Bitcoin

The Biden Administration Is Easing Crypto (A Vibrations Analysis)

Published

6 months ago

21 May, 2024

The Biden Administration Is Easing Crypto (A Vibrations Analysis)

The Biden administration’s stance on crypto appears to be softening. I feel comfortable saying this despite the “whole of government” attack on the industry due to some important advances in recent weeks.

Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates. This is an excerpt from The Node newsletter, a daily digest of the most important crypto news on CoinDesk and beyond. You can subscribe to get the full content newsletter here.

First, and perhaps most significantly, Monday’s news that the U.S. Securities and Exchange Commission (SEC) may be preparing to approve shares in cash ether exchange-traded funds (ETFs). This would be a major reversal of fortune for an asset class considered dead on arrival, especially considering that the securities watchdog has recently been investigating prominent Ethereum-related institutions.

Although much of this is just speculation, based partially on words heard through grapeview (i.e. “sources with direct knowledge of the situation”), it is telling that the SEC requested amended registrations of potential ETH ETF exchanges on an expedited basis. It would be a strange move if the agency planned to reject these requests outright.

Just yesterday, Bloomberg Intelligence put the odds of SEC approval for spot ETH ETFs at 25%. Today, there is a 75% probability that these products – which would likely attract institutional capital to the second-largest crypto asset by market cap, in the same way that bitcoin has benefited from its own group of ETFs – will be launched this year. (The SEC is expected to make a decision on the VanEck spot ether ETF on May 23.)

Second, last week a bipartisan bill called the Deploying American Blockchains Act of 2023 passed with a margin of 334 to 79 by representatives of the Chamber. Although modest in scope, the bill would allow the Secretary of Commerce, currently Gina Raimondo, to “take necessary and appropriate actions to promote the competitiveness of the United States” in the blockchain industry.

This comes ahead of the Senate vote on the Financial Innovation and Technology for the 21st Century (FIT21) Act, considered the most significant piece of cryptocurrency-specific legislation most likely to actually become law. As my colleague Nikhilesh De astutely points out:

“House Democratic leaders on the Financial Services and Agriculture Committees told their members that while they opposed the FIT21 bill, they would not actively whip it – in other words, they essentially told their members to vote as they see fit. ”

This is similar to recent votes in the House and Senate to repeal the SEC’s controversial Personnel Accounting Bulletin 121, which imposed severe capital requirements on cryptocurrency custodians and all but foreclosed the possibility of banks entering the space (and hotly contested both by cryptocurrencies and banks). TradFi communities).

The theory is that when President Joseph Biden promised to veto the measure to repeal SAB121, he cleared the way for members of Congress — including prominent Democrats like Senate Majority Leader Chuck Schumer (D-NY) and the chairman of the Finance Committee, Ron Wyden (D-OR). – to vote your conscience.

It remains to be seen whether Biden will veto the measure, despite the independent Government Accountability Office (GAO) saying the SEC inappropriately enforced the guidance. However, the important thing here is that sensible, bipartisan crypto regulation is possible, despite opposition from figures like the arch-skeptical Senator Elizabeth Warren (D-MA).

Speaking of which, Warren may be losing influence in the Biden administration. Yesterday, president of the Federal Deposit Insurance Corp. Martin Gruenberg announced he would step down after Senate Banking Committee Chairman Sherod Brown called for his resignation.

While the move doesn’t directly pertain to cryptography, it’s worth mentioning that Gruenberg is a known confidant of Senator Warren — and his views on cryptography are largely cut from the same cloth. Under Gruenberg’s leadership, for example, the FDIC took a hard line against crypto during the 2023 financial crisis, which took down three midsize banks.

Although he extensively cited poor risk management and incompetent leadership, the FDIC also said Signature Bank’s “association with and dependence on crypto industry deposits” was one of the main causes of its failure in its report. That same year, the agency officially added cryptography to its annual report on the risks facing US banks and began to enter into “robust supervisory discussions” with the companies under its responsibility.

Additionally, Castle Island Ventures co-founder Nic Carter considers Gruenberg one of the greatest “architects” of what he called Operation Choke Point 2.0, or a series of maneuvers by the US government to systematically cripple the crypto industry (the name is a callback to the Obama-era effort to debank unsavory industries). In fact, after the collapse of FTX, the White House issued its first fact sheet related to crypto, essentially calling for a crackdown.

