genesis Losses

Notes: 6/28: CoinFLEX Drama, Bitcoin As Commodity, Grayscale’s ETF Bid, and Crypto’s Robber Barons

Bring out the popcorn. The dramas [and pyramid schemes] in crypto seem to go on forever. Just as the controversies about Three Arrows Capital and Celsius Lending were on the wane, we are being treated to another soap opera of sorts at CoinFLEX. The derivatives exchange stopped customer withdrawals due to “extreme market conditions” last week and was back in the news yesterday. It is … Continue reading Notes: 6/28: CoinFLEX Drama, Bitcoin As Commodity, Grayscale’s ETF Bid, and Crypto’s Robber Barons

Bitcoin Price Continues Crumbling As Celsius Contagion Spreads

The dreaded W word is re-entering the crypto lexicon. Chatter about a crypto winter is on the cards once again after the asset class’s spectacular pandemic run. The irony of crypto becoming one of the first casualties of an impending recession is rich because its enthusiasts have spent years positioning it as a hedge against central bank policies and distinguishing the asset class from mainstream … Continue reading Bitcoin Price Continues Crumbling As Celsius Contagion Spreads

On Crypto Mining and NYDFS Guidance for Stablecoins

Yesterday I wrote about a crypto mining bill that is sitting on Gov. Kathy Hochul’s desk. While New York’s net zero goals are ostensibly the driving factor behind the legislation, an element of political calculus could trump climate change concerns. According to the New York Times, Gov. Kathy Hochul’s re-election campaign has already received $40,000 from the owner of a crypto-mining plant in Massena, N.Y. … Continue reading On Crypto Mining and NYDFS Guidance for Stablecoins

Bipartisan Senate Bill Aims to Bring Order to Crypto But Could Set Up Dangerous Dynamic, Says a Critic

Regulation of cryptocurrencies by the Commodities and Futures Trading Commission (CFTC), tax exemptions for crypto transactions, and strict reserve requirements for stablecoin issuers are some of the proposals in a new bipartisan bill for cryptocurrency regulation from Senator Cynthia Lummis (R-Wy) and Sen. Kirsten Gillibrand (R-NY). The bill, titled the Responsible Financial Innovation Act, is the first such attempt to regulate an industry with aspirations … Continue reading Bipartisan Senate Bill Aims to Bring Order to Crypto But Could Set Up Dangerous Dynamic, Says a Critic

Can Crypto Handle A Recession?

After climbing to dizzy heights last year, markets are hemorrhaging value as prices plummet since the beginning of this year. Expensive assets that were worth millions of dollars as recently as last year have crashed from their earlier valuations. One of the world’s biggest financial instruments careened to a sudden and spectacular crash in less than a month, further deepening distrust of a financial system … Continue reading Can Crypto Handle A Recession?