SEC Chair Gary Gensler responds to concerns about first Bitcoin-linked ETF

In the same interview, Proshares CEO Simeon Hyman opined that regulated futures traded in a 40-act ETF will open the opportunity to get BTC exposure to a lot of folks who may have been waiting on the sidelines.

SEC Chair Gary Gensler and Proshares CEO Simeon Hyman discussed the launch of the first Bitcoin-linked ETF in a CNBC breaking news segment on Tuesday.

Proshares Bitcoin Strategy ETF, also known as BITO, is based on CME Bitcoin futures contracts. CNBC commentator Bob Pisano shared concerns from some investors that BTC futures could deviate from the BTC spot price:

“The futures market is a better place for price discovery,” said Hyman. “The CME futures market trades more volume than the largest US crypto exchange. We launched a similar mutual fund on 7/28 and since we launched on Friday, the Bitcoin Reference Rate is up 52 percent, our BTC mutual fund is up 52 percent and the BTC Greyscale Trust is up 37 percent.”

The debut of BITO follows announcements that other BTC-linked funds, including Valkyrie’s Bitcoin Strategy ETF, are set to start trading on the Nasdaq. A new blockchain-industry-based fund, called the Volt Crypto Industry Revolution and Tech ETF, intends to begin trading soon as well.

Pisano asked SEC Chair Gary Gensler about earlier comments where he said he did not have the same concerns with issuing BTC futures-linked funds versus a fully-linked BTC fund. Gensler confirmed:

“What we are trying to do is bring new projects into the investor-protected perimeter. BTC futures have been overseen by the SEC’s sister agency, The Commodities Futures Trading Commission, for the past four years. You have something that’s been overseen for the past four years by a federal regulator and it’s also been wrapped up in the SEC’s jurisdiction through the Investment Company Act of 1940.”

Hyman expressed his confidence in the new fund noting the history of BTC’s price action, US securities laws, and the opportunity for a new opportunity for investors:

“There’s a lot of history here. We believe it will trade quite well. We think regulated futures traded in a 40-act ETF will open the opportunity to get BTC exposure to a lot of folks who may have been waiting on the sidelines.”

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Altcoin Roundup: DEXs come to the rescue after China bans crypto

China’s wide-spanning crypto ban puts a hefty dent in token values, but the surge in DEX volumes and BTC’s pop above $55,000 suggest the move was a blessing in disguise.

Over the past few months, there have been some major developments coming out of China that have rocked the cryptocurrency market and the global financial markets. China’s Evergrande debt repayment crisis sent shockwaves throughout global equities markets, as well as the United States Securities and Exchange Commission’s (SEC’s) consistent signaling of upcoming regulation for stablecoins and decentralized finance (DeFi) continued to weigh on sentiment within the market. 

While the Evergrande situation somewhat resolved itself, for the time being, the government crackdown on unregulated DeFi platforms and stablecoin transactions continues. This has resulted in cross-chain equipped layer-one protocols and layer-two solutions seeing increased volumes as traders search for non-centralized venues to interact with.

According to CryptoQuant CEO Ki Young Ju, after China announced a ban on all cryptocurrency transactions, major cryptocurrency exchanges like Huobi suspended services for accounts in mainland China.

This triggered an exodus of funds from Asia-based centralized exchanges (CEXs), and these funds were eventually deposited onto decentralized exchanges (DEXs) and the wider decentralized finance (DeFi) ecosystem.

This phenomenon is particularly interesting and requires further investigation, given the assumed failure of Ethereum’s London hard fork in addressing untenable gas fees and the regulatory concerns mounting over the U.S. and China’s response to cryptocurrencies.

Let’s take a look at some of the recent thriving DEXs and popular protocols that are seeing an increase in inflows.

The Ethereum network

The Ethereum network is by far the most dominant smart contract and it hosts the largest and most used decentralized exchanges like Uniswap (UNI) and SushiSwap (SUSHI), according to data from Dune Analytics.

Monthly DEX volume. Source: Dune Analytics

While the most recent cryptocurrency ban out of China dominated headlines in the last two weeks of September, the announcement was originally made on Sept. 3, around the same time that activity on Uniswap surged higher.

Uniswap trading volume vs. total revenue. Source: Token Terminal

As shown in the graph above, the spike in Uniswap’s activity and trading volume actually began on Aug. 28 and remained elevated above its previous average for the next couple of weeks.

Uniswap has also benefited from its recent integrations with the newly released layer-two solutions Optimism and Arbitrum, which helped to lower the transaction costs and speed up confirmation times for users on the network.