There are certainly some important caveats to consider here. Firstly, Gruenberg resigned under political pressure following a Wall Street Journal report based on widespread evidence of sexual harassment at the FDIC. The septuagenarian himself wasn’t accused of harassment, but he allowed a toxic workplace culture to fester — which is why Senator Brown called for his resignation (which Senator Warren called “political motivation”).

All of this is to say that encryption is not a motivating factor here, although some political commentators see the Gruenberg situation as a sign of the Warren faction’s waning influence. For example, John Deaton, who is challenging Senator Warren for her Senate seat in November, said it was “disgraceful” how Warren “circled the wagons to keep one of her wretched puppets in place.”

It’s also important to note that Congress is not the White House and the White House is not the SEC. In other words, there is no real reason to assume that the Biden administration is suddenly telling Gary Gensler or lawmakers to, for example, go easy on encryption. These are all discrete events, but they are positive developments for crypto.

As for the possibility of ETH ETF approval, the idea is that the SEC resisted because it was not holding productive meetings with potential issuers. And “the fact that their meetings have become productive more recently doesn’t necessarily mean there has been a policy reversal,” as Jesse Hamilton, a policy expert at CoinDesk, said.

But what if there really was a driving force behind all these developments? What explains the widespread sea change? And why would a Democrat-controlled government suddenly become pro-crypto now?

“The backdrop to all of this is an election in which the standard-bearer of the Republican Party, former President Donald Trump, explicitly appealed to crypto voters as part of his strategy,” De said.

In fact, the former president apparently intuited that the crypto contingent is something of a wealthy political force and has been currying favor. There are some cynics who argue that the billionaire real estate developer is primarily motivated by his grants (Trump has issued several NFT series and owns a good amount of ETH and other tokens), but this seems like an unnecessarily narrow view.

The alignment makes perfect sense: crypto gets people’s attention. And Trump likes to attract attention. Crypto also irritates a certain type of person, and it turns out that these are the same people that Trump likes to irritate. Crypto advocates also like powerful people willing to speak positively about crypto. And Trump likes his praise.

And while both parties can claim the “apolitical” crypto narrative for themselves, there is something to the idea that the industry’s somewhat contradictory situation of being rooted in Occupy Wall Street-era populism while also being more often associated to “hilariously rich” is undeniably Trumpian. To some extent, I’m surprised it took so long for Trump to accept this.

Which brings us to the main point: why now? Of course, Trump supported encryption because it is an issue he can use against his rival, President Biden. While the general public is likely uninformed about the basic politics of crypto regulation, a surprising amount of registered voters own crypto and have positive feelings toward it. In particular, almost 25% of self-identified independent voters (i.e. the main “swing voter”) bought crypto. And this number will only increase over time, especially after the launch of crypto ETFs.

On the other side of the equation, as Trump has established himself as a figure of opposition to the Biden administration’s slow, simmering war on encryption (which has literally won over at least a handful of voters who despise his other policies), Biden’s easiest way to solving the problem is either doing a 180 on cryptography itself or simply making it less problematic.

This is compounded by the fact that, although the majority of Americans still don’t interact or care much about cryptography, there have been a series of missteps on the part of regulators that have earned something almost akin to sympathy for the industry. The biggest problem was the way the SEC approved the approval of bitcoin ETFs, which was called “arbitrary and capricious” by an appeals court.

But there is a growing sense that this same arrogant and biased view permeates all of the Biden administration’s crypto efforts. Americans want cryptography to be secure and well regulated, they want consumer protection; they don’t want arcane debates about whether an asset is a security.

Furthermore, it is conceivable that a strong reaction to the industry’s cataclysmic failures in 2022 would be politically advantageous, but now that prices are rising again, a heavy-handed approach seems both a waste of government resources and potentially overkill. Not to mention the fact that provoking the crypto industry always generates backlash from those within.

Once again, this is all mere speculation: there is no direct evidence that Biden is reversing course. It is significant that a major piece of crypto legislation has made it this far, that ETH ETFs being approved are back in play, and that Trump has won over “single issue” crypto voters. Consider this a vibrational analysis, a theory that may never be proven, but which could grow stronger if more positive advances like this happen.

Ultimately, politics, like cryptography, is all about vibrations.

