21st January 2022 > > Regulation.

tl;dr

We love a bit of regulation at CCC towers.

Market Snap (at time of writing)

Market Wrap

BTC getting killed.

BTC below $40k is not a particularly welcome surprise for the start of 2022. Broader market conditions are not conducive to risk assets performing well, and cryptos are leading the charge downwards.

The GBTC discount is at a record high (see comment below), which is a negative indicator.

Occasional Series – The CCC is back! (boy that was a loooong party)

I know, apologies but you are going to have to start pressing delete on my name again every day now.

Curious Cryptos’ Commentary – Grayscale Bitcoin Trust (GBTC)

GBTC is now trading at a record discount of close to 30%.

For long-term holders of BTC, selling physical BTC and buying GBTC (for those who can do so) is a no-brainer.

Once again, I seem to be in a minority of one regarding this trade idea, which is a worrying sign.

Curious Cryptos’ Commentary – Regulation and the SEC

Gary Gensler, chair of the SEC, has taken note of the CCC.

For traditional financial products, regulation has always excluded currencies and commodities in their physical form. Any form of security (e.g. bonds and shares) have long been regulated, as have any derivative products of any securities or any non-securities.

I believe this anomaly is entirely historical, and there has been little pressure or desire on the part of regulators to correct it.

The challenge that cryptos pose is that though they are clearly a form of currency, their utility (much like derivatives) goes further than simply as a means of exchange. The fact that all Western liberal democracies decided to treat cryptos in the same way as currencies has always sat a little uneasily with the CCC.

Gary has now expressed his view that he agrees with the CCC. As a first step, he is going to increase the scrutiny of spot exchanges:

“I’ve asked staff to look at every way to get these platforms inside the investor protection remit. If the trading platforms don’t come into the regulated space, it’d be another year of the public being vulnerable.”

This is the type of comment that gets the knickers of the ill-informed crypto crowd all in a twist.

The unreconstructed crypto revolutionaries refuse to accept the benefits of regulation, probably because they want to keep cryptos all to themselves. This is typical of all revolutionaries. They just want the spoils that others are rightfully enjoying from their own hard work.

…

In another comment, Gary makes his intentions clear:

“I’m not neutral about investor protection. If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud.”

Gary’s vision of enhanced regulation is not an attempt – futile as it would be – to dampen or diminish the crypto revolution.

Gary’s vision is an attempt to enhance consumer protection to allow development and innovation in the crypto space to flourish.

…

Gary has made it quite clear that BTC futures exchange traded funds (ETFs) have been approved because the underlying product (BTC futures) is regulated.

When Gary is comfortable that BTC spot exchanges are regulated to his satisfaction, he will have no choice but to approve spot BTC ETFs.

Reserve Treasury Protocols (before they all go to zero)

Reminder – Olympus and Wonderland are, to the best of my knowledge, live viable projects. XEUS, FORT and JADE turned out to be scams, though they are still live scams. Scams are not uncommon in these Wild West fringes of Decentralised Finance (DeFi).

Photon appears to have won the prize for being the most extraordinary scam. In under 18 hours it went to zero. And as far as I can tell – and I am no blockchain analytics expert – they walked away with less than $30k.

It is very upsetting we have scumbags like that around.

Open positions:

Closed positions: