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ETFs are waiting...⏳
4-6 months 'til ETF party time? Maybe all at once. PYUSD is Ethereum's friend afterall? Bitstamp's Bucket List: Europe, Asia, and? FedNow or FedLater? So many questions.
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The SEC is knee-deep in Bitcoin ETF applications, and the crypto world is watching... with popcorn.
Mike Novogratz, CEO of Galaxy Digital: During Galaxy's recent Q2 earnings call (where, ahem, they announced a $46 million net loss 😬), he played a fun game of "pin the tail on the donkey" with his ETF prediction, giving it a 4 to 6 months timeline - referring to insights from internal sources.
"We're going to fight like cats and dogs to win market share there once it gets approved," added Novogratz. "It's a big, big deal."
Contacts from both Invesco and BlackRock suggest the approval is inevitable, hinting at a timeline rather than its possibility.
Galaxy Digital had collaborated with Invesco in June to reapply for a spot ETF, soon after BlackRock had also applied.
Currently, there are nine Bitcoin spot ETF applications awaiting SEC's decision.
Cathie Wood, CEO of ARK Investment Management: She believes that if the SEC decides to approve a Bitcoin ETF, it might approve multiple simultaneously.
And she predicts a delay in their spot Bitcoin ETF approval.
ARK teamed up with 21Shares for their Bitcoin ETF and is at the forefront among the eight applications awaiting the SEC's decision.
With the public comment period ending soon, the SEC might extend the decision date further.
Potential Market Impact
Many in the investment community believe that the approval of a spot Bitcoin ETF could lead to an increased inflow of institutional capital into Bitcoin. This could substantially drive up the cryptocurrency's price.
Novogratz emphasised the importance of this approval, stating that gaining the majority market share upon the ETF's approval would be a significant achievement for firms.
Historical Context: The SEC's approval of the ProShares' Bitcoin futures ETF in October 2021 resulted in substantial inflows on its opening day compared to other competitors that launched subsequently.
Given that the current set of spot ETF applications have similar fund structures, there's a belief that the SEC might not favour any particular one.
Cathie Wood speculates that multiple ETFs might receive approval simultaneously. Her firm's ETF, Ark21 Shares ETF, is set to be the first in the queue for potential approval on August 13, though a delay in the approval date is expected by many.
Grayscale, another significant player that's currently in a legal battle with the SEC over its own ETF application, has argued that the SEC should approve several ETFs at once to ensure fairness in the market.
The Centralisation Conundrum
Advocates laud ETFs for being tax-smart, affordable, and easy to trade. But does BlackRock's move align with crypto's core principles? Not quite.
Centralised Exchanges (e.g., FTX): They hold your crypto keys and require identity checks.
Decentralised Exchanges: A no-middleman setup. Direct transactions, no need for identity checks, and users manage their keys.
Here's the beef: ETFs centralise what is fundamentally a decentralised ethos of cryptos. With ETFs, you lose the decentralised edge.
ETFs could spawn "paper" Bitcoin — Bitcoin in name, but not in essence. You can't withdraw it, which amplifies potential risks.
While Bitcoin should be more approachable, turning it into just another tradable asset might weaken its revolutionary character.
Nikolaos Panigirtzoglou - JPMorgan analyst.
PayPal USD can “boost Ethereum activity and enhance Ethereum's network utility”
PayPal's brand new stablecoin could be a confetti shower for Ethereum, JPMorgan's crew believes. While there are some who aren't loving PayPal's Ethereum choice, there's a good vibe about Ethereum getting a popularity boost from this.
JPMorgan's Nikolaos Panigirtzoglou suggests that the move could pave the way for more companies to lean towards Ethereum for their decentralised initiatives. Notably, with Binance's BUSD stablecoin making an exit (due to regulatory concerns), PayPal's PYUSD could step in, potentially directing traffic from Binance over to Ethereum.
There's been some pushback against PayPal's decision to use Ethereum, largely due to Ethereum's notorious transaction fees. Expert Jayendra Jog points out the potential drawbacks, emphasizing the need for PayPal to possibly support PYUSD on platforms with more affordable fees.
The entrance of PayPal into the stablecoin domain could encourage better integration between conventional and decentralised finance.
"However, it is important to emphasize that the stablecoin issuers' regulatory framework is still pending in the U.S. and the lighter compliance/regulatory frameworks enjoyed by fintech companies might change in the future," they said.
TTD Scams 🥷🏻
Indian authorities shut down a major crypto scheme
The Situation: Authorities in India have wrapped up a massive $120 million crypto scam, rescuing over 200,000 victims in the process. The main orchestrator behind the operations within the country, Gurtej Singh Sidhu, has been arrested.
Who's Involved: Gurtej Singh Sidhu, a 40-year-old, was taken into custody in Odisha. His alleged involvement was with Solar Techno Alliance (STA), a scheme that launched in 2021 claiming to use blockchain to speed up delivery between customers and farmers, emphasising solar tech.
The Official Statement: Jai Narayan Pankaj from the Economic Offence Wing (EOW) explained that STA cleverly used terms like "green energy" and "solar technology" to cover up the Ponzi multi-level marketing operation. At present, this scheme has hoarded a staggering 10 billion rupee (which is about $120 million).
The Scam's Mechanism: STA members were lured with the promise of daily earnings ranging from $20 to $3,000, with the catch being the continual recruitment of new members. As Pankaj pointed out, initial returns enticed members to recruit more aggressively.
Lifestyles of the Accused: This wasn't just any scam; the individuals behind it, including Hungarian David Gez and Sidhu, apparently led lavish lives. They revelled in the luxury of fast cars and high-end fashion, a stark contrast to the victims they left in their wake.
TTD Exchanges 🏛️
Two major crypto exchanges, Blockchain.com and Crypto.com, have been granted a major payment institution license by the Monetary Authority of Singapore. This license allows them to offer unrestricted payment services, including digital payment token services and cross-border transfers, without transaction volume limits. Singapore is positioning itself as a significant centre for the crypto industry and has implemented additional regulatory rules to protect customers. The MAS has also allocated $112 million to support the fintech sector, including those operating in the Web3 space.
Bitstamp, the oldest cryptocurrency exchange, is reportedly raising funds for European derivatives trading in 2024 and expansion into Asian markets. The Luxembourg-based exchange has been seeking fresh funding since June, with Galaxy Digital Holdings acting as an adviser. The funds will also be used to support operations in the UK. Bitstamp is aiming to launch derivatives trading in Europe, a popular goal among crypto exchanges, and expand its presence in Asian markets. The exchange has not yet responded to requests for comment.
"Bitstamp is not for sale, and we are not actively looking to sell the company," CEO Jean-Baptiste Graftieaux said. "Our current and exclusive priority is to raise money through strategic investors to accelerate Bitstamp's growth by providing new products and services to retail and institutional crypto customers."
A cryptocurrency whale deposited substantial sums into the Huobi exchange: $200 million in USDT and 5,000 ether (valued at $9.15 million). Huobi clarified that the depositing address doesn't belong to Justin Sun but is among the top-10 TRX token holders.
Following the deposits, Huobi's USDT supply rose to $273 million. The exchange also holds $400 million in stUSDT, associated with Sun and the Tron Network, though it lacks broad support. Interestingly, these large deposits come amid a trend of outflows from Huobi.
The US Federal Reserve is stepping into the cryptocurrency scene with its latest program: the "Novel Activities Supervision Program."
The primary objective? Monitor and manage risks tied to banks diving into the crypto waters.
What's the Program About? At its core, this program aims to balance innovation and regulation. It will work closely with current supervisory teams to keep an eye on emerging activities, ensuring that while banks embrace cryptocurrency and related tech, they don't compromise on customer safety or create potential threats to the financial system.
Why Does This Matter? The rapid advancements in digital tech and cryptocurrencies mean banks face novel challenges.
"Given the novelty of these activities, they may create unique questions around their permissibility, may not be sufficiently addressed by existing supervisory approaches, and may raise concerns for the broader financial system."
If a state bank wants a piece of the action with specific dollar tokens or stablecoins, the Fed emphasises they need to have appropriate safety measures in place. Regular reviews will be the order of the day for banks engaging with these technologies.
This move isn't the only way the Fed is showing interest in the digital realm.
FedNow: On July 20, they rolled out FedNow, a tool that lets financial institutions make instant money transfers throughout the year. But not everyone's thrilled. US presidential candidate, Robert F Kennedy Jr, for instance, called out FedNow as potentially paving the way to "financial slavery and political tyranny."
TTD Surfer 🏄
Marathon Digital, a crypto mining firm, reported lower-than-expected earnings and revenue for the second quarter of 2023.
Superchief Gallery founder, Edward Zipco, plans to create a global network of 50 physical NFT galleries, allowing artists and exhibitions to seamlessly travel between different countries.
Former FTX Digital Markets co-chief executive is reportedly in talks with federal prosecutors to plead guilty to criminal charges related to the collapse of the cryptocurrency exchange.
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