29th August 2023 > > ETFs and Shopify.

tl;dr

Another twist in the saga of BTF spot ETFs. Shopify joins the crypto revolution.

Market Snap

Market Wrap

BTC and ETH back into a very narrow trading range once again.

Curious Cryptos’ Commentary – BTC spot ETF

The SEC has consistently rejected all applications for a BTC spot ETF in the US, on the grounds that the market is neither liquid nor deep enough to ensure the absence of market manipulation.

The SEC has approved BTC futures ETFs and a 2x leveraged futures ETF, which is just madness. Futures prices are derived from spot prices, so the grounds for refusing a spot ETF should have been applied to a futures ETF. This glaring inconsistency is glossed over by the SEC.

A little while back, Blackrock, the largest asset manager in the world, entered the BTC spot ETF fray with an application that included an SSA (surveillance sharing agreement), naming Coinbase as the partner. Blackrock, steeped in a history of working closely with regulators, must have a good degree of confidence that the SSA concept will overcome the objections of the SEC. Almost immediately afterwards, all the other applications for a BTC spot ETF were amended to include the SSA concept.

The SEC’s response was to delay its decision with a public consultation based around four questions (https://www.curiouscryptos.com/post/12th-august-2023-etfs-and-boyaa). Three of those questions have already been answered in the affirmative by the SEC itself. We expect further insight when the SEC responds on 6th October.

…

In a pleasing twist, Hashdex have submitted their own application to amend the terms of their current BTC futures ETF, and to hold physical BTC. In the first instance, any buying or selling of BTC futures to match the creation or destruction of ETF shares still takes place on the CME (Chicago Mercantile Exchange) as per the current process. Futures roll every three months, settled until now in cash.

Hashdex has proposed to the SEC that futures contracts are settled in physical BTC (assuming you can call something that only exists in the digital space a physical object, but we leave that discussion for another day).

However obstructive the SEC can be about the regulation of crypto markets this concept must have a very high chance of passing muster.

And this is important.

The financial outcome for investors of futures or spot ETFs can materially differ, so this hybrid version will be to deliver a return much closer to spot returns. This is an important consideration for investors.

For those of us who hold BTC, this will bring a new net buyer of BTC into the marketplace, which can only add upward pressure to prices.

Most importantly, once this gets the nod, the pressure keeps growing on the SEC to approve a BTC spot ETF. Happy days.

Curious Cryptos’ Commentary – Shopify

Shopify and Solana have announced a collaboration to allow businesses operating on Shopify to utilise Solana Pay to receive payments in stablecoin USDC (https://www.prnewswire.com/news-releases/solana-pay-integrates-with-shopify-as-new-payment-option-to-transform-commerce-301908023.html).

As the press release makes clear:

“Solana Pay makes it easy for merchants to get real-time access to their money and greater ability to manage working capital, liquidity, and liability protection. With no intermediary, Solana Pay eliminates bank fees, chargebacks, and holding times while enabling immediate, direct payment settlement of USD stablecoins compatible with Solana.”

The argument has been that online retail stores do not want to receive cryptos as a payment option because of the inherent volatility. And this is a fair point. Using stablecoins removes that obstacle.

Next up, Amazon.

Crypto adoption is happening right here, right now.