The United States Securities and Exchange Commission (SEC) has taken a significant step in the potential approval of a spot Bitcoin exchange-traded fund (ETF).
BlackRock, a prominent financial firm, has had its application accepted by the SEC, following a similar acknowledgment of Bitwise’s application the previous day.
Accepting BlackRock’s proposal marks the beginning of the official review process for their ETF.
While this is just the initial stage of a lengthy regulatory journey, it signifies the SEC’s willingness to explore the concept of a spot Bitcoin ETF and evaluate its potential impact on the market.
ETFs are investment funds that typically track specific indexes and are commonly traded on exchanges.
In the realm of cryptocurrencies, a cryptocurrency ETF refers to a fund that mirrors the value of one or more digital tokens and encompasses a range of cryptocurrencies.
On July 14, the SEC also announced that it is currently reviewing applications for various funds, including Wise Origin Bitcoin Trust, WisdomTree, VanEck, and Invesco Galaxy.
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BlackRock’s participation in the race to launch a spot Bitcoin ETF holds great significance due to its stature in the financial industry.
Their filing for a spot Bitcoin ETF includes an agreement for “surveillance-sharing” with Coinbase, a prominent cryptocurrency exchange.
The competition among companies striving to be the first to introduce a Bitcoin ETF in the United States is viewed as a positive development for the crypto industry.
With multiple applications being considered, the chances of success increase, and the diverse proposals allow the SEC to evaluate different strategies and concerns.
While the SEC has not yet approved a spot Bitcoin ETF in the United States, such financial products are already available in Canada.
Regulators in the country have approved three significant funds: Purpose Bitcoin, 3iQ CoinShares, and CI Galaxy Bitcoin.
The acceptance of BlackRock’s application and the ongoing review process for other ETF proposals indicate a growing recognition of the potential of cryptocurrencies in the mainstream financial sector.
As the SEC continues its evaluation, the market eagerly awaits the decision on the first spot Bitcoin ETF in the United States.
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Bitcoin (BTC) long-term holders are reemerging as the price of BTC continues to climb, according to the latest analysis.
On July 13, Philip Swift, the creator of on-chain data resource LookIntoBitcoin, highlighted the classic behavior of “older” BTC investors during bull markets.
Despite the ongoing debate about how high BTC’s price could ultimately reach in this current cycle, one thing remains clear: Hodler behavior remains consistent.
The increase in BTC/USD, which has more than doubled in 2023, has resulted in an uptick in on-chain spending velocity, indicating profit-taking activities.
Swift shared a chart of the Value Days Destroyed (VDD) Multiple, a metric based on the Coin Days Destroyed (CDD) indicator.
The VDD measures the inactivity period each time BTC moves on-chain and compares it to the current BTC price, providing a 30-day result compared to the 365-day average.
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The chart shows that the current cycle aligns closely with previous cycles in terms of on-chain spending volume, indicating where we are in the current market cycle.
Swift explains that the VDD Multiple highlights when older coins begin entering the market for sale as long-term participants seek to capitalize on the price increase during major bull market cycles.
The VDD Multiple currently stands at 1.32, just below its peak of 1.37 in April 2023. Swift sees this as a sign of the “1st stage bull market.”
Checkmate, the lead on-chain analyst at Glassnode, praised the findings, emphasizing the remarkable consistency of market cycles and human reactions to similar stimuli.
Moreover, data from Glassnode highlights the temptation for hodlers to cash out at current prices. Bitcoin’s market-value-to-realized-value (MVRV) ratio for long-term holders (LTHs) and short-term holders (STHs) indicates that both groups are significantly in profit.
LTH coins, defined as dormant for at least 155 days, are now worth 1.52 times more than when they were last moved, while STH coins show a value increase of 1.12.
Previous reports have already highlighted the influence that STHs have on BTC price action.
With both long-term and short-term holders in profitable positions, it remains to be seen how these trends will impact BTC’s price movement going forward.
The consistent behavior of BTC hodlers in response to market conditions suggests that this cycle is following a similar pattern to previous ones.
