Following the recent approval by the United States Securities and Exchange Commission (SEC) of spot Bitcoin exchange-traded funds (ETFs), SEC Commissioner Mark Uyeda has expressed significant reservations regarding several aspects of the approval process.
While Uyeda voted in favor of the groundbreaking decision to approve these Bitcoin ETF applications, he voiced concerns about the underlying analytical approach adopted by the commission.
One of Uyeda’s primary concerns revolves around the potential long-term repercussions of the SEC’s reasoning in the approval order.
He worries that the flawed rationale and legal analysis employed in this case may serve as a precedent for future decisions, impacting the crypto industry for years to come.
Uyeda’s foremost objection centers on the SEC’s differentiation between Bitcoin and other commodities.
He believes that Bitcoin should be treated on par with other commodities and criticizes the commission’s use of the “significant size” test as a unique benchmark for spot Bitcoin ETP (exchange-traded product) applications.
According to Uyeda, spot Bitcoin ETPs should have been approved much earlier under this standard, and he questions why they continue to be treated differently than Bitcoin futures ETPs under the “significant market” test.
Although none of the Bitcoin ETF applicants met the SEC’s significant market test, the approval cited “other means” that satisfied the requirements.
Uyeda contends that the SEC’s decision to introduce a new standard after applicants spent years pursuing the significant market requirement was unjust.
He argues that the commission should have communicated its expectations more clearly to applicants, rather than forcing them to make multiple attempts with uncertain criteria.
Furthermore, Uyeda suspects that the SEC’s motivation for expediting the approval of spot Bitcoin ETFs was to gain a competitive advantage.
He points out a lack of analysis concerning how the cash-only creation and redemption feature might prevent fraudulent activities.
He emphasizes the importance of transparency in the analysis and reasoning behind approval orders.
In a somewhat contradictory stance, Uyeda ultimately supports the issuance of the approval order, despite his objections to the legal analysis presented in it.
He cites independent reasons for concluding that the applications met the approval standards outlined in the Exchange Act.
Nonetheless, his critique underscores the need for greater clarity, consistency, and fairness in the SEC’s approach to regulating cryptocurrency-related financial products.
Ethereum’s community is currently embroiled in a debate sparked by Vitalik Buterin’s recent proposal to increase the gas limit on the network.
Buterin’s suggestion, made on January 11th, called for a “modest” 33% boost in the gas limit, aiming to enhance network throughput.
The proposed gas limit increase from the current 30 million to 40 million would potentially allow more transactions per block, thereby increasing the network’s overall throughput and capacity.
However, Ethereum developer Marius van der Wijden raised some concerns about this move in a blog post titled “Why increasing the gas limit is difficult.”
One of the primary concerns is the expansion of the blockchain state, which encompasses account balances and smart contract data.
Currently, the state requires approximately 267 gigabytes (GB) of storage space, and increasing the gas limit would only exacerbate this issue.
While storage costs may be relatively low, accessing and modifying this expanding data would become progressively slower, with no clear solutions for managing state growth.
Furthermore, increasing the gas limit would also lead to longer synchronization times and complicate the development of diverse Ethereum clients, according to Wijden.
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Gnosis co-founder Martin Köppelmann echoed these concerns, highlighting the potential bandwidth increase associated with raising the gas limit.
Péter Szilágyi, Ethereum’s team lead, also acknowledged the downsides of increasing the gas limit, emphasizing the faster growth of the state, the quicker slowdown of synchronization, and the heightened potential for denial-of-service (DoS) attacks.
The gas limit represents the maximum amount of work and gas expended when executing Ethereum transactions or smart contracts in each block.
It serves to maintain block sizes within reasonable limits to preserve network performance and synchronization.
Potential solutions to these challenges include proposed upgrades such as EIP-4444, addressing chain history expiration, and EIP-4844, which introduces “blobs” to improve rollup data availability and mitigate long-term growth trends.
Software developer Micah Zoltu contributed to the discussion, emphasizing the importance of enabling real-world users to run Ethereum nodes on everyday machines.
However, achieving this goal becomes more challenging as the state and full blockchain size continue to expand, emphasizing the need for a holistic approach to Ethereum’s scalability and accessibility.
