Cboe Refiles Fidelity Bitcoin ETF Application, Plans Coinbase Policing Partnership (Reuters)
Exchange operator Cboe on Friday refiled an application with the U.S. securities regulator to launch a bitcoin exchange-traded fund by asset manager Fidelity, saying it would work with global crypto exchange Coinbase to prevent any market manipulation in the process. The refreshed filing aims to address concerns raised by the U.S. Securities and Exchange Commission (SEC), which told Cboe that its recent filing to list and trade a spot bitcoin ETF from Fidelity was unclear and incomplete, according to a person familiar with the matter. The SEC raised the same concerns with Nasdaq over a recent filing for a spot bitcoin ETF from BlackRock, the person said.
Brokerage Firm Prometheum Wants to Use Exemption to Trade Crypto (WSJ)
A small brokerage firm thinks it has a blueprint to bring crypto trading into the regulated market. Prometheum’s plan involves the use of an exemption that U.S. regulators created 50 years ago to permit trading of shares that were restricted, such as those given as compensation to a corporate insider or sold to an early investor. The exemption is used daily in the stock market to sell millions of shares. It has never been used in crypto, however, which developed as an unregulated alternative to Wall Street that still doesn’t have a federal market overseer. Prometheum, a six-year-old startup with no digital-asset trading revenue, has cast its lot with regulators hoping to move crypto onto regulated exchanges and brokerages.
Coinbase International Nears $900 Million in Volume Over Eight Days (The Block)
Coinbase, which gate-crashed the offshore crypto derivatives market in May, is already clocking in about $100 million in volumes on a daily basis, according to data compiled by The Block. Over the period of June 21 to June 28, the exchange clocked in nearly $900 million in trading volumes. Sources at the firm tell The Block that the market reception has been positive and volumes are strong for a venue with only two contracts to trade.
Compound Founder Forms 'Superstate' to Create Bond Fund With Ethereum for Record-Keeping (CoinDesk)
Robert Leshner, CEO of decentralized lender Compound, submitted filings to U.S. securities regulators for "Superstate," a new company that will create a short-term government bond fund using the Ethereum blockchain as a secondary record-keeping tool. According to a June 26 filing with the Securities and Exchange Commission, Superstate's fund will invest in "ultra-short duration government securities," including U.S. Treasury bonds, government agency securities and other government-backed instruments. The fund will rely on a traditional Wall Street "transfer agent" to keep ownership records of the holders of the fund, the filing states.
UK Crypto, Stablecoin Rules Receive Royal Assent, Passing Into Law (CoinDesk)
A U.K. bill giving regulators the power to supervise crypto and stablecoins was approved by King Charles Thursday, marking the last formal stage that makes the bill law. Royal assent, a purely procedural step following agreement from lawmakers, makes the Financial Services and Markets Bill an Act, and includes measures to bring crypto and stablecoins into the scope of regulation. The bill was last week approved by the upper chamber of Parliament. The Act "gives us control of our financial services rulebook," following the U.K.'s exit from the EU, enabling regulation of crypto assets to support their safe adoption in the U.K., said Financial Services Minister Andrew Griffith in a statement.
PayPal Veterans Launch Swift-Like Cross-Border Payments Network on SUI (The Block)
Fintech startup Six Clovers launched the Versal Network on the Sui blockchain. It's designed to enable faster, more cost-effective and secure cross-border payments. Combining blockchain technology with existing fiat infrastructure, the Six Clovers API allows organizations to integrate the Versal Network into their technology stacks, enabling real-time payments in stablecoins and Central Bank Digital Currencies, according to a statement.
FTX Begins Talks on Reboot Amid Regulatory Crackdown on Crypto Exchanges (WSJ)
FTX is moving ahead with plans to restart its flagship international cryptocurrency exchange, an effort that will face major challenges as regulators ratchet up their oversight of the industry and the company works its way through bankruptcy proceedings. The company “has begun the process of soliciting interested parties to the reboot of the FTX.com exchange,” said Chief Executive John J. Ray III, who took over in November when the exchange filed for bankruptcy. The crypto company has been holding early talks with investors about backing a potential restart of the FTX.com exchange through structures including a joint venture, people familiar with the discussions said.
