Top Stories of Last Week

Regulatory

  • Initial pretrial conference in SEC vs. Ripple case has been set for February 22, 2021. New York Southern District Court will hold conference with Judge Analisa Torres and both parties.
  • VanEck filed new S-1 with SEC for approval of bitcoin ETF called VanEck Bitcoin Trust. After series of rejections from SEC last year, it withdrew previous proposal in September 2019. ETF’s shares would be traded on Cboe BZX Exchange, valued daily based on bitcoin prices on top five bitcoin exchanges, which will be calculated by MV Index Solutions.
  • Indian government considering bitcoin transaction tax, according to proposal put forward to Central Board of Indirect Taxes & Customs by Central Economic Intelligence Bureau, which would categorize bitcoin as intangible asset and impose 18% goods and services tax on transactions. Proposal also suggests treating bitcoin as current assets and charging GST on margins made in trading. 18% GST on estimated annual value of all bitcoin transactions of INR would yield $1 billion.
  • New York Department of Financial Services issued trust charter to GMO-Z.com Trust Company, allowing it to issue, administer and redeem Japanese yen and U.S. dollar-pegged stablecoins in New York. GMO is a Tokyo-based internet conglomerate and said it is world’s largest online FX trading platform.
  • SEC obtained order imposing asset freeze and other emergency relief against Virgil Capital LLC and affiliated companies in connection with alleged securities fraud relating to Virgil Capital’s flagship cryptocurrency trading fund, Virgil Sigma Fund LP. Stefan Qin, founder of Virgil Capital, has been accused by SEC of fabricated records for failing to redeem $3.5 million in investments and attempting to withdraw $1.7 million in investor funds to pay off loan sharks.

Institutional

  • SkyBridge Capital investment firm announced investment of $182 million in bitcoin in investor brochure about forthcoming bitcoin fund. Firm is launching SkyBridge Bitcoin Fund LP in January, and will be open as of Jan. 4 to outside investors putting up at least $50,000. 
  • BitGo reported in official press release that digital assets under custody have surpassed $16 billion. CEO Mike Belshe commented: “We’re seeing unprecedented interest from institutional investors as a result of the pandemic’s economic impact, as well as Bitcoin’s extraordinary performance.”

Project Development

  • Turkey will begin piloting digital currency in second half of 2021, according to country’s chief central banker Naci Ağbal, with conceptual phase of project allegedly already completed. Further details of Turkey’s CBDC are yet unknown.

交易所

  • Coinbase to suspend trading of XRP, with trading moving into “limit only” effective immediately and fully suspended on Tuesday, Jan. 19. Paul Grewal, Coinbase’s chief legal officer, stated “we will continue to monitor legal developments related to XRP and update our customers as more information becomes available. Coinbase also said users’ XRP wallets will remain available for receive and withdraw functionality after trading suspension.
  • Binance.US will remove support for XRP on Wednesday, January 13. XRP trading and deposits will cease but withdrawals are permitted after January 13. In addition, Bittrex is removing XRP trading pairs on January 15.
  • Genesis suspended XRP trading and lending, effective December 29. Users who hold XRP will have until January 15 to sell. Genesis will also no longer support loans in XRP. Open term loans will be called, and all XRP fixed-term loans maturing on or after February 1 will be called.  
  • Market-maker B2C2 halted trading of XRP with U.S.-based counterparties following SEC’s lawsuit against Ripple Labs. Non-U.S. clients can still trade token but need to pre-fund all short trades.
  • OKCoin announced suspending XRP trading and deposits on January 4, 2021, saying decision was made in light of recent lawsuit filed by SEC.
  • New lawsuit in California federal court alleges Coinbase violated state’s unfair competition laws by making commission from sale of Ripple’s XRP. Class-action suit was filed by Thomas Sandoval, who claims Coinbase profited from sale of XRP while knowing it was a security. 

Mining

  • Marathon Patent Group announced purchase of 70,000 Antminer S19 bitcoin miners from Bitmain for $170 million. Marathon expects first delivery by July 2021 and final shipment during last month of 2021, giving mining operation over 100,000 ASIC miners. Once newly acquired miners are fully deployed, Marathon expects to command 10.36 EH/s of hashpower.

