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SEC Opts Not to Challenge Court Ruling on Grayscale's Bitcoin ETF Application
The SEC has opted not to challenge the D.C. Circuit Court of Appeals' decision that previously overruled the SEC's denial for Grayscale to transform its Bitcoin trust into an exchange-traded fund (ETF). This decision could pave the way for the establishment of the first Bitcoin ETF in the U.S. In August, the court termed the SEC's refusal of Grayscale's application as "arbitrary and capricious", pointing out the inconsistency as the SEC had approved the trading of two Bitcoin futures funds but declined Grayscale's request.
While the SEC's next steps regarding Grayscale's application remain uncertain, the agency can still reject the application on different grounds. Grayscale, which first sought to convert its closed-end fund into an ETF in October 2021, argues that this conversion would bridge the gap between GBTC's price and its Bitcoin holdings, as GBTC has been trading at a discount. Notably, Grayscale isn't alone in its pursuit, with other financial giants like BlackRock and Fidelity also awaiting SEC approval for their Bitcoin spot ETFs.
Australia Plans to Introduce Cryptocurrency Licensing and Custody Rules by 2024
Australia's Treasury unveiled plans to introduce draft legislation by 2024, detailing licensing and custody rules for crypto asset providers. Following the legislation's enactment, exchanges will get a 12-month transition period, potentially pushing the licensing of an Australian digital asset platform to 2025. This move, marking a significant advancement in Australia's crypto regulatory framework, experienced delays from its initially expected mid-2023 announcement.
During the recent Australian Financial Review Crypto Summit, Assistant Treasurer and Minister for Financial Services, Stephen Jones, elaborated on the proposal. Under the proposed rules, crypto exchanges holding customer assets beyond specific thresholds would need a license from the Australian Securities and Investments Commission. Furthermore, the Treasury and the Reserve Bank of Australia aim to release a report in 2024, shedding light on the nation's central bank digital currency (CBDC) research. This follows a decision earlier this year to postpone any CBDC development due to challenges from the pilot phase.
Moscow Stock Exchange to Launch Blockchain-Based Digital Financial Asset (DFA) for Real Estate in 2024
The Moscow Stock Exchange is gearing up to roll out a blockchain-based Digital Financial Asset (DFA) for real estate in 2024. Overseen by the National Settlement Depository (NSD) and championed by Sergei Kharinov, the exchange's digital assets director, this DFA aims to democratize real estate investment by reducing entry barriers. Unlike conventional financial instruments, DFAs leverage blockchain to represent digital rights, tokenizing tangible assets like real estate properties. While not a medium of payment in Russia, DFAs offer the advantages of fractional ownership and programmable transactions. Such innovations promise to streamline real estate financing for builders and afford investors easier market access. Preliminary interest from developers is evident, with many engaging in dialogues with the exchange.
Trading Desk Insights
Equity futures kicked off positively on Monday, with a bustling earnings calendar ahead. This week, approximately 11% of the S&P 500 members are expected to disclose their earnings. Netflix and Tesla, both of which hold substantial influence on the Nasdaq, are among the key players to watch.
Wall Street is gearing up for a possible increase in volatility as we head towards the year's end, given the rising yields, surging oil prices, persistent inflation, and the unfolding Middle Eastern conflict. However, investors may find solace by shifting their focus to the forthcoming earnings reports and speculating on the Federal Reserve's next move regarding interest rates.
Bitcoin experienced a sharp flux today. A tweet from Cointelegraph suggested the SEC's approval of the iShares Bitcoin spot ETF, propelling BTC to climb from $27,900 to $30,000, marking a 7.5% hike, only to fall back to its initial level within half an hour. BlackRock later clarified that their ETF application is still pending with the SEC. This ambiguity sparked a frenzy on Twitter, leading to a 300% surge in 24-hour liquidations, amounting to $180M.
On a related note, the SEC, last Friday, revealed its intentions of not challenging the court's decision regarding Grayscale's spot BTC ETF. With the case drawing to a close in a week, the path is cleared for Grayscale to commence dialogues with the SEC about the approval procedures. The GBTC's discount to NAV reached its narrowest since 2021 at 16%, a marked recovery from the 43% seen in mid-June during BlackRock's Bitcoin ETF filing. However, one must remain cautious as the SEC could decide to revisit the application, potentially leading to another legal stalemate.
To cap it off, digital asset portfolios registered inflows for the third successive week, accumulating $15m. Despite this positive trend, trading volumes are still lagging, standing 27% beneath the 2023 mean.
Technical Charts
Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.
Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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