Crypto Custodian Prime Trust Teeters on the Brink of Collapse (WSJ)
Another crypto quasi-bank appears to be on the brink. Prime Trust, a state-chartered trust company that serves as a custodian for crypto firms, is feared by digital-asset investors to be on the verge of failing after being rebuked by its state regulator and abandoned by a potential acquirer. Las Vegas-based Prime Trust has a shortfall of customer funds and was unable to honor customer withdrawals this week, according to the Nevada Department of Business and Industry. The Department’s Financial Institutions Division on Wednesday ordered Prime Trust to cease and desist all activities that violate Nevada regulations, alleging that the company is in an unsafe condition to transact business and might be insolvent. Prime Trust declined to comment on the order.
Crypto’s Most Powerful Woman Speaks Out as Crisis Rocks Binance (Bloomberg)
One senior Binance executive has managed to stay out of the global spotlight over the past six years and counting — even now as governments everywhere intensify their crypto clampdown: Yi He. As a co-founder of the besieged digital-currency empire, she’s one of the most powerful players in the $1.2 trillion industry. She also has much to lose as the regulatory onslaught deepens and causes an existential crisis for crypto’s largest exchange.
SEC Has No Jurisdiction Over Cryptos on Coinbase's Platform, Exchange Claims in Response to Regulator's Lawsuit (CoinDesk)
U.S. crypto exchange Coinbase claimed that digital assets listed on its platform fall outside the U.S. Securities and Exchange Commission's (SEC) purview in its first legal response to the regulator's lawsuit. The SEC sued Coinbase at the beginning of June, alleging that a dozen of the cryptocurrencies offered through its wallet or trading platforms were unregistered securities. In its answer, filed early Thursday, Coinbase claimed that these cryptos are not investment contracts and therefore are not securities.
Cboe Amends Filing for Ark’s Bitcoin ETF to Include Blackrock-Like Feature (The Block)
The Cboe BZX Exchange on Wednesday amended a 19b-4 filing for the proposed ARK 21Shares Bitcoin ETF to include a feature similar to one used for a spot bitcoin fund planned by BlackRock. Specifically, the revised filing includes a surveillance sharing agreement to deter fraud and market manipulation. “The Exchange is proposing to take additional steps to those described above to supplement its ability to obtain information that would be helpful in detecting, investigating, and deterring fraud and market manipulation in the Commodity-Based Trust Shares,” Cboe BZX said in the updated filing.
CFTC Technology Advisory Board to Discuss DeFi, DAOs and More at July Meeting (The Block)
An advisory body on technology issues within the Commodity Futures Trading Commission is set to discuss decentralized finance and a recent win in the regulator's case against Ooki DAO. The CFTC’s Technology Advisory Committee plans to meet July 18 at its Washington D.C. headquarters. “Decentralized finance (DeFi) models such as decentralized autonomous organization (DAO) and the Commission’s recent Ooki DAO case will be discussed, in addition to other DeFi issues,” CFTC Commissioner Christy Goldsmith Romero, the committee’s sponsor, said in a Wednesday statement.
Three Arrows Liquidators Seek $1.3 Billion From Fund’s Founders (Bloomberg)
Three Arrows Capital liquidators are seeking to recover $1.3 billion from the co-founders of the failed crypto hedge fund, an amount that reflects losses the founders are accused of racking-up in the months before the firm collapsed, according to a person familiar with the liquidators’ claims. The liquidators discussed the allegations against Three Arrows co-founders Su Zhu and Kyle Davies at a Tuesday meeting with the hedge fund’s creditors, the person said.
