Week of June 3rd
The President declares for the "anti crypto army" by vetoing the Bill, passed with bipartisan support, that would rescind SAB 121 from the SEC. At the same time, his opponent was convicted of felony charges in a NY courtroom, energizing Republican fundraising. With all of that as a backdrop, the market didn't move a lot...
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Biden vetoes SAB 121 recision bill
While this was threatened a couple of weeks ago, there was hope among the Democrat supporters in the crypto community that the administration would recognize the bipartisan effort to pass this bill. Despite a last minute letter from the American Banking Lobby, the president acted to support his embattled SEC chairman and vetoed this bill.
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In the opinion of this author, this was a terribly bad decision. SAB 121 is a staff accounting bulletin, which did not go through public comment or any industry review. Despite that, it effectively prohibits regulated financial institutions from custodying crypto assets for their clients by forcing them to hold such assets on their balance sheet and account for them as risk capital. The result is that client assets cannot be "ring fenced" and protected from bankruptcy as other assets under custody are. It also forces the crypto business to rely upon non bank institutions. Considering their stated reason is to encourage the creation of a regulatory regime, this is a giant step backwards and has earned the administration a lot of ill will.
Trump is convicted in NY "hush money" case
Much ink has been spilled on this topic, so I wont go into depth about the precedent it sets, how it makes the U.S. look to the rest of the world or how it has sparked even greater polarization. What I will say is that, quite factually, it has spurred a wave of donations to his campaign & the betting markets still project Trump as the winner. Considering Trump's recent support for personal sovereignty by protecting wallets and his support for entrepreneurs to have a coherent regulatory framework, the election does matter to the industry. That being said, it is appropriate that the market did not really move on this news.
Mt. Gox Bitcoin has all been moved to a single wallet
The news that all 140,000 Bitcoin from Mt. Gox has been moved to a single wallet, presumably for the purpose of repaying roughly 25% of the original holders in kind, did spark a small selloff early in the week. The market seems to have digested this well, however, and that makes sense to me. Consider that many of the larger institutional buyers of Bitcoin are concerned about the size of the market, if the assets were sold off in an auction, while it would likely trade below the market, the elimination of the supply overhang would be bullish. In this case, however, many of the holders are likely to keep holding, as they would realize capital gains and many of them are "hodlers" who believe Bitcoin prices will go much higher. As a result, it has been shrugged off, for now, but watch the space over the next few weeks as it becomes clearer.
Retired partner, Aeorads Capital Management
6moas always, brilliant & insightful
Sales @ Voltage
6moLove these little updates, keep them coming!