´Source

Up Next

Investing in Crypto Amid Ether ETF Approval Pending

Don't Miss

Stacks Co-Founder Reveals New BTC Reestablishment Protocol Plan

Chain Feed Staff

We are the editorial team of Chain Feed Staff, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Chain Feed Staff, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

Click to comment

Bitcoin

Grayscale Unveils Bitcoin Mini Trust ETF

Published

4 months ago

31 July, 2024

Chain Feed Staff

Grayscale Unveils Bitcoin Mini Trust ETF

Bitcoin Currency

Grayscale Investments The Bitcoin Mini Trust began trading on Wednesday with a 0.15% expense ratio, offering a lower-cost option for bitcoin exposure in the market.

The Mini Trust, which has the symbol BTC and trades on NYSE Arca, is structured as a spin-off of the Grayscale Bitcoin Trust (GBTC). New shares will be distributed to existing GBTC shareholders with the fund contributing a portion of its bitcoin holdings to the new product. According to a company press releaseBTC’s S-1 registration statement became effective last week.

“The Grayscale team has believed in the transformative potential of Bitcoin since the initial launch of GBTC in 2013, and we are excited to launch the Grayscale Bitcoin Mini Trust to help further lower the barrier to entry for Bitcoin in an SEC-regulated investment vehicle,” said David LaValle, Senior Managing Director and Head of ETFs at Grayscale.

The Bitcoin Mini Trust’s debut comes amid growing interest in ETFs based on the current price of the two largest cryptocurrencies by market cap, bitcoin and ether. Spot bitcoin ETFs have generated nearly $18 billion in inflows since the first ones began trading on Jan. 11, though GBTC has lost nearly $19 billion in assets.

This fund differs from other funds because it is a conversion of an existing fund and has a 1.5% fee, the highest among spot bitcoin products that have received SEC approval this year.

Mini Bitcoin Trust Low Fee

On a Post X On Wednesday, Bloomberg senior ETF analyst Eric Balchunas noted the Bitcoin Mini Trust’s “lowest fee in the category…”

“[Important] to recognize how incredibly cheap 15bps is — about 10x cheaper than spot ETFs in other countries and other vehicles,” Balchunas wrote, adding that this pricing strategy reflects the competitive nature of the U.S. ETF market, which he referred to as the “ETF Terrordome.”

“This is what Terrordome does to fund [cost]. It reaches 1.5% [and] end in 0.15%, how to go from [a] country club to the jungle. But that’s why all the flows are here, investor paradise,” he noted.

Bitcoin was recently trading at around $66,350, virtually flat since U.S. markets opened on Wednesday.

Grayscale also offers two spot Ethereum ETFs, the Grayscale Ethereum Trust (ETHE) and the Grayscale Ethereum (ETH) Mini Trustwhose performance is based on ETHE. ETHE outflows exceeded $1.8 billion in its first six days of trading, while ETH added more than $181 million in the same period, according to Farside. The remaining seven ETFs generated about $1.2 billion in inflows.

The story continues

´Source

Bitcoin

Bitcoin (BTC) Price Drops Below $65K After FOMC as Middle East Tensions Rise

Published

4 months ago

31 July, 2024

Chain Feed Staff

Bitcoin (BTC) Price Drops Below $65K After FOMC as Middle East Tensions Rise

Cryptocurrencies fell sharply on Wednesday as rising geopolitical risks captivated investors’ attention following the conclusion of the Federal Reserve’s July meeting.

Bitcoin (BTC) fell to $64,500 from around $66,500, where it traded following Federal Reserve Chairman Jerome Powell’s press conference and is down more than 2% in the past 24 hours. Major altcoins including ether (ETH)sunbathing (SUN)Avalanche AVAX (AVAX) and Cardano (ADA) also fell, while Ripple’s XRP saved some of its early gains today. The broad cryptocurrency market benchmark CoinDesk 20 Index was 0.8% lower than 24 hours ago.

The liquidation happened when the New York Times reported that Iran’s leaders have ordered retaliation against Israel over the killing of Hamas leader Ismail Haniyeh in Tehran, raising the risk of a wider conflict in the region.

Earlier today, the Fed left benchmark interest rates unchanged and gave little indication that a widely expected rate cut in September is a given. The Fed’s Powell said that while no decision has been made on a September cut, the “broad sense is that we are getting closer” to cutting rates.

While digital assets suffered losses, most traditional asset classes rose higher during the day. U.S. 10-year bond yields fell 10 basis points, while gold rose 1.5% to $2,450, slightly below its record highs, and WTI crude oil prices rose 5%. Stocks also rallied during the day, with the tech-heavy Nasdaq 100 index rebounding 3% and the S&P 500 closing the session 2.2% higher, led by 12% gains in chipmaker giant Nvidia (NVDA).