EU’s Controversial Smart Contract Kill-Switch Rules Finalized by Negotiators (CoinDesk)
Legislative negotiators from the European Union have agreed on new rules known as the Data Act – after the Web3 community raised fears that its provisions on smart contracts could kill the sector. The plans – made as part of a wider overhaul of data rules governing internet-connected appliances – have caused consternation in the Web3 sector for their vague scope and potentially fatal impact on decentralized transactions governed by immutable code.
Sui Foundation Denies Selling Staking Rewards on Binance (The Block)
Sui Foundation, the organization building out the Sui crypto network, said Tuesday that it had not sold staking rewards on the Binance crypto exchange. "Sui Foundation has not sold staking rewards or any other tokens from locked and non-circulating staked SUI on Binance or otherwise," the organization wrote on Twitter. "All insider token allocations remain subject to and compliant with their lock ups and other restrictions on transfer." The foundation said that SUI token unlocks have "proceeded as planned."
Judge Rejects FTX Founder Sam Bankman-Fried's Motions to Dismiss Criminal Charges (CoinDesk)
The federal judge overseeing FTX founder Sam Bankman-Fried's criminal trial denied his pretrial motions to dismiss criminal charges against him, writing that the exchange's founder did not have standing to dismiss many of these charges and didn't meet the "extraordinary" circumstances for a dismissal. Bankman-Fried, who faces wire fraud, bank fraud, operating an unlicensed money transmitter, bribery and campaign finance charges, filed to dismiss the bulk of these charges last month across seven pretrial motions. After a court hearing earlier this month, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York denied the last three of those motions.
Grayscale Bitcoin Trust Shares Rally to a One-Year High, Discount Dips to 30% (CoinDesk)
Grayscale Bitcoin Trust’s (GBTC) share price surged to a one-year high on Tuesday as a report about investment asset manager Fidelity Investments preparing to follow BlackRock’s application for a spot bitcoin (BTC) exchange-traded fund (ETF) with its own, renewed optimism about converting the trust into an ETF. GBTC closed at $19.47 Tuesday afternoon, gaining 7.1% through the day. This was the highest closing price since last June, according to TradingView data. Meanwhile, BTC traded mostly flat, except for a brief spike to $31,000 following the Fidelity news.
Leading Democrat Asks Gensler, Yellen for Thoughts on Republican-Led Crypto Bill (The Block)
Securities and Exchange Commission Chair Gary Gensler and Treasury Department Secretary Janet Yellen have both been called to provide analysis on a Republican-led digital asset market structure bill set for a committee vote in the coming weeks. House Financial Services Committee leading Democrat Maxine Waters sent letters to the pair, according to a statement released on Monday, urging them to share their thoughts on the Digital Asset Market Structure Discussion Draft. Waters asked Gensler how the legislation would impact the SEC’s current authorities.
Japanese Crypto Issuers Won't Pay Taxes on Unrealized Gains, Govt. Clarifies (CoinDesk)
Japan's National Tax Agency has clarified that crypto issuers in the country will not have to pay capital gains taxes on unrealized gains, in a June 20 notice. The country's ruling Liberal Democratic Party (LDP) tax committee approved a proposal to exempt crypto startups that issue their own tokens from paying corporate taxes on unrealized gains last December. Japan has been reviewing its tax treatment of crypto since at least last year to encourage startups to remain in the country after heavy tax burdens seemingly led to a company exodus.
Coinbase Provides Crypto Miner Hut 8 With $50 Million Credit Facility (The Block)
Crypto miner Hut 8 has snagged a $50 million credit facility from Coinbase Credit, the company said in a statement on Monday. Proceeds from the loan will be used for general corporate purposes. The facility provides an initial $15 million term loan, and an additional $20 million delayed-draw term loan tranche. The agreement includes the option for an additional $15 million tranche, according to the statement. The loan is secured by Hut 8's interest in bitcoin held at Coinbase Custody Trust Company.
