26th September 2023 > > The EU and BTC ETFs.

tl;dr

The EU attracts more crypto business. US spot BTC ETFs look more certain by the day.

Market Snap

Market Wrap

Yields continue to rise, encouraging the leveraged children to build BTC shorts. BTC is resiliently trading in a tight range. It’s now six months since BTC broke through $25k following the end of the last crypto winter but apart from a couple of brief forays into the 30s, price action has been the very definition of stability. How long can this go on for?

Curious Cryptos’ Commentary – The EU

Coinbase is enjoying regulatory clarity in the EU.

Yesterday Coinbase announced that it has registered with the central bank of Spain to allow it to provide exchange and custody services:

https://www.coinbase.com/blog/coinbase-obtains-bank-of-spain-registration-in-spain

This follows on from its registrations in Italy, Ireland, and the Netherlands. More EU countries are surely on their task list. This comment says it all:

“The recent adoption of MiCA by European Union policymakers also represents a pivotal moment for cryptocurrencies in the region. The regulatory clarity MiCA provides to the industry is hugely welcome, and shows that the region is recognising the potential that emerging technology can provide. The EU is stepping up to the mark, while other notable jurisdictions are struggling to provide a solid, cohesive regulatory framework that gives clarity to a burgeoning innovative industry.”

Curious Cryptos’ Commentary – US spot BTC ETF

We are now just 10 days away from October 6th, the date that the SEC is expected to give its response to the public consultation paper it issued in response to the deluge of ETF applications it received incorporating the Blackrock SSA (surveillance sharing agreement) clause:

https://www.curiouscryptos.com/post/12th-august-2023-etfs-and-boyaa

As we have already seen, the Blackrock SSA is not the only game in town. Hashdex has applied for a futures ETF, but settled not on a cash basis, but with physical BTC every quarter, closing the gap in the performance of a futures ETF compared to spot.

Bitwise have also proposed an innovation in an amendment to its spot ETF.

Instead of using Coinbase as its “regulated market of significant size” for the SSA, it has proposed using the CME Bitcoin futures market.

This is a canny move. The SEC has approved many futures ETFs, and even a leveraged futures ETF, for BTC based on the CME. The SEC has therefore conceded that the CME is free of market manipulation. It is hard to see how the agency can retain credibility if it rows back on that previous conclusion.

Gary Gensler, chair of the SEC, has appeared determined to prevent a spot ETF. It is very possible that on the 6th of October the SEC provides another reason to delay approval. But the pressure is growing, and the eventual outcome will be that the SEC must give the go-ahead. The longer he refuses to admit defeat, the worse the blow will be to his reputation.