The different performances across asset classes could be due to traders’ positioning ahead of the Fed meeting, Zach Pandl, head of research at Grayscale, said in an emailed note.

“Equities may have been slightly underutilized after the recent dip, while bitcoin is coming off a strong period with solid inflows, while gold has recovered after a period of weakness,” he said.

“Overall, the combination of Fed rate cuts, bipartisan focus on cryptocurrency policy issues, and the prospect of a second Trump administration that could advocate for a weaker U.S. dollar should be viewed as very positive for bitcoin,” he concluded.

UPDATE (July 31, 2024, 21:30 UTC): Adds grayscale comments.

´Source

Bitcoin

Donald Trump’s Cryptocurrency Enthusiasm Is Just Another Scam

Published

4 months ago

31 July, 2024

Chain Feed Staff

Donald Trump's Cryptocurrency Enthusiasm Is Just Another Scam

Former US President Donald Trump spoke at the Libertarian National Convention in May and lent his a strong support to crypto: “I will also stop Joe Biden’s crusade to crush crypto. … I will ensure that the future of crypto and the future of bitcoin is made in the US, not taken overseas. I will support the right to self-custody. To the 50 million crypto holders in the country, I say this: With your vote, I will keep Elizabeth Warren and her henchmen out of your bitcoin.”

Trump continued to court the cryptocurrency industry in the months that followed; he he appeared at the Bitcoin 2024 Conference in Nashville this week, along with independent presidential candidate Robert F. Kennedy Jr.’s parting words to Trump — “Have fun with your bitcoin, your cryptocurrency and whatever else you’re playing with” — were less than enthusiastic, but the industry itself remains packed with ardent Trump supporters.

This turnaround came as a surprise, given Trump’s previous strong opposition to cryptocurrency. When Facebook was floating its Libra cryptocurrency in 2019, Trump tweeted: “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.” Former national security adviser John Bolton’s White House memoir, The Room Where It Happened, quotes Trump as telling Treasury Secretary Steven Mnuchin: “Don’t be a trade negotiator. Go after Bitcoin.” [for fraud].” In 2021, Trump counted Fox Business that bitcoin “just looks like a scam. … I want the dollar to be the world’s currency.”

Why the change? There doesn’t seem to be any crypto votes. Trump’s “50 million” number comes from a poorly sampled push survey by cryptocurrency exchange Coinbase which claimed 52 million cryptocurrency users in the United States starting in February 2023. But one survey A survey conducted last October by the US Federal Reserve showed that only 7% of adults (about 18.3 million people) admitted to owning or using cryptocurrencies — down from 10% in 2022 and 12% in 2021. Many of these people are likely wallet owners who were left holding the bag after crypto plunged in 2022 — and are not necessarily new fans.

What Trump wants from the cryptocurrency industry is money. The cryptocurrency industry has already raised more than US$ 180 million to run in the 2024 US elections through his super PACs Fairshake, Defend American Jobs and Protect Progress.

Fairshake spent $10 million on taking Rep. Katie Porter in the primary battle for Dianne Feinstein’s California Senate seat by funding Porter’s pro-crypto rival Adam Schiff. This put $2 million to knock out Rep. Jamaal Bowman in the Democratic primary for New York’s 16th District in favor of pro-crypto George Latimer. In the Utah Senate Republican primary, Rep. John Curtis defeated Trent Staggs with the help of $4.7 million from Defend American Jobs. In Alabama’s House District 2, the majority of campaign expenses came from the cryptocurrency industry.

Fairshake is substantially financed by Coinbase, cryptocurrency issuer Ripple Labs, and Silicon Valley venture capital firm Andreessen Horowitz, or a16z. Silicon Valley was awash in cryptocurrencies during the 2021 bubble, and a16z in particular continues to promote blockchain startups to this day — and still holds a huge amount of bubble crypto tokens that he wishes he could cash in on.

Many in Silicon Valley would like an authoritarian who they think will let them run wild with money — while bailing them out in tough times. Indeed, Trump promised Bitcoin 2024 participants that he hold all bitcoins that the United States acquires. (Never mind that it is usually acquired as the proceeds of crime.) Silicon Valley explicitly sees regulation of any kind as its greatest enemy. Three a16z manifestos — “Politics and the Future” It is “The Techno-Optimist Manifesto” and 2024 “The Small Tech Agenda—describe co-founders Marc Andreessen and Ben Horowitz’s demands for a technology-powered capitalism unhindered by regulation or social considerations. They name “experts,” “bureaucracy,” and “social responsibility” as their “enemies.” Their 2024 statement alleges that banks are unfairly cutting off startups from the banking system; these would be crypto companies funded by a16z.