FTX Debtors Release Second Investigative Report, Details on Commingling and Misuse of Deposits (The Block)
FTX debtors released a second investigative report on Monday, detailing the commingling and misuse of customer deposits at the now defunct crypto exchange. "The image that the FTX Group sought to portray as the customer-focused leader of the digital age was a mirage," CEO and Chief Restructuring Officer John J. Ray III said in a statement. "From the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon at the direction and by the design of previous senior executives." The exchange owed customers about $8.7 billion, debtors said the report.
Hong Kong's HSBC Allows Customers to Trade Bitcoin, Ether ETFs but That's Not Really News (CoinDesk)
A string of cryptocurrency news outlets reported that HSBC Hong Kong is giving its customers access to bitcoin (BTC) and ether (ETH) exchange-traded funds on Monday. The news was first reported by crypto journalist Colin Wu and reproduced by a number of different sites, including The Block. However, this appears to be something of an overreaction. HSBC's customers in Hong Kong have in fact been able to trade such crypto investment products since they were listed on the Hong Kong Stock Exchange (HKEX) in December, as the bank allows trading of all publicly-listed ETFs.
Coinbase Wins Supreme Court Ruling in Arbitration Lawsuit (CoinDesk)
Crypto exchange Coinbase won a reprieve from the U.S. Supreme Court on Friday, after the high court ruled that a lawsuit filed by one of the exchange's users couldn't proceed until Coinbase defends an appeal of a lower court ruling. The ruling, which won a 5-4 majority, allows Coinbase to continue its effort to compel arbitration against the putative class action lawsuit, halting the lawsuit's progress through the federal court system in the meantime. While this marks a win for Coinbase, it has little direct effect on the crypto industry. "The sole question here is whether the district court must stay its pre-trial and trial proceedings while the interlocutory appeal is ongoing. The answer is yes: The district court must stay its proceedings," wrote Justice Brett Kavanaugh on behalf of the majority.
JPMorgan Starts Euro Blockchain Payments for Corporates (Bloomberg)
JPMorgan Chase & Co. expanded one of the most high-profile projects to bring blockchain technology to traditional banking, introducing euro-denominated payments for corporate clients using its JPM Coin. JPM Coin, which the bank launched in 2019 to move dollars, went live with euro transactions on Wednesday, Basak Toprak, JPMorgan’s head of Coin Systems for Europe, the Middle East and Africa, told Bloomberg News. Germany’s Siemens AG conducted the first euro payment on the platform, Toprak said. A Siemens representative confirmed the cross-border transaction.
First Leveraged Bitcoin Futures ETF Will Launch Tuesday, Volatility Shares Says (The Block)
The first leveraged bitcoin futures exchange-traded fund became effective on Friday after not being rejected by the U.S. Securities and Exchange Commission. The Volatility Shares 2x Bitcoin Strategy ETF, or BITX, is due to start trading on Tuesday, Stuart Barton, chief investment officer at Volatility Shares, said in an email. CoinDesk first reported the news. BITX will look to provide two times the return of a bitcoin futures index on a daily basis.
SAP Testing Cross-Border Payments Using Circle’s USDC Stablecoin (The Block)
German software giant SAP is testing Circle’s Ethereum-based USDC stablecoin for clients to tackle difficulties associated with existing cross-border payments. The company aims to provide a solution to the "hassle” for businesses when sending money overseas by leveraging the U.S. dollar-pegged stablecoin and its less-adopted Euro-pegged equivalent EUROC, according to a blog post.
IMF Says Banning Crypto Assets May Not Be Effective Long-Term (The Block)
Banning crypto assets may not be an effective approach for countries to manage risk over the long run, according to the International Monetary Fund. “While a few countries have completely banned crypto assets given their risks, this approach may not be effective in the long run,” the international financial organization said in a post discussing interest in central bank digital currencies in Latin America and the Caribbean. Instead, the IMF said that “the region should focus on addressing the drivers of crypto demand, including citizens’ unmet digital payment needs, and on improving transparency, by recording crypto asset transactions in national statistics.”