False news of approval of Bitcoin ETF by SEC account on X shakes market
On January 9th, a compromise of the SEC account on X (formerly Twitter) led to the dissemination of false information about the approval of a Bitcoin ETF, causing significant market volatility. The investigation identified that the phone number linked to the SEC account was accessed by an unauthorized third party. Security experts and the crypto community highlighted the irony of the situation, as the SEC itself did not follow the security practices it recommends. US lawmakers demand explanations and transparency from the SEC, emphasizing the seriousness of the security breach and its potential impact on the markets, and calling for a comprehensive investigation into the security practices of regulatory bodies.
Bitcoin (COIN:BTCUSD) quickly rose to nearly $48,000 before falling to $44,900, resulting in massive liquidation of both short and long positions. The market turmoil prompted short-term holders, with less than 155 days of ownership, to transfer $1.3 billion in profits to exchanges, one of the largest profit transfers in two years. In total, about $2 billion in Bitcoin was sent to exchanges, with $750 million representing losses, highlighting the significant impact of this false news on the cryptocurrency market. At the time of writing, the price of Bitcoin was at $45,440.
Ethereum (COIN:ETHUSD) and platform-based Ethereum tokens recorded an increase in the last 24 hours, driven by the expectation of a future Ether ETF, following the likely approval of the Bitcoin ETF in the US. Native tokens of Lido (COIN:LDOUSD) and RocketPool (COIN:RPLUSD) experienced significant increases, while layer 2 network tokens such as Mantle (GATE:MNTUSDT) and Optimism (COIN:OPUSD) also rose. Despite the rally, the approval of the Ether ETF is still considered a probability, not a certainty.
Intense competition reduces fees for spot Bitcoin ETFs
Anticipating SEC approval on Wednesday, spot Bitcoin ETF applicants have cut fees to compete better.
- BlackRock: Reduced the fee from 0.3% to 0.25%. Offered a temporary discount from 0.2% to 0.12% for the first $5 billion in assets in the first 12 months.
- Ark Invest/21Shares: Reduced fees from 0.25% to 0.21%. Offers zero fees for the first six months or up to $1 billion in assets.
- Fidelity: Reduced the permanent fee from 0.39% to 0.25%.
- Valkyrie: Reduced the fee from 0.8% to 0.49%.
- Invesco Galaxy: Reduced the fee from 0.59% to 0.39%.
- WisdomTree: Reduced the fee from 0.5% to 0.3%.
- Bitwise: Maintains the position as the potential cheapest issuer, reducing the permanent fee from 0.24% to 0.2%.
- Grayscale: Filed an amended S-3 form to convert its existing GBTC product into an ETF, reducing the fee from 2% to 1.5%.
While these fees are higher compared to traditional stock and bond ETFs, they are competitive in the commodities segment. The SEC’s decision will influence the launch of these ETFs.
Notable increase in assets of BITO ETF, according to K33 Research
Vetle Lunde from K33 Research highlights the significant growth in assets under management (AUM) of the Proshares Bitcoin Strategy ETF (AMEX:BITO). Recently, BITO had a notable increase, with the fourth-largest daily inflow of 4,555 Bitcoins on January 9th. This growth is comparable to the peaks observed at its launch in October 2021 and in July of the same year. Currently, BITO holds the equivalent of 46,930 Bitcoins. Lunde also notes a 2% increase in open contracts on the CME and an 8% growth in exposure to the CME ETF, indicating a growing preference for regulated markets and Bitcoin ETFs.
Richard Heart confronts SEC accusations with a robust legal defense
Richard Heart, the founder of HEX (COIN:HEXUSD), faces SEC accusations with a strong legal defense. Represented by renowned lawyers, Heart has refuted securities fraud charges. His legal team has requested a preliminary conference in a letter sent to Judge Carol Bagley Amon, emphasizing his dedication to blockchain technology since 2011. Heart’s defense challenges the SEC’s jurisdiction and the validity of the charges, arguing that software programs operate on a decentralized and independent network. Furthermore, the market reaction has been positive, with increases in HEX prices and associated tokens following Heart’s legal response, demonstrating the crypto community’s interest in the case’s outcome.
Arthur Hayes, former co-founder of BitMEX, becomes a consultant at the decentralized AI platform Ritual
Arthur Hayes, former co-founder of BitMEX, now joins the team at Ritual, a decentralized platform focused on artificial intelligence, as a consultant. Ritual, which recently raised $25 million in funding, offers fine-tuning of AI models and APIs to facilitate access to these models. Hayes, who also runs the Maelstrom family office and pioneered perpetual swaps at BitMEX, joins a notable advisory board at Ritual, including experts from NEAR, EigenLayer, and Gauntlet. He expressed enthusiasm for AI decentralization and the creation of more robust censorship-resistant technologies, aiming to drive collaboration and independence in the emerging AI economy.
Libre: The new tokenization platform backed by investment giants
Prominent institutional investors in cryptocurrencies, such as Nomura’s Laser Digital, Brevan Howard’s WebN Group, and Hamilton Lane, have announced a partnership in the new tokenization platform, Libre. Developed under the leadership of Avtar Sehra and built on the Polygon CDK, Libre focuses on complete decentralization from the outset. The platform will allow issuers and distributors to interact directly on the blockchain, integrating compliance, such as KYC and AML, in a more sophisticated manner. Products such as hedge funds and private credit are planned for launch in the first quarter, with the goal of reducing operational costs and generating revenue through web services.
BitGo obtains regulatory approval in Singapore for cryptocurrency services expansion
BitGo, a major cryptocurrency custody service provider, has received preliminary approval from the Monetary Authority of Singapore to operate as a significant payment institution. This authorization allows BitGo to exceed previously established transaction limits, strengthening its role in the Asian market. With full licensing, BitGo will expand its secure buying and selling of digital asset operations. Founded in 2013, the company already has licensing in Germany and is involved in a Bitcoin ETF in the US.
Binance and other cryptocurrency exchanges removed from the App Store in India
Binance has confirmed the removal of its app, along with other foreign exchange apps, from Apple’s App Store (NASDAQ:AAPL) in India. The company, aware of Apple’s new restrictions, has stated its commitment to complying with local regulations. Current app users will not be affected, and Binance is seeking to resolve the issue with regulators. Other exchanges removed include Kraken, MEXC Global, HTX, and Gate.io. The removal follows Apple’s strict stance on cryptocurrency, as previously seen with Coinbase Wallet and Trust Wallet.
Turkey nears finalization of cryptocurrency regulation
Turkey’s Minister of Finance, Mehmet Şimşek, announced that the country is in the final stage of technical studies to establish cryptocurrency regulations, according to Coindesk. This move is part of a broader effort to remove Turkey from the Financial Action Task Force (FATF) gray list, which highlights countries with deficiencies in anti-money laundering measures. The proposed legislation will define crypto assets as “intangible assets” and place cryptocurrency exchanges under the supervision of the country’s Capital Markets Board, subject to operational requirements similar to financial institutions. Şimşek expects the proposals to be ready before FATF’s next assessment in February.