Fundraising

  • Trading/investment management platform eToro is allegedly considering going public in what would be $5 billion IPO, and is reportedly in talks with Goldman Sachs about possibly leading offering, which would be completed by end of Q2 2021. eToro is also considering possibility of merger with special purpose acquisition company for purpose of accelerating entry into Wall Street trading.

Defi

  • DeFi platform 1inch released governance and utility token, which will be used for both platform’s automated market maker protocol and decentralized exchange aggregator service. Liquidity mining program introduced for 6 pools, pairing 1INCH tokens with ETH, DAI, WBTC, USDC, USDT and YFI. 30% of total token supply of 1.5 billion allocated to community incentives over next four years. Another 14.5% reserved for protocol growth and development fund, also to be unlocked over next four years.
  • DeFI insurance project Cover Protocol was hacked in an infinite printing scheme, causing price of cover token to plunge. Grape.Finance, a “white hacker,” claimed responsibility for attack via Twitter account, saying all funds had been returned. Exploit cashed out over $4 million including about 1,400 ether, one million DAI and 90 WBTC.

Other

  • National Football League player Russell Okung first player from major U.S. sports league to be paid in bitcoin. Arrangement comes by way of Zap’s Strike product, which enables traditional paychecks to be converted into BTC. Okung’s $13 million yearly salary is being split 50-50 between bitcoin and fiat, and other pro athletes, including unnamed members of Brooklyn Nets basketball team and baseball’s New York Yankees, have also allegedly begun onboarding to program. 
  • Elad Roisman will take over as Chairman of Securities and Exchange Commission, replacing Jay Clayton, who resigned from position last week. Roisman will likely serve until President-elect Joe Biden designates his own acting chairman of SEC. Roisman was appointed commissioner to SEC in 2018 and served as chief counsel to U.S. Senate Committee on Banking, Housing, and Urban Affairs. Roisman is considered an ally of cryptocurrency community for relatively favorable stance towards digital-asset regulation.

Things to Watch This Week

  • FinCEN KYC proposal comment period deadline
    • The shortened comment period for the Treasury’s recently proposed rule requiring more stringent KYC and reporting measures for self-hosted wallet activity ends today, January 4th. Eight members of Congress, along with several exchanges and other crypto industry entities, have sent a letter to Treasury Secretary Steve Mnuchin expressing concern over the shortened comment period. We should be hearing shortly whether these efforts have had any effect in extending the comment period to a more traditional 60 days for significant proposed rules. The outcome of this decision will be important to monitor, as it could mean the difference between a Treasury Secretary with less than a few weeks left in office making a cursory decision that could have a significant impact on crypto markets.  
  • Georgia Run-off Election
    • Control of the U.S. Senate – and the fate of President-elect Joe Biden’s legislative agenda – will be on the ballot Jan. 5th when voters in Georgia decide twin runoff elections. If either or both Republican incumbent senators David Perdue and Kelly Loeffler win, their party would retain a majority, effectively giving Senate Republicans ability to block Biden’s most ambitious goals. Early voting has shattered runoff records, with 3 million ballots already cast, according to Reuters. Results could remain unclear for days as ballots are counted, and legal challenges could prolong the process. An impact on traditional markets and the U.S. Dollar is expected, and thus, crypto markets will also need to keep an eye on results as they develop. 
  • Ripple Suit
    • Fallout over the SEC’s lawsuit against Ripple will continue throughout the week, as we could see other exchanges drop XRP trading to go along with the likes of Coinbase, Binance.US, B2C2, and Genesis. Although the brunt of the news has already been absorbed, the scale of further developments could have an effect on not just XRP, but crypto markets in general. 
    • Mira Christanto@asiahodl
      #Bitcoin Is 2020’s Best-Performing Institutional Asset.

      Elpizo Choi @elpizoch
      You’re missing out on one of the most vibrant corners of the internet right now if you haven’t played around with NFTs yet. The good news: you’re not too late – things are still just getting started. 2021 is gonna be a wild ride.