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Steven Kinard, the director of Bitcoin mining analytics at the Texas Blockchain Council, a crypto advocacy group, has announced his candidacy for the Texas House of Representatives.
Kinard revealed his plans on July 11, stating his intention to seek the Republican Party nomination for Texas House District 70 in the Dallas-Fort Worth area.
If elected, he would serve a two-year term starting in 2025. Prior to joining the Texas Blockchain Council in March 2022, Kinard had worked for approximately three years at BOK Financial.
In his campaign, Kinard expressed his commitment to promoting “digital freedom” and advocating for “strategic technology investments.”
He is expected to compete against the incumbent Democratic Representative, Mihaela Plesa, who has been serving in the Texas House since 2023.
One of Kinard’s key points of criticism is directed at the Federal Reserve for its attempts to launch a central bank digital currency (CBDC), which he considers a reckless move.
This sentiment aligns with that of other Republican lawmakers, including Florida governor and 2024 presidential candidate Ron DeSantis.
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Kinard’s campaign website states his intention to actively resist and prevent any research into CBDCs.
Texas, particularly the capital city of Austin, has emerged as a significant hub for cryptocurrency mining activity, especially after the departure of many miners from China.
While a bill aimed at limiting incentives for crypto miners was passed by the Texas State Senate in April, the government has also shown support for incorporating crypto into the state’s Bill of Rights.
Governor Greg Abbott has openly identified himself as a supporter of crypto law proposals.
As the 2024 United States primaries approach in the following months, the crypto and blockchain industry has become a prominent issue for many voters.
Coinbase CEO Brian Armstrong has urged crypto users to support pro-crypto candidates in all 435 U.S. congressional districts, emphasizing the importance of electing officials who understand and advocate for effective legislation to regulate digital assets.
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The determination of prices in any market, whether it’s for goods or financial assets, relies on the interplay between supply and demand.
When there is a scarcity of a product like tomatoes due to a flood, the price at the supermarket will naturally be higher, assuming the demand remains the same.
Similarly, if there is a fixed supply of tomatoes but an increased number of people wanting to buy them, the price will also rise.
In the financial market, the price of a mutual fund is unaffected by demand if the supply is unlimited.
In such cases, additional shares are simply issued at the net asset value (NAV) of the fund, which represents its true value based on its assets.
However, if the available shares are limited, the price will fluctuate based on the uneven supply and demand.
In such situations, the price may deviate from its intrinsic value, especially when an asset is in high demand.
Estimating the correct price of an asset can be challenging. In 2021, the author published data attempting to estimate the fair value price of Bitcoin.
By analyzing the number of wallets in circulation and the average amount held in each wallet, the author derived an estimation of Bitcoin’s capitalization and price.
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The transparency provided by the blockchain technology enables the collection of reliable information, such as tracking the number of Bitcoin addresses with non-zero balances.
The graph illustrating the average amount in wallets fluctuates due to supply and demand factors.
By considering the 90th and 10th percentiles, a range can be established to estimate Bitcoin’s price.
This approach, although simple, proves effective due to the large numbers involved and a complete price cycle analysis.
Additionally, certain market phenomena provide insights into Bitcoin’s potential price appreciation.
For example, during the last days of a crypto winter, there is often an increase in withdrawals from crypto exchanges and a decrease in balances held on centralized platforms.
This indicates a preference for long-term Bitcoin holdings, signaling bullish sentiment and contributing to cyclical price appreciation.
Based on this model, the data suggests that Bitcoin could reach its next ceiling in autumn 2025, potentially exceeding $130,000.
It is crucial to emphasize that this forecast should not be considered financial advice, but rather an expected value based on certain assumptions with a degree of confidence.
Other predictive models also support similar price growth estimates.
The growing interest in the asset class from institutional players like BlackRock further suggests a level of faith in these models, as evidenced by their pursuit of approval for a spot Bitcoin exchange-traded fund.
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Monochrome Asset Management, a crypto investment firm based in Australia, has made an update to its application, aiming to introduce a spot Bitcoin exchange-traded fund (ETF) on the Australian Securities Exchange (ASX) in collaboration with Vasco Trustees.
The newly proposed ETF, called the Monochrome Bitcoin ETF, will provide direct exposure to Bitcoin and Ether (ETH) for retail investors in Australia, as stated in the company’s announcement on July 14.
Monochrome CEO Jeff Yew explained in an interview with Cointelegraph that the Bitcoin ETF would allow Australian retail investors to engage with Bitcoin in a regulated environment, offering them the freedom to utilize this asset class as they see fit while operating within the established regulatory framework.
Yew emphasized the advantage of investor protection that comes with a regulated ETF, in contrast to unregulated exchanges where such safeguards may be lacking.
Yew further expressed his belief that the introduction of a Bitcoin ETF on the ASX would convey a significant message to traditional investors, signaling the end of the unregulated “Wild West” phase.
The ETF’s existence would assure investors of a familiar, structured, and protected environment, enhancing their confidence in the crypto market.
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Vasco, Monochrome’s “Responsible Entity Partner,” holds the necessary authorization under an Australian Financial Services Licence to offer regulated exposure to cryptocurrencies to retail investors, as outlined by the company.
Spot Bitcoin ETF applications have garnered considerable attention in the industry recently, particularly in the United States.
Over the past few weeks, major financial firms such as Fidelity, Invesco, Wisdom Tree, Valkyrie, and the $10 trillion asset management giant BlackRock have all submitted filings for spot Bitcoin ETFs, indicating growing interest in providing regulated exposure to digital assets.
The introduction of a Bitcoin ETF on the ASX through Monochrome Asset Management’s application update marks a significant step toward facilitating mainstream adoption and regulatory acceptance of cryptocurrencies in Australia.
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The European Securities and Markets Authority (ESMA), the regulatory body for financial markets in the European Union, has released a consultative paper on Markets in Crypto-Assets (MiCA) mandates.
This paper, which is the first of three consultative packages, focuses on the technical specifications for crypto asset service providers (CASPs).
Under MiCA, entities that are already licensed are presumed to be capable of providing crypto-asset services.
However, they will be required to provide additional information to the national competent authorities (NCAs) of their respective countries through notifications.
The consultative paper seeks feedback on regulatory and technical standards for these notifications from CASPs.
ESMA is also seeking feedback on regulatory and technical standards related to CASP authorization applications, handling complaints, managing and preventing conflicts of interest, and disclosures to NCAs by entities planning to acquire shares in a CASP.
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Interested stakeholders and market participants have until September 20 to respond to the consultative paper.
ESMA plans to submit a draft of the finalized standards to the European Commission by June 30, 2024, as mandated by MiCA.
The second consultative package will be released in October, followed by the third in the first quarter of 2024, aligning with the deadlines set for ESMA in MiCA.
In addition to specific feedback, ESMA has posed four general questions to respondents.
These questions aim to gather more insight into the current and planned activities of market participants and their expectations for the future development of the EU crypto-asset markets.
The questions cover topics such as expected turnover, the number of white papers respondents plan to publish, and their utilization of on-chain and off-chain trading.
MiCA, approved by the European Parliament on April 20, will be implemented in three stages between 2024 and 2025.
It represents a comprehensive regulatory framework for crypto assets within the European Union. The consultation process conducted by ESMA is an important step in shaping the technical standards and guidelines that will govern the operation of CASPs under MiCA.
PwC recently published its fifth annual global crypto hedge fund report on July 12, which was based on surveys conducted in the first quarter of 2023 among both crypto-native and traditional hedge funds.
Despite the recent crypto winter and ongoing regulatory uncertainties, the report revealed a predominantly positive outlook among the funds.
According to the report, crypto-native hedge funds are actively working towards rebuilding confidence and ensuring their needs are heard.
An overwhelming majority of these funds (93%) expect the market cap to rise over the course of the year. Interestingly, more than half of them (53%) reported no exposure to FTX or the Terra Luna ecosystem.
The report also highlighted that most of the funds performed better than the price of Bitcoin (BTC), which stood at $30,553 in 2022.
This finding emphasizes the popularity of crypto hedge funds as investment vehicles for those seeking exposure to the crypto-asset market.
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While over half of the funds (54%) operate in the United States, they did not respond differently from others to U.S. regulations. In fact, 42% of these funds stated that they do not expect the regulations to impact them significantly.
The report further revealed that the funds expressed a desire for trading venues to implement certain requirements, including asset segregation (75%), financial audits (62%), and an independent statement of reserve assets (60%).
The report also shed light on the limited impact of tokenization within the sector. Only 15% of the surveyed funds are considering investments in tokenized securities, and merely 4% tokenize units within their own funds.
Regarding traditional hedge funds, the proportion investing in crypto decreased from 37% in 2022 to 29% in 2023.
Among those still investing in crypto, 62% allocate less than 5% of their assets under management to the crypto market, while only 8% hold more than 20% in crypto.
The survey found that 46% of these funds plan to increase their crypto investments this year, a decline from 67% in the previous year. Notably, none of the respondents mentioned a decrease in their capital deployed in crypto.
For traditional funds that do not invest in crypto, “client reaction or reputational risk” has become the primary reason, surpassing “regulatory uncertainty.”
Moreover, 40% of these funds stated that the removal of regulatory barriers would not motivate them to begin investing in crypto.
The survey was conducted in collaboration with CoinShares, an alternative asset manager, with 131 crypto-native funds participating. Data from 59 traditional hedge funds was obtained by the Alternative Investment Management Association.
United States Senators Cynthia Lummis and Kirsten Gillibrand are set to reintroduce the Responsible Financial Innovation Act, a piece of legislation aimed at establishing a comprehensive regulatory framework for digital assets.
The bipartisan bill, which had been tabled in the previous session of Congress, will be reintroduced to the Senate on July 12.
The main objective of the Lummis-Gillibrand bill is to provide clarity on the roles of regulatory bodies such as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission in overseeing digital assets.
Additionally, the legislation aims to enhance consumer protection measures within the digital asset space.
Originally introduced in June 2022, during a period marked by a significant crypto market crash, the bill seeks to address the aftermath of the market downturn.
It includes updates to the U.S. tax code that would allow the industry to finance its own oversight and implement safeguards to prevent events like the collapse of FTX, a crypto exchange that occurred after the bill’s initial introduction in November 2022.
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The legislation was prompted by the collapse of Terraform Labs, a South Korea-based firm, which experienced the depegging of its algorithmic stablecoin from the U.S. dollar.
As a response, the bill will require payment stablecoins to be exclusively issued by depository institutions.
Critics of U.S. regulators have argued that there is a lack of clarity in the regulatory environment, which allows firms to operate without fear of enforcement actions.
The Lummis-Gillibrand bill has garnered praise for its bipartisan approach during a time when some elected officials have politicized certain aspects of the crypto space.
While the Responsible Financial Innovation Act represents one option, other legislators in the House of Representatives have proposed alternative legislation to address the regulatory framework for cryptocurrencies.
A discussion draft released in June suggests limiting the SEC’s authority over crypto firms, while the House Financial Services Committee has drafted legislation proposing that the Federal Reserve become the primary regulator responsible for establishing stablecoin requirements.
Overall, the reintroduction of the Responsible Financial Innovation Act reflects ongoing efforts by U.S. lawmakers to develop a comprehensive and balanced regulatory framework for digital assets, with the aim of protecting consumers and promoting innovation within the industry.
Hive Blockchain, a cryptocurrency mining firm based in Vancouver, Canada, has undergone a rebranding process and is now known as Hive Digital Technologies.
The name change aims to highlight the company’s expansion into artificial intelligence (AI) and its evolving focus on revenue opportunities in graphics processing units (GPUs) and cloud computing.