Trump’s vice presidential pick, Senator J.D. Vance, is a former Silicon Valley venture capitalist. He was once employed by Peter Thiel, who bankrolled Vance’s successful 2022 Senate run; Vance has been described as a “Thiel creation”. He has increased support for the Trump ticket among his venture capital associates. Vance is a bitcoin holder and a frequent advocate of encryption. He recently released a draft bill to review how the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) control crypto assets. In 2023, he circulated a bill to prevent banks from cutting out cryptocurrency exchanges.

Minimal regulation has been tried before. It led to the wild exuberance of the 1920s, which ended with the Black Tuesday crash of 1929 and the Great Depression of the 1930s. Regulators like the SEC were put in place during this era to protect investors and transform the securities market from a jungle into a well-tended garden, leading to many prosperous and stable decades that followed.

Crypto provides the opposite of a stable and functional system; it is a practical example of how a lack of regulation allows opportunists and scammers to cause large-scale disasters. The 2022 Crypto Crash repeated the 2008 financial crisis in miniature. FTX’s Sam Bankman-Fried was feted as a financial prodigy who would perform economic miracles if you just gave him carte blanche; he ended up stealing billions of dollars of customers’ money, destroying the lives of ordinary people, and is now in a prison cell.

U.S. regulators have long been concerned about the prospect of cryptocurrency contagion to the broader economy. Criminal money laundering is rampant in cryptocurrency; even the Trump administration has made rules in December 2020 to reduce the risk of money laundering from crypto. Meanwhile, the crypto industry has persistently tried to infiltrate systemically risky corners of the economy, such as pension funds.

Four U.S. banks collapsed during the 2023 banking crisis, the first since 2020. Two of them, Silvergate Bank and Signature Bank, were deeply embedded in the crypto world — Silvergate in particular appears to have collapsed directly from its heavy reliance on FTX and failed a few months after that. Silicon Valley Bank was not involved in crypto but collapsed due to a run on the bench due to panic among venture capital deposit holders, particularly Thiel’s Founders Fund.

Project 2025the Heritage Foundation mammoth conservative wish list The plan, which Trump and Vance have both endorsed and tried to distance themselves from at various times, emphasizes the importance of party loyalists, noting especially financial regulation. The plan recommends replacing as much of the federal bureaucracy as possible with loyalists and “trusted” career officials rather than nonpartisan “experts.” Vance defended in 2021 that Trump should “fire every mid-level bureaucrat, every civil servant in the administrative state” and “replace them with our people.” Loyalty will likely trump competence.

Crypto is barely mentioned directly in Project 2025 — suggesting it has little active support among the broader conservative coalition. But near the end of the manifesto is a plan to dismantle most U.S. financial regulations and investor protections put in place since the 1930s, suggesting the exemption the crypto industry seeks from current SEC and CFTC regulations.

Bitcoin, the first cryptocurrency, started as an ideological project to promote a strange variant of Murray Rothbard’s anarcho-capitalism and the Austrian gold-backed economy—the kind we abandoned to escape the Great Depression. Crypto quickly co-opted the “end of the Fed” and “establishment elites” conspiracy theories of the John Birch Society and Eustace Mullins. It’s a way for billionaire capitalists like Thiel, Andreessen and Elon Musk to claim they’re not part of the so-called elite.

If a second Trump administration were to limp along with financial regulators and allow cryptocurrencies to have free rein, it could help foster the collapse of the U.S. economy that bitcoin claimed to prevent. But Trump is more likely to be happy to take the crypto money and run.

´Source

Bitcoin

Trump’s Bitcoin (BTC) Reserve Plan Seen as Just a ‘Small Token Stash’

Published

4 months ago

31 July, 2024

Chain Feed Staff

Trump's Bitcoin (BTC) Reserve Plan Seen as Just a 'Small Token Stash'

Donald Trump’s recent promise to create a “strategic national stockpile of Bitcoin” may not turn out to be as big a commitment as the hype surrounding the announcement makes it seem.

“Trump’s proposal is extremely modest,” said George Selgin, director emeritus of the Center for Monetary and Financial Alternatives at the Cato Institutea Washington-based public policy group. “It doesn’t have much economic implication.”

´Source