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- Spot Bitcoin ETF receives official approval from the SEC 🪙📑
Spot Bitcoin ETF receives official approval from the SEC 🪙📑
PLUS: Turkey’s crypto regulations in final stages, finance minister reveals. Ripple Labs to buy back $285M stake in tender offer.
Manan Vora
January 11, 2024
Snapshot Web3
January 11, 2024
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Regulatory and Legal News
The U.S. Securities and Exchange Commission (SEC) has officially approved the first regulated spot Bitcoin exchange-traded funds (ETFs) in the United States. This historic decision paves the way for a regulated exchange-traded product in the U.S. that provides investors with direct exposure to Bitcoin's price. The SEC approval follows a false announcement on Jan. 9 and over a decade of consistent denials. The industry is now anticipating the commencement of trading for these ETFs. Various issuers have filed S-1 (or S-3) and 19b-4 forms, and the approved ETFs have disclosed their respective fees, ranging from 0.2% to 1.5%.
BitGo, a crypto custody business, has received in-principle approval from the Monetary Authority of Singapore (MAS) for a Major Payment Institution (MPI) license. This approval allows BitGo to offer digital payment token services in Singapore while awaiting the complete permit. MPI-licensed firms are authorized to conduct payment services without being subjected to certain transaction limits. This follows BitGo's acquisition of a crypto custody license in Germany from BaFin in October 2023. The company raised $100 million in Series C financing in August 2023 to expand its regulated custody wallet and infrastructure solutions.
Turkey's Minister of Treasury and Finance, Mehmet Şimşek, has revealed details about the upcoming crypto regulations in the country. The regulations will legally define critical concepts in crypto, license trading platforms, and comply with Financial Action Task Force (FATF) standards. The government aims to reduce risks associated with crypto trading for investors and intends to align with international practices to exit the FATF "grey list." The regulations will require crypto platforms to obtain licenses from Turkey's Capital Markets Board (CMB) and provide legal definitions for various crypto-related terms. The move is part of Turkey's efforts to regulate and legitimize its crypto market.
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Scams and Hacks
CoinGecko's X account and terminal were briefly compromised in a phishing attack on January 10. A phishing scam link, claiming to inform users of a CoinGecko token airdrop, was posted on the X account. CoinGecko quickly responded, stating that they were investigating the situation and securing their accounts. Users were warned not to click on any suspicious links. This incident follows a similar compromise of the United States Securities and Exchange Commission's (SEC) X account on January 9, where scammers falsely claimed that the SEC had approved multiple Bitcoin spot exchange-traded funds (ETFs).
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Funding, Acquisitions and Partnerships
Ripple Labs is set to conduct a tender offer to buy back a $285 million stake from early investors and employees. The company plans to allocate $500 million for the process, covering the cost of converting restricted stock units to common shares. Investors will be allowed to sell only 6% of their holdings, resulting in a valuation of $11.3 billion for Ripple. This move provides an alternative exit route for early investors, allowing them to cash out without going through a traditional initial public offering (IPO). Ripple CEO Brad Garlinghouse stated that the company has no immediate plans to go public in the U.S. due to regulatory uncertainties.
Phoenix Group PLC, a cryptocurrency mining and blockchain firm listed on the Abu Dhabi Securities Exchange, has invested $187 million to acquire Bitcoin mining machines from Bitmain Development PTI Ltd. The deal, made through a related party, Cypher Capital DMCC, aims to enhance Phoenix's position in the global Bitcoin mining sector. This move follows the company's earlier $380 million purchase of hardware equipment from WhatsMiner in December 2023, showcasing its commitment to expanding its mining capabilities. Phoenix Group went public on the Abu Dhabi Securities Exchange in December 2023 and reported substantial market capitalization growth.
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Price Action
The author argues against the idea of a 30% Bitcoin price crash after the approval of Bitcoin exchange-traded funds (ETFs). The article suggests that given the fee structures proposed by ETF providers such as BlackRock, Invesco, and ARK Invest, they are well-prepared for asset acquisition. The competition among ETF providers and their ambitious asset acquisition goals signal an expectation of bringing billions into Bitcoin in a short period. The author anticipates a positive reception for Bitcoin ETFs and suggests that the current dynamics, with 76% long-term Bitcoin hodlers, make a 30% sell-off unlikely. Instead, they foresee Bitcoin's price potentially soaring to around $60,000 in 2024, driven by ETF approval and the Bitcoin halving.
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Interesting Reads
With 11 spot Bitcoin exchange-traded funds (ETFs) approved on January 10, analysts believe that spot Ethereum ETFs have a clear path to approval in 2024. Bloomberg ETF analyst Eric Balchunas and digital asset lawyer Joe Carlasare both foresee spot Ether ETFs being approved, with Balchunas estimating a 70% chance of approval by May. The price of Ether saw a 3% spike after the Bitcoin ETF approvals, reaching over $2500 for the first time since May 2022. While Carlasare suggests that spot ETH ETFs may not start trading until the third quarter of 2024, Hashdex, one of the applicants, predicts trading to begin as early as the second quarter. The SEC must decide on various Ether ETF applications by different deadlines ranging from May to August.
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Miscellaneous
Digital currencies were a topic of interest at the latest U.K. Parliament Treasury Committee meeting. Enthusiasm for them, however, was muted.
“We want to bring back DeFi summer, but this time, it’s not going to end, and it’s not going to go to zero.” - Rune Christensen
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The information provided in this newsletter is for informational purposes only and should not be interpreted as investment advice, endorsement, or recommendation. Cryptocurrency investments carry significant risk due to their volatility. You should consider your financial situation, investment goals, and risk tolerance before making any investments. We strongly recommend consulting a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
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