The Fantom network

The Fantom protocol has risen in prominence in recent months thanks to the launch of a bridge to the Ethereum network and a 370 million FTM developer incentive program designed to attract new projects to the Fantom ecosystem.

Data from Token Terminal shows that while the announcement of the incentive program on Aug. 30 provided an initial boost in protocol revenue and token price, it wasn’t until after the regulatory announcement from China on Sept. 3 that activity and protocol revenue really experienced a sustained increase.

Fantom price vs. protocol revenue. Source: Token Terminal

Fantom utilizes a directed acyclic graph architecture that enables a high throughput capability for near-zero fees, which has helped the protocol grow in popularity amongst DeFi and NFT traders who were priced out of conducting transactions on Ethereum.

SpookSwap and SpiritSwap are the two top DEXs on the Fantom network and together currently handle an average of $95 million in 24-hour trading volume.

Avalanche

The Avalanche network is a blockchain protocol that has been gaining traction since its mid-August launch of the Avalanche Rush liquidity mining incentive program, which includes more than $180 million worth of rewards and incentives designed to attract liquidity to the DeFi ecosystem on Avalanche.

Avalanche price vs. protocol revenue. Source: Token Terminal

Since the release of the incentive program in mid-August, the protocol revenue and token value for the native token AVAX have been on the rise as users transferred assets across-chain to engage in Avalanche’s growing DeFi ecosystem.

According to data from DefiLlama, the top DEXs on Avalanche are Trader Joe (JOE) and Pangolin (PNG), which combined currently see an average 24-hour trading volume of $355.2 million.

Decentralized perpetuals trading

Decentralized perpetuals trading protocol dYdX, which has exploded in popularity in September following the airdrop of its native DYDX token, has also seen an uptick in user activity and volumes.

According to data from Token Terminal, the daily trading volume on the exchange exploded in the final days of September, surging from an average below $2.1 billion to more than $9 billion on Sept. 27.

Total value locked on dYdX vs. trading volume. Source: Token Terminal

The regulatory crackdown has been especially hard on derivative and leveraged cryptocurrency exchanges like BitMEX and Binance, leading to an increase in demand for decentralized options like dYdX and Hegic.

While many across the cryptocurrency ecosystem lamented China’s crackdown on the crypto sector, their heavy-handedness may have actually turned out to be a blessing in disguise. It prompted traders to venture away from centralized exchanges and out into the rapidly expanding DeFi ecosystem where the ethos of decentralization and the ability to “be your own bank” is still available to those who seek it.

Want more information about trading and investing in crypto markets?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Former CFTC brass joins Andreessen Horowitz as an advisor

The company has brought former United States CFTC commissioner Brian Quintenz aboard its operation.

Crypto regulation has become an increasingly relevant topic over the past several years. To address these legal ins and outs amid the ever-changing regulatory waters, VC firm Andreessen Horowitz has called upon a previous leader of the United States Commodity Futures Trading Commission’s, or CFTC, to join its team.

“As part of our larger effort to make sure we have a world-class support system in place when it comes to policy and regulatory matters, I’m thrilled to announce that Brian Quintenz, a former Commissioner of the Commodity Futures Trading Commission, is joining as an advisory partner on the crypto team,” Andreessen Horowitz general partner Katie Haun wrote in a Thursday announcement on the a16z website.

The past year in particular has seen significant regulatory talk within the U.S. and abroad. In December 2020, the U.S. Treasury aimed to increase self-hosted crypto asset wallet surveillance and more recently, the U.S. infrastructure bill included terminology that could put considerable strain on the growing crypto space. Other countries have also made various regulatory moves, evident in their actions against digital asset exchange Binance.

Andreessen Horowitz seems to have recognized the present regulatory tune of the crypto industry and desired to provide support for the entities in its portfolio. “Our portfolio projects are innovating in ways previously unimagined, and so our investment in them must be more than just financial — we seek to provide them with a full suite of resources on their path to success,” Haun noted in the post.

The CFTC and the U.S. Securities and Exchange Commission, or SEC, are two regulatory agencies often part of the conversation whenever legal guidelines intersect with crypto. Explaining the importance of having a previous regulatory head on hand, Haun wrote:

“The CFTC plays a critical role as a federal regulator with jurisdiction over digital currencies, utility tokens, and other non-security commodities and Brian has long stood out as an innovative thinker in the crypto and DeFi space. He understands both how crypto technology works and how the CFTC thinks about the issue. His ability to translate between the two will be central to the success of a16z Crypto’s policy program and our portfolio companies.”

Other former U.S. government brass has also joined different crypto-involved outfits, such as Jay Clayton, who previously led the SEC as chairman. 

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PayPal launches crypto services for UK customers

PayPal customers with verified identities will soon have access to crypto trading. However, crypto transactions for PayPal business accounts aren’t yet supported.

