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Grayscale gets a 🙌🏻 BTC ⬆️ COIN 🚀
Grayscale gets a high-five from the DC Court, outfoxing the SEC on a Bitcoin ETF. Impact theory - SEC's first crackdown on NFT project. Binance rolled out "Send Cash" and who's warning about AI now?
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The US Court of Appeals for the DC Circuit gave its nod in favour of Grayscale, tipping the scale against the SEC regarding Grayscale's push for a Bitcoin spot ETF.
A Court Ruling in Grayscale's Favor
The Decision: A federal judge revoked the SEC's refusal for Grayscale's ETF proposal via its Bitcoin Trust.
Judge Neomi Rao of the US Court of Appeals for the District of Columbia Circuit found Grayscale's ETF comparable to the already approved Bitcoin futures exchange-traded products by the SEC.
SEC's Stance: The commission had rejected Grayscale's application, arguing the proposal didn't adequately guard against "fraudulent and manipulative acts." This justification has now been deemed inadequate.
The US Court of Appeals branded the SEC’s denial of Grayscale's spot Bitcoin ETF conversion as “arbitrary and capricious.”
Current ETF Landscape in the US
SEC's Track Record: Up until now, the SEC has turned down every spot crypto ETF application in the US.
In the Pipeline: Applications from industry giants like BlackRock, ARK Invest, Bitwise Asset Management, VanEck, WisdomTree, Invesco, Galaxy Digital, Fidelity, and Valkyrie await the SEC's nod.
Potential Delays: The SEC could prolong finalising these decisions up until March 2024.
Bitcoin reacted: Reacting almost immediately, Bitcoin's price soared by over 7% in 24 hours, leaping from slightly above $26,000 to $27,425 and now $27,433.
Why is this so crucial?
For the majority of the summer, Bitcoin maintained a low profile, showing minimal volatility, unless news about a spot ETF emerged. The recent decision that challenges the SEC's refusal of Grayscale's Bitcoin ETF application is an encouraging sign for investors.
For those out of the loop, Grayscale took the legal route against the SEC last year when their proposal to transition their Bitcoin Trust to a spot Bitcoin ETF faced rejection.
The SEC, known for its conservative stance, has consistently been hesitant to green-light a Bitcoin ETF, mainly due to concerns surrounding market manipulation. Despite this, the regulator's desk is flooded with applications from prominent players, highlighting a strong demand for such a product among investors.
But why do investors have such an appetite for this financial delicacy? Here's why: It promises traditional investors a safer entry into the cryptocurrency realm. These ETFs serve as investment tools that let individuals purchase shares mirroring the price of an associated asset. Thus, a Bitcoin ETF would simplify the investment process, eliminating the challenges tied to the storage and security of cryptocurrency assets.
What it means for Coinbase
While Bitcoin enjoyed a 7% surge, Coinbase's shares skyrocketed by a whopping 15% by market close.
Positioning as Custodian: Coinbase is eyed as the potential custodian and surveillance-sharing partner for forthcoming Bitcoin ETFs.
The Implication: Coinbase would be tasked with the safe storage of Bitcoin that backs the ETF shares and will share crucial trade and customer data to counteract market manipulation risks.
Coinbase is the chosen guardian for some major players. Financial titan BlackRock, managing a cool $8.5 trillion, is looking at Coinbase to be the custodian for coins in its spot Bitcoin ETF.
Coinbase isn't just offering custody. They've entered into surveillance-sharing agreements with powerhouses like the Cboe BZX Exchange and Nasdaq. These partnerships aim to enhance these exchanges' abilities to spot any shady activities in Bitcoin's spot market by offering insights into trading, clearing activities, and customer identification.
“Despite the inevitable SEC appeal, to our mind there is no doubt now, spot BTC ETFs are coming to the US,” - Tim Bevan, CEO at ETC Group
“Now is the time for the US to embrace innovation by making bitcoin available to investors through exchange-based products or risk falling behind global powers that are moving faster to claim this advantage.” - Lolli CEO and co-founder
"This is a monumental step forward for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper," a Grayscale spokesperson.
Post the Grayscale-centric ruling on August 29, the SEC holds the card to challenge the decision at the US Supreme Court within a 90-day frame or push for an en banc review, where a full circuit court could overturn a verdict handed down by a trio of judges.
Clarity on the SEC's intended path remains elusive. Should the SEC opt against an appeal, the court would then dictate the execution of its ruling. This could range from directing the SEC to sanction Grayscale's request or, at the very least, reassessing it.
The upcoming deadlines
Bitwise: Awaiting the SEC's green light on its ETF application by September 1st.
Others in Line: BlackRock, VanEck, Fidelity, Invesco, and Wisdomtree are gearing up for the SEC's verdict on their applications by September 2nd, based on numerous SEC filings.
Valkyrie's Turn: The investment firm is set to get feedback from the SEC on September 4th.
Oscar Franklin Tan, the chief legal officer of NFT platform Enjin.
'Problematic to imply all NFTs are securities'
The SEC just wagged its finger at Impact Theory, an entertainment company, for supposedly selling what looked suspiciously like unregistered securities. These "Founder's Keys" NFTs, which made the company a $30 million, are now on the SEC's naughty list.
It's the agency's first-ever crackdown on an NFT project.
Who's in the Hot Seat? Tom Bilyeu, co-founder of Impact Theory and the brains behind the popular YouTube show, also named "Impact Theory." With over 3.7 million subscribers and A-list guests like the iconic Matthew McConaughey, this is no small fry.