The recent decision by the United States Securities and Exchange Commission (SEC) to approve the country’s first spot Bitcoin exchange-traded funds (ETF) has sent ripples of excitement through both the traditional finance (TradFi) and decentralized finance (DeFi) spaces.
This historic decision has sparked curiosity about its potential impact on the markets and, of course, on the price of Bitcoin itself.
Across the Atlantic in Europe, however, the excitement surrounding a Bitcoin ETF has already somewhat subsided. Europe witnessed the introduction of its first spot Bitcoin ETF on August 15, 2023.
The Jacobi FT Wilshire Bitcoin ETF made its debut on the Euronext Amsterdam stock exchange, more than a year after its originally planned launch.
This pioneering ETF was issued by Jacobi Asset Management, a London-based firm.
What set the Jacobi Bitcoin ETF apart was that it was the first physical-backed Bitcoin fund, offering investors exposure to a financial product backed by actual Bitcoin.
Moreover, it was classified as an “environmental investing” or Article 8 fund, promoting environmental and/or social characteristics.
Grzegorz Drozdz, a market analyst at the European Union-based financial services platform Conotoxia, discussed the market implications of U.S. spot Bitcoin ETFs, particularly from a European perspective.
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He noted that the introduction of Bitcoin ETFs has significantly democratized access to the crypto market, moving beyond traditional cryptocurrency exchanges and wallets.
However, Drozdz pointed out that while Bitcoin ETFs are making waves, their size is still relatively small compared to the overall financial and crypto market.
The total capitalization of the cryptocurrency market stands at $1.78 trillion, and existing investment funds in this sector represent only 2.9% of this total value.
In the European Economic Area, there seems to be a greater openness to institutional investment in cryptocurrencies with the launch of Bitcoin ETFs.
However, Drozdz observed that these funds have not yet generated substantial inflows from institutions in Europe. Market expectations are currently more focused on the potential approval of such instruments in the U.S., which could have a more significant impact on the long-term development of the crypto world.
Despite the uncertainties, Drozdz emphasized the rapid increase in the inflow of new funds into the Bitcoin ETF space, which could potentially signal the start of a new bull market.
Given that Bitcoin still commands a substantial 53.7% share of the market’s capitalization, its success could have a significant ripple effect on the rest of the digital currency market.
This sentiment aligns with the speculations of other analysts and social media communities as they await the SEC’s decision on Bitcoin ETFs.
Bitcoin surged towards its recent high as Wall Street opened its doors on January 11th, as new U.S. macroeconomic data put inflation back on the radar. In the pre-market trading hours, Bitcoin’s price exhibited volatility, primarily hovering around $47,000.
The December Consumer Price Index (CPI) report defied expectations, revealing that inflation was accelerating faster than anticipated.
The month-on-month CPI showed a 0.3% increase, surpassing the expected 0.2%.
Furthermore, on a year-on-year basis, the index rose by 3.4%, exceeding the anticipated 3.2%, according to data from the U.S. Bureau of Labor Statistics.
This data confirmed a larger increase in the all-items index for the 12 months ending in December compared to November.
Although such reports usually trigger fluctuations in risk assets, this time they added to the already existing tension in the cryptocurrency markets.
On January 10th, the first U.S. spot Bitcoin exchange-traded fund (ETF) received approval, and its inaugural trading day was set for January 11th. Pre-market data indicated strong investor interest ahead of the ETF’s debut.
On that day, BTC/USD on Bitstamp briefly surpassed $47,700 but remained within its established range, with $48,000 acting as a resistance level.
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Prominent trader Jelle emphasized that shorting Bitcoin at this point was unwise, predicting an eventual upward acceleration.
Meanwhile, Ethereum outshone Bitcoin, with its 24-hour gains exceeding 10%.
This surge was attributed to traders shifting their focus to Ethereum after the ETF approval, as they didn’t witness the expected pump in Bitcoin’s price.
Crypto Tony, another trader, noted this shift in investor sentiment, driving ETH/USD to reach $2,666 on Bitstamp, its highest level since May 2022.