      1/ NFTs make money: loopifyyy.medium.com/the-proof-of-n…
      2/ Mainstream artists are getting in superrare.co/artwork-v2/in-…
      3/ NFTs can be anything (not just art!) twitter.com/elpizoch/statu…
      4/ NFTs are windows to the metaverse twitter.com/masonnystrom/s…

      Charlie Bilello@charliebilello
      Remember, it’s all the same trade… More Debt —> Currency Debasement —> Asset Price Inflation

      Deficit spending and easy money used to be a tool reserved for crises. It’s now the default policy as the prevailing view is that there are only positive (stimulus/wealth effect) & no negative (if higher inflation comes, that’s good) consequences to more debt and endless easing.

      The less the Federal Government and the Federal Reserve care about the value of the dollars in your pocket, the less they are worth. The best narrative in support of Bitcoin is that there should be an alternative to this centralized madness.

      Qiao Wang@QwQiao
      What’s the biggest bullish event for #BTC in 2020? IMO it’s MassMutual. Insurance is among the most financially conservative institutions. The only thing even bigger than that would be nation-states buying #BTC. Maybe that’ll be 2021.

      Ari Paul   @AriDavidPaul
      I’ve been a bitcoin proselytizer for almost half a decade now, but even my thinking is changing. I don’t think I ever really believed I’d hodl *forever*, I priced my stash in USD. For the first time, I’m thinking about how many BTC I have, not how much they’re worth.

      2/ a big part of this shift was seeing billionaires put a good chunk of their net worth into BTC. Being rich won’t mean having a lot of fiat in 20 years.

      skew@skewdotcom
      CME tops #bitcoin futures open interest for first time

      Raoul Pal@RaoulGMI
      We are at the stage where people I really respect – mean reversionists, value players and rationalists are urging caution in bitcoin.

      However, I think reflexivity here is stronger than they can ever possibly imagine. There will be sharp sell offs on negative new and also on no news but people will hope for even better entry on sharp dips and miss it. 1/

      And then bitcoin will climb the wall of fear and eventually transition to scale the cliff of incredulity. This is the most reflexive set up I’ve ever seen in my life. Even wild eyed bulls will shake their heads in dismay. I won’t be easy to hold on.

      It also won’t be easy to know when to get off… And therein lies the problem for all of us who aren’t aiming yet for hyper-bitcoinalisation. Maybe the big test will come from stable coins, regulation or just the wall of fear, or maybe even harder, no corrections.

      Have a take some off the table plan at some point and also a run the rest of it to the moon plan. It’s still early days yet however…. too early for a plan except buy any dip. Same for ETH. Maybe even more so…

      Alex Krüger@krugermacro
      A quick thread for those looking into DeFi as an asset class for the first time – Many DeFi projects are producing high caliber products – DeFi faces potential regulatory burdens other tokens do not face. These generate short-term headwinds.

      – Institional investors aren’t yet able to invest in DeFi directly. – DeFi assets are not available to Paypal or Circle investors. – For those seeking for alternatives to $BTC, the safer bets are $LTC$BCH and $ETH, as the SEC won’t label them as securities. Other tokens may.
      READ MORE

      Kyle Davies@kyled116
      There is a big shortage of ASIC’s. Miners only need to sell enough bitcoin to cover existing USD operational costs. They are incentivized to hold all capital that would otherwise be deployed into buying hardware, in $BTC.
      Joseph Young @iamjosephyoung
      The BIG reason institutions would naturally move into $ETH after Bitcoin is regulatory clarity. Ethereum is the ONLY other cryptocurrency an SEC official clarified as a non-security. This is *very very* critical. twitter.com/ki_young_ju/st…

      The reason why the regulatory clarity around Ethereum becomes more appealing is because of the XRP lawsuit by the SEC. Institutions wouldn’t want anything to do with anything that could be a security, ever. The SEC is becoming more active too. So, it makes sense fundamentally.

      Jeff Dorman, CFA@jdorman81
      Prediction: first time $BTC buyers from traditional finance will buy a #DeFi token next before buying $ETH or a nonsense top 25 “crypto”. They got over the “impossible to value” hump for #Bitcoin

      but they will still gravitate towards cash flow valuation when given the choice.