Beginning this week, residents of the United Kingdom will be able to buy, hold and sell cryptocurrencies through PayPal for the first time — marking a significant milestone for a company that began offering digital asset services less than a year ago. 

The global payments provider announced Sunday that U.K. customers will soon have access to Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH) through PayPal’s website and mobile app. The announcement marks the first expansion of PayPal’s cryptocurrency services beyond the United States — a service that first launched in November of last year.

Jose Fernandez da Ponte, a senior executive for PayPal’s crypto division, cited the “digitization of money” during the pandemic as one of the primary motivations for entering crypto in the first place. He continued:

“Our global reach, digital payments expertise, and knowledge of consumer and businesses, combined with rigorous security and compliance controls provides us the unique opportunity, and the responsibility, to help people in the U.K. to explore cryptocurrency.”

By offering its cryptocurrency services to U.K. residents, PayPal could play a role in increasing exposure to digital assets in the country. It’s reported that, among all European countries, PayPal penetration is highest in the United Kingdom at over 2 million monthly active users.

Related: PayPal reportedly assembling crypto team in Ireland as Bitcoin adoption grows

Rumors about PayPal’s crypto expansion plans have been circulating since last month when CEO Dan Schulman told investors that the U.K. is likely to get the service soon. As Cointelegraph reported, the company is also eyeing developments in decentralized finance, or DeFi, which is a possible precursor to future integration plans.

On the regulatory front, the U.K.’s Financial Conduct Authority, or FCA, is increasingly cracking down on cryptocurrency exchanges that do not meet its registration requirements. Binance’s U.K. operations were shuttered earlier this summer after the FCA warned the exchange it was not permitted to offer regulated trading activity in the country. PayPal’s da Ponte said his company is “committed to continue working closely with regulators in the U.K. and around the world” in rolling out its crypto offerings.

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Massive government spending accelerating crypto adoption: Sen. Cynthia Lummis

Senator Cynthia Lummis said that inflation and massive government spending is accelerating the adoption of digital assets.

Republican Senator and Bitcoin proponent Cynthia Lummis said that massive government spending is accelerating crypto adoption.

Lummis made the comments while sharing an interview she did with “Varney & Co” on the Fox Business cable network on July 29, in which she called for a crypto regulatory sandbox and support to attract Bitcoin miners to set up in US states.

On Twitter she stated that “big gov’t spenders are (accidentally) doing far more to accelerate the adoption of digital assets than I am,” and asserted that the debasement of the U.S. dollar is driving citizens to store value in digital assets such as Bitcoin. Not that this was necessarily a good thing:

“BUT spending America deeper into a hole is a stupid, inflationary & altogether undesirable way to drive ppl to digital assets.”

“I want USD to continue as the world’s reserve currency. We need to reign in spending & support financial innovation on US soil,” she added.

During the cable TV interview, Lummis gave her thoughts on the July 27 hearing held by the Senate Banking Committee regarding the risks of crypto and offered views on the regulatory landscape moving forward.

The Senator emphasized that the first step should be “good solid definitions” that are agreed upon in legislation and called for  “a regulatory sandbox where everyone understands the rules, but innovation can still occur unrestricted.”

Lummis stated that “we wanna make sure that Bitcoin can continue to serve as a good store of value,” and she appears view the asset primarily in that way. However, she did also note that if the U.S. were to follow El Salvador’s route and make BTC legal tender, it would need to be regulated under the bank secrecy act, anti-money laws and in a way that it can be “ferreted out” if it’s used illegitimately.

The Bitcoin proponent also said she wants to see the U.S. welcome and support crypto miners that are flocking to the country following the Chinese mining ban:

“We wanna make sure that these miners […] can come to places like Pennsylvania, Texas, Wyoming and elsewhere. Where they can get the energy to mine it and then once it’s produced that it can be on the blockchain in a way that enhances the non-fiat currency advantages that cryptocurrency has.”

Related: Law professor calls for crypto mining regulation during US Senate hearing

Lummis is a Bitcoin hodler who previously stated that she was excited to buy the dip in June, and has advocated for holding BTC as part of a retirement diversification strategy. However, her pro-crypto sentiments were not shared by Democrat senator Sherrod Brown and others during the Senate Banking Committee’s recent hearing.

“After a decade of experience with these technologies, it seems safe to say that the vast majority haven’t been good for anyone but their creators,” Brown said in his opening statement.

“They claim to enable ‘transparency.’ Their backers talk about the ‘democratization of banking.’ There’s nothing ‘democratic’ or ‘transparent’ about a shady, diffuse network of online funny money.”

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