Other cryptocurrencies, such as Solana’s SOL and XRP, also posted double-digit gains.
In conclusion, Bitcoin’s price rallied as U.S. inflation data surprised investors, while the approval of the first U.S. Bitcoin ETF added to the cryptocurrency market’s anticipation.
Despite the volatility, Bitcoin remained within its established range, and Ethereum stole the spotlight with significant gains.
These developments illustrated the continued interest and resilience of the cryptocurrency market in the face of economic data and regulatory advancements.
On January 11, prominent figures from the Hedera and Algorand ecosystems, including the HBAR Foundation and Algorand Foundation, made an exciting announcement at the Crypto Finance Conference in St. Moritz.
Leemon Baird, co-founder of Hedera, and John Woods, Chief Technology Officer of the Algorand Foundation, introduced a groundbreaking initiative known as the DeRec Alliance, aimed at creating a decentralized recovery system for digital assets.
The primary objective of the DeRec Alliance is to simplify the process of securing and recovering digital assets, aligning it with the user-friendly experiences commonly associated with Web2 platforms.
Baird emphasized the importance of establishing standards and open-source code across the blockchain industry to enhance safety within the evolving landscape of Web3.
He stressed the need to make key recovery user-friendly and called upon all blockchain entities to collaborate in creating compatible standards across different wallet software and blockchains.
Notably, Hedera and Algorand are not alone in this venture.
They have already garnered support from banks, credit unions, and multiple wallet software projects, showcasing a strong industry-wide commitment to this crucial initiative.
In conjunction with the DeRec Alliance, the Decentralized Recovery (DeRec) open-source protocol was introduced as a standardized approach to secret management.
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This protocol is built on the concept of secret sharing among a designated group of helpers, whether they be friends or businesses, allowing users to recover their secrets when needed. Each helper’s share reveals no information about the original secret, ensuring security and privacy even if a user loses their recovery device.
John Woods emphasized the importance of a seamless user experience and the need to minimize risks associated with self-sovereignty.
The DeRec protocol achieves this by incorporating automatic confirmations for the retention of secret shares by helpers, automatic resharing when secrets change or helpers join or leave, and a system that protects the identities or numbers of helpers, keeping them unaware of each other.
This initiative is especially timely as the DeFi space grapples with ongoing security challenges.
Just a day prior to the DeRec Alliance announcement, the United States Commodity Futures Trading Commission released recommendations aimed at mitigating DeFi-associated risks, underscoring the industry’s need for enhanced security measures.
Inquiries were made to the developers for additional details about this groundbreaking initiative, which has the potential to significantly bolster the security and usability of digital assets in the evolving blockchain ecosystem.
Turkey’s Minister of Treasury and Finance, Mehmet Şimşek, has unveiled crucial details about the impending cryptocurrency regulations set to govern the Turkish market.
The government is actively working on legally defining vital cryptocurrency concepts, instituting licensing requirements for trading platforms, and adhering to the international standards outlined by the Financial Action Task Force (FATF).
In a recent interview with the Anadolu Agency on January 10, Şimşek confirmed that the framework for regulating cryptocurrencies in Turkey is nearing its finalization, with ongoing assessments of its technical implementation.
One of the central goals of these regulations is to minimize the risks associated with cryptocurrency trading for everyday investors, aligning Turkey’s practices with international norms. Şimşek emphasized,
“Therefore, we are taking steps to reduce the risks of parties trading with crypto assets in our country, similar to international practices.
This is also within the scope of FATF to get out of the gray list.”
The forthcoming guidelines will mandate that cryptocurrency platforms operating in Turkey acquire licenses from the country’s Capital Markets Board (CMB).
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Moreover, these regulations will provide precise legal definitions for key terms such as “crypto assets,” “crypto wallets,” “crypto asset service providers,” “crypto asset custody service,” and “crypto asset buying and selling platforms.”
As an example, Şimşek clarified the definition of crypto assets as “intangible assets that can be created and stored electronically using distributed ledger technology or a similar technology, distributed over digital networks, and capable of expressing value or rights.”
However, it’s worth noting that the regulations will not encompass the specific tax treatment of virtual assets.
Turkey has been contemplating cryptocurrency regulations for a considerable period, with a primary focus on licensing and taxation measures aimed at removing the country from FATF’s “grey list.”
Notably, according to data from the blockchain analytics firm Chainalysis, Turkey ranked fourth globally in raw cryptocurrency transaction volumes between July 2022 and June 2023, with approximately $170 billion in crypto activity, trailing only the United States, India, and the United Kingdom in this regard.
Prominent lawyers and senators in the United States are urging Congress to launch an inquiry into the U.S. Securities and Exchange Commission (SEC) following a reported compromise of their Twitter account, previously known as X, which disseminated false news regarding the approval of spot Bitcoin exchange-traded funds (ETFs).
Senator Bill Hagerty expressed his dismay over the incident, drawing a parallel between the SEC’s accountability and that of public companies in case of a significant market-moving error.
Hagerty insisted that Congress should seek answers, deeming the situation unacceptable. Senator Cynthia Lummis also called for greater transparency from the SEC regarding the events leading to the erroneous post.
Charles Gasparino from Fox Business revealed that securities lawyers had informed him that the SEC would need to investigate itself for potential market manipulation. U.S. Representative Ann Wagner described the incident as “clear market manipulation” that adversely affected millions of investors, vowing to obtain more information from SEC Chair Gary Gensler.
Bloomberg ETF analyst James Seyffart speculated that Gensler would be displeased with the staff member responsible for the alleged security breach, foreseeing consequences for the individual involved.
Investment manager Timothy Peterson criticized the SEC, arguing that its security breach amounted to a potential market manipulation event, a violation of the commission’s core mission of safeguarding investors.
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The incident in question, labeled as market manipulation, involved the SEC’s Twitter account, which falsely claimed the approval of spot Bitcoin ETFs.
X Safety, an account under the control of X, confirmed that the SEC’s account had been compromised due to an unidentified individual gaining control over a phone number linked to the SEC account through a third party.
Notably, the SEC’s X account lacked two-factor authentication at the time of the breach.
Layah Heilpern, a Bitcoin advocate, highlighted that the false post remained online for 20 minutes and garnered at least 4.4 million views during that period.
Heilpern asserted that this amounted to clear market manipulation.
The SEC has not provided detailed information on how their Twitter account was compromised but has denied the involvement of its staff in publishing the unauthorized tweet.
Despite the controversy, Bloomberg ETF analyst Eric Balchunas remains optimistic about the official approval of spot Bitcoin ETFs, expecting an announcement sometime between 4:00 pm to 5:00 pm Eastern Time on January 10.
Circle Internet Financial, the company behind the USD Coin (USDC), the second-largest stablecoin globally, has reportedly filed for an initial public offering (IPO) in the United States, according to a report by Reuters on January 11.
This move signifies Circle’s intention to transition into a publicly traded company, though specific details regarding the IPO, such as the proposed price range and the number of shares to be sold, remain undisclosed.
The completion of the IPO is contingent on the U.S. Securities and Exchange Commission (SEC) completing its review and prevailing market conditions.
The notion of Circle going public first surfaced in 2021 when the stablecoin issuer announced its intention to merge with Concord Acquisition Corp, a blank-check company initially valued at $4.5 billion. Subsequently, the valuation swelled to $9 billion in 2022, but the merger was ultimately abandoned.
In 2023, the prospect of Circle’s IPO resurfaced following a Bloomberg report that relied on anonymous sources.
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The report indicated that Circle had been engaged in discussions with its advisers and was preparing for a potential IPO.
At that time, a Circle representative acknowledged that becoming publicly listed in the U.S. had been a longstanding strategic objective but refrained from confirming the rumors.
Circle is renowned for issuing the USDC stablecoin, which is pegged to the value of the U.S. dollar.
USDC has consistently ranked among the world’s largest stablecoins, boasting a substantial market capitalization of $25 billion.
The decision to go public underscores Circle’s commitment to further establishing itself within the digital currency landscape and reflects the growing prominence of stablecoins within the broader financial ecosystem.
By pursuing an IPO, Circle aims to capitalize on the surging interest in digital assets while also adhering to the regulatory framework imposed by the SEC.
As the IPO process unfolds, industry observers and potential investors will keenly monitor developments surrounding Circle, as the stablecoin issuer navigates the regulatory landscape and charts its course as a publicly traded company.
Bitcoin is unlikely to experience an immediate bullish surge in response to the United States Securities and Exchange Commission’s (SEC) potential approval of a spot Bitcoin exchange-traded fund (ETF), according to an analysis by trading firm QCP Capital.
Despite recent developments, Bitcoin’s price has displayed limited upside volatility.
The recent turmoil in the Bitcoin market was triggered by a hacker who falsely claimed on the SEC’s X (formerly Twitter) account that the first U.S. spot Bitcoin ETF had received official approval.
This incident was later revealed to be the result of a SIM swap attack, facilitated by the lack of two-factor authentication on the compromised account.
During this period of confusion and the subsequent correction by the SEC, the price of Bitcoin briefly approached $48,000 but failed to surpass that level.
QCP Capital interprets these events as a warning sign that even if the SEC grants official approval, it may not ignite the substantial rally that Bitcoin enthusiasts are anticipating.
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The trading firm stated that the initial response to the fake “approval” was subdued, with Bitcoin unable to break free from its resistance level.
There remains a glimmer of hope for investors, as the deadline for approving one ETF application, submitted by ARK Invest, falls on January 10th.
Historically, the SEC has approved all ETFs simultaneously, so an announcement may be imminent.
$48,000 has become a pivotal price level for Bitcoin traders, with many considering it to be a local peak.
The future direction of Bitcoin’s price remains a topic of debate, with some foreseeing continued sideways movement, while more pessimistic predictions anticipate a substantial correction to as low as $35,000 or even $12,000.
At the time of writing, BTC/USD was trading near $45,600 ahead of the Wall Street opening on January 10th.
As the crypto market eagerly awaits the SEC’s decision, the uncertainty surrounding Bitcoin’s immediate future prevails.
Two U.S. Senators, J.D. Vance and Thom Tillis, have urged the United States Securities and Exchange Commission (SEC) to provide a comprehensive report to Congress regarding the security breach that occurred on January 9 involving the SEC’s X Twitter account.
In a letter addressed to SEC Chair Gary Gensler on the same day as the incident, the senators expressed their grave concerns about the breach and its implications for the SEC’s internal cybersecurity protocols.
The senators emphasized that the breach was not only a matter of cybersecurity but also ran contrary to the SEC’s fundamental mission, which includes safeguarding investors, ensuring fair and efficient markets, and promoting capital formation.
They were particularly troubled by the “widespread confusion” caused by the hack, which prompted their request for a detailed report from the SEC to Congress.
The letter set a deadline of January 23 for the SEC to submit the report, drawing attention to an existing mandate that compels businesses to disclose the impact of any cybersecurity incident within four days.
The senators specifically asked whether the SEC could provide Congress with a report within this mandated timeframe if the breach was indeed a result of a cybersecurity attack, seeking an explanation if such a deadline couldn’t be met.
The breach, which occurred on January 9, involved the SEC’s X Twitter account posting a false tweet claiming that spot Bitcoin exchange-traded funds (ETFs) had received approval in the United States.
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The ensuing confusion in the cryptocurrency community was short-lived as Gensler later confirmed that the SEC’s X account had been compromised and the tweet unauthorized.
Critics, including investors and market participants, criticized the SEC for its lack of preparedness against cyberattacks and online threats.
An internal investigation by X, formerly Twitter, revealed that the SEC account did not have two-factor authentication enabled at the time of the breach.
The report from X also indicated that the breach occurred because an unidentified individual gained control over a phone number linked to the @SECGov account through a third party.
Several other prominent government officials, including Senators Cynthia Lummis and Bill Hagerty, as well as Representative Ann Wagner, echoed the concerns of their congressional colleagues.
Hagerty demanded full transparency regarding the incident, while Lummis emphasized the risks associated with fraudulent announcements that can manipulate financial markets, calling for clarity on such incidents.
These collective concerns highlight the urgent need for a comprehensive report from the SEC to address the security breach and its broader implications.