By dropping “blockchain” from its name, Hive seeks to better represent its mission of driving advancements in AI and supporting the new Web3 ecosystem.
The CEO of Hive, Aydin Kilic, emphasized that the company’s GPU Cloud business requires a strategic approach that goes beyond blockchain.
Hive is focused on building infrastructure for emerging digital technologies and intends to leverage its large fleet of GPUs to grow its cloud hosting business.
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In addition, Hive plans to use its extensive fleet of 38,000 Nvidia GPUs to offer small and medium-sized businesses a more efficient alternative to major cloud service providers.
Kilic expressed confidence in the increasing demand for GPU compute driven by AI and machine learning in the future.
While many crypto mining companies concentrate on mining proof-of-work cryptocurrencies like Bitcoin, Hive stood out by utilizing GPUs to mine Ether, the native cryptocurrency of the Ethereum network, on a large scale.
However, with the completion of the Ethereum Merge in September 2022, which transitioned the Ethereum blockchain to a proof-of-stake consensus mechanism, the profitability of GPU mining for Ether significantly declined.
As a result, Hive has diversified its focus and expanded into AI and other revenue-generating opportunities.
Hive’s rebranding follows a similar move made by another mining company, Riot Blockchain, which changed its name to Riot Platforms on January 3.
Riot’s decision reflected its increasingly diversified business operations beyond the scope of blockchain mining.
The rebranded Hive Digital Technologies is positioning itself to capitalize on the growing demand for GPU compute in AI and machine learning.
By expanding its focus beyond blockchain, Hive aims to leverage its expertise and resources to establish a prominent presence in the evolving digital tech industry and support the development of the new Web3 ecosystem.
Prosecutors and the Internal Revenue Service (IRS) in the United States are reportedly conducting investigations into wealthy individuals involved in cryptocurrency trading and fund management, suspecting them of illegally benefiting from Puerto Rico’s tax incentives.
Bloomberg’s report on June 12 revealed that civil and criminal cases are being built against hedge fund managers, crypto traders, and other affluent Americans who may have misrepresented their residency and income to exploit the tax breaks.
The investigations extend to attorneys and accountants who promoted Puerto Rico’s tax program, and it is anticipated that at least two criminal investigations will lead to charges in the near future. Charges under scrutiny include conspiracy and wire fraud.
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Attorney Carlos Ortiz shared insights from a conversation with a U.S. federal prosecutor, stating that they are collaborating with IRS agents and Puerto Rico officials. Ortiz summarized the situation by saying, “The message is the noose is tightening.”
Since the implementation of Puerto Rico’s new tax policy in 2012, over 5,000 U.S. individuals have relocated to the territory, attracted by the potential savings in federal income tax.
The tax policy provides a 100% exemption on dividends, a 60% exemption on municipal taxes, and zero federal taxes on income earned within Puerto Rico.
Furthermore, more than 3,600 businesses have enjoyed exemption from taxes on dividends, only paying a 4% tax on exports.
While these tax benefits are among the most lenient globally, the requirements to qualify for them are stringent.
Applicants must prove residency on the island for a minimum of 183 days annually and establish Puerto Rico as their “tax home.”
According to lawyers familiar with the tax regime, the strict eligibility criteria have tempted many individuals to manipulate numbers and engage in fraudulent activities on their tax returns.
Renowned figures such as gold enthusiast Peter Schiff and crypto investor Michael Terpin have relocated to Puerto Rico for tax purposes.
However, Schiff’s bank was recently shut down by Puerto Rican regulators for failing to meet minimum capital requirements.
Speaking at Miami’s annual Bitcoin Conference, Terpin praised Puerto Rico as the only place where one can avoid paying global taxes without relinquishing U.S. citizenship.
Despite the potential scrutiny, Terpin expressed confidence in his meticulous record-keeping and willingness to face an audit.
While wealthy residents laud the tax breaks for attracting top fund managers and entrepreneurs to the island, protests have arisen, claiming that the influx of low-tax “colonizers” has raised living costs.
The tax program remains a subject of contention in Puerto Rico.