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25th December 2023 > > Spot BTC ETFs & the BIS.


Spot BTC ETFs are a done deal. The BIS gives us some food for thought.

Market Snap

Market Wrap

We have been confident for some time now that spot BTC ETFs would be approved in January 2024. Given the latest news – see below – I think we now know that spot BTC ETFs will be approved next month.

We also know the halving will be upon us in less than four months.

All this information must surely be in the price by now. But since that breach to the upside of $40k on 4th of December we have traded in a tight range with no serious threats of a breakout in either direction.

Have I got it wrong all this time?

Curious Cryptos’ Commentary – The ETF is a done deal

At least according to Reuters, one of the more reliable news agencies compared to the partisan approach taken by Fox News, or the BBC, both of which egregiously filter out inconvenient truths and facts that do not fit their own worldview:

“Executives from two of the firms that met with regulators -- speaking on background because of the confidential nature of the discussions -- said the SEC set a deadline for final updates to their filings of Dec. 29. Regulators told attendees at the meetings that any issuer that doesn't meet that deadline will not be part of a first wave of potential spot bitcoin ETF approvals in early January, both executives said.”

There has been a flurry of amendments to the now-14 applications for a spot BTC ETF, all of which have been driven by conversations between the relevant proposer and the SEC.

Back home in the UK, our regulator will prevent us from accessing the most secure and most liquid means of investing in BTC once these ETFs are up and running. Great work from the civil servants as always.

Curious Cryptos’ Commentary – BIS

The Bank for International Settlements and the CCC are often at odds with each other. One of these two protagonists firmly believes in a technocratic, number-crunching view of the world, in the mistaken belief that regulations are the only appropriate answer to innovation, whilst also supporting the IMF’s self-imposed task of hurting the poorest people on the planet.

The other one is right.

As remarkable and unlikely as it sounds, sometimes the twain shall meet.

A recent report by the BIS highlights some of the inadequacies and deficiencies in stablecoins:

Its conclusion is as misguided as much as it was inevitable:

“Complementary private or public sector efforts, such as improvements in existing payment infrastructures and exploration or the development of central bank digital currency (CBDC), may help to offer the legitimate benefits in payments and financial services that the public seeks.”

Quickly moving on, some of the criticisms within this document could have been lifted from the pages of the CCC, particularly about the collateral behind stablecoins:

“The degree of transparency on the asserted availability and composition of backing reserves varies by the type of stablecoin.”

“Only a few stablecoins publish their reserves on a daily or even more frequent basis.”

“Even where information is available, it is often unclear whether the published information has been audited.”

The most damning comment, and the one that should worry us the most, is this:

“As a result, it is impossible to assess with any degree of confidence the quality of the underlying reserve assets of many stablecoins.”

The stresses on the crypto markets in 2022 led to the downfall of the algorithmic stablecoin LUNA and its associated ecosystem Terra, but all algorithmic stablecoins are destined to fail at some point. Fiat backed stablecoins have a more certain future, but with caveats. Despite my misgivings about its lack of disclosure and some dodgy filings, fortunately USDT (Tether) has not suffered the same fate as LUNA. Now we are back in full bull-market mode the risk of a fiat-backed stablecoin collapse – which would cause huge damage to the crypto industry – has receded dramatically.

Let us hope by the time of the next bear, the BIS’s warnings have been heeded.

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