Some Friendly Fire Within the SEC: Hester Peirce and Mark Uyeda, two SEC commissioners, cried foul on this decision.
They reckon a few promises here and there don't make an NFT a full-blown investment contract. Peirce and Uyeda said in a statement:
"We do not routinely bring enforcement actions against people that sell watches, paintings, or collectibles along with vague promises to build the brand and thus increase the resale value of those tangible items."
"We must ensure that the SEC order does not hold back creators from trying the spectrum of Web3 economic and social models. It is problematic to imply that all NFTs are securities because NFTs are a technology and can mean an infinite number of things, from a graphic to a health record to a land title." Says Franklin Tan.
I mean, if we're going down that road, should we be looking at grandma's antique watch collection too?
“It doesn't mean that now Grayscale will be 100% able to list a spot Bitcoin ETF, nor that this will happen in the future.”👇🏻
TTD AI 🎈
The AI guidebooks
Experts are warning that AI-generated guidebooks sold on Amazon could have deadly consequences. The New York Mycological Society has raised concerns about mushroom hunting books created using generative AI tools, which could mislead readers into eating poisonous mushrooms. These AI-generated books often mimic patterns typical of AI text and contain inaccuracies, making it difficult for novices to discern safe advice from trustworthy sources.
Content Patterns & Creation:
AI books show recognisable patterns and potential inaccuracies.
AI's speed in content generation contrasted with lengthy human research processes.
The public seems more susceptible to AI-produced false information.
UK MPs warn you too
A group of British lawmakers has warned that AI policy "weaknesses" in the UK are putting artists at risk. They are calling for safeguards to protect the intellectual property of musicians, authors, and artists from being used by AI developers without consent. The lawmakers also criticized the government's plans to exempt text and data mining from copyright protection, stating that it shows a lack of understanding of the creative sector.
They emphasized the need for urgent action to protect creators when their likeness or past performances are used without consent through generative AI. Critics have described the proposed laws as a "green light to music laundering."
AI threats are also a concern in the US with the entertainment sector, including actors and writers, striking over AI-related issues.
Outlets like The New York Times, Reuters, The Washington Post, and ABC News have blocked OpenAI's GPTBot from accessing their content.
TTD Binance ☢️
Binance has rolled out a new platform named "Send Cash." This initiative is designed to enable transfers of cryptocurrency via Binance Pay in select Latin American countries.
Fast and efficient digital fund transfers.
Lower transfer costs through licensed providers.
Initial availability: Users from nine countries can send funds directly to bank accounts in Colombia and Argentina.
Countries on Board:
This launch comes on the heels of Binance discontinuing a crypto card payment partnership with Mastercard in four countries, including Colombia and Argentina, on August 24.
Regional Crypto Landscape: Ark Invest has recently underscored the growing popularity of cryptocurrency in Argentina, attributed in part to the country's inflation challenges. This economic context has bolstered the political profile of Javier Milei, a pro-bitcoin libertarian presidential aspirant.
Additionally, Circle has partnered with Latin American payment leader, Mercado Pago, to offer USDC in Chile. Meanwhile, Num Finance sees a substantial opportunity to innovate remittances in the region, particularly with the introduction of a new stablecoin on Polygon linked to the Colombian Peso.
TTD China 🇨🇳
Let’s have a detailed look at the Chinese economy & Bitcoin.
Recent alarming economic data from China is causing ripples of concern.
Coupled with other global pressures, including Russia's conflict with Ukraine, soaring interest rates, and geopolitical issues, the landscape for crypto is intricate.
China's economic landscape
Recent headlines have pointed to China's waning economy and the potential threats this poses globally.
Data suggests diminishing economic activities. For instance, July's industrial output grew by 3.7%, slower than June's 4.4%. Also, Chinese banks' new loans dropped by 89% in July from June, the lowest since 2009.
Broader Financial Implications:
Worries are brewing about the turbulence in China's real estate sector, which could ripple into the US dollar and commodities markets, posing threats to Bitcoin.
On August 28, the Shanghai Shenzhen CSI 300 Index, reflecting China's stock market, witnessed a 5.5% surge, closing at a 1.2% gain. Still, Chinese shares lag behind globally in equity performance.
China's Bitcoin Connection:
Bitcoin's value has shown some historical correlation with China's stock market's movements. On Aug. 28, the correlation between the CSI 300 Index and Bitcoin/USD was a notably high 70%.
Bitcoin traders are naturally apprehensive of the potential negative impact of China's stock market on the crypto.
The stock market's recent uptick is attributed to China's stimulus measures announced on Aug. 27, including special refinancing terms for real estate, reduced fees, and limits on selling below IPO prices.
The yuan's value against the US dollar is decreasing, indicating the currency hitting historically low levels, which could signify long-term issues for China.
Implications for Bitcoin:
With capital moving away from Chinese equities, it strengthens the US dollar. This could pose challenges for Bitcoin since it's valued in dollars and acts as an alternative store of value.
However, Bitcoin's value as an alternative hedge persists, even if it can't currently regain the $29,000 support.
TTD Surfer 🏄
Bus and taxi operators in Jamaica are eager to use the country's CBDC, Jam-Dex, as it offers operational efficiencies and reduced costs.
Elon Musk's company X has been granted a currency transmitter license by regulators in Rhode Island - closer to offering crypto payments.
Coinbase is investigating a technical issue that has caused some users of its Wallet service to see empty balances.
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