The Increasing Political Relevance Of Crypto In The US
The Daily Crypto Update for Institutional Investors
Three Separate Developments From Wednesday Portend The Increasing Political Relevance Of Crypto Ahead Of US Presidential ElectionsÂ
‘... if you’re in favor of crypto, you better vote for Trump:’ On Wednesday, candidate Trump was hosting was hosting the Trump Cards NFT Gala. The former President, who during his time in office took a relatively antagonistic stance to crypto, was asked to comment on the current administration’s stance towards crypto. Trump described the Biden administration as hostile to the digital assets leading to crypto businesses leaving the country. Trump said his administration is ‘going to embrace it,’ referring to crypto. Trump also invited crypto proponents to vote for him. The event, hosted at Mar-a-Lago also featured crypto data platform Messari CEO Ryan Selkis, and Polygon co-founder Mihajlo Bijelic, making an impromptu statement on stage. Trump’s stance is being seen as increasingly pro-crypto by some members of the digital asset community. Last month, we noted that Trump has a noticeably significant number of BTC and crypto proponents in his orbit.Â
President Biden plans to veto pro-crypto legislation: The US House voted to reject the SEC's crypto accounting guidance on Wednesday. The legislation was introduced by Republican representative Mike Flood. Fellow Republican Cynthia Lummis has been spearheading matching legislation in the Senate. The SEC’s guidance, also known as Staff Accounting Bulletin No. 121, aimed to clarify the accounting procedures for crypto. It instructs that a bank holding a customer's crypto should include the assets on its balance sheet, which could lead to significant capital expenses. A government review later determined that the policy guidance was poorly managed, although the agency and Chair Gary Gensler have since defended it. In a statement issued on the same day, the White House indicated President Biden would veto the bill if it were to be presented to him to sign. According to the statement, the legislation would ‘disrupt the [SEC’s] work to protect investors in crypto-asset markets and to safeguard the broader financial system.’ The statement also notes that the guidance ‘was issued in response to demonstrated technological, legal, and regulatory risks that have caused substantial losses to consumers.’ For context, President Biden has vetoed 11 bills so far into his term.Â
The ‘United States needs to promote dollar-denominated stablecoins:’ Speaking to Bloomberg on Wednesday, Republican Congressman Andy Barr, spoke about stablecoin legislation. Barr serves as a member of the House Financial Services Committee, where he is the Chair of the Subcommittee on Financial Institutions and Monetary Policy and a member of the Subcommittee on National Security, Illicit Finance, and International Financial Institutions. He is also a member of the House Foreign Affairs Committee. Barr said the stablecoin legislation is ‘connected to national security.’ Barr indicated he believes the US needs to promote USD-denominated stablecoins ‘in the global economy to protect and advance the dollar’s dominance and the dollar as the world reserve currency.’
CRYPTO HEADLINES
Stand With Crypto, initiated by Coinbase, has launched a PAC to support crypto-friendly US politicians. The PAC, aiming to mobilize its 440,000 members, will back bipartisan candidates in the upcoming elections. It seeks to advocate for sensible crypto regulations and innovation within the industry. This initiative is part of a broader industry effort, with crypto super PACs raising over $110M this election cycle. - link - @TheBlock
Grayscale Investments maintained flat first-quarter revenue at USD 156M despite holding fees steady for its Bitcoin ETF. The firm faced about USD 17.4B in outflows since converting GBTC from a trust, with competition from lower-cost funds impacting its performance. Despite this, Grayscale's parent company, Digital Currency Group, saw an 11% revenue increase to USD 229M, attributed to higher asset prices and growth in its mining and exchange subsidiaries. - link - @Bloomberg
Binance Holdings Limited was fined CAD 6M by FINTRAC for regulatory breaches. The firm failed to register with Canadian authorities as a foreign money services business and neglected to report significant virtual currency transactions. These violations persisted until Binance discontinued its services in Canada in September 2023. - link - @FINTRAC
Toronto-based Ledn processed loans exceeding USD 690M in Q1 2024, its most successful quarter in six years. Institutional demand surged following US approval of BTC ETFs, with a notable allocation to ETF market makers, the firm noted. Since November 2022, the company’s loan book has doubled. - link - @CoinDesk
The European Securities and Markets Authority (ESMA) weighed the inclusion of BTC in the EU mutual fund market. ESMA is reviewing the potential for BTC to become a part of UCITS, which would introduce the asset to a mainstream European audience. The move faces regulatory challenges, including alignment with forthcoming regulations such as MiCA. - link - @BitcoinMagazine
Core Scientific (NASDAQ: CORZ) transitioned part of its BTC mining infrastructure to AI use. The company allocated 16 MW of capacity to AI startup CoreWeave Inc., seeking to benefit from AI data center demand. The company anticipates a full transition to AI high-performance computing services within three to four years. CORZ saw an 8.6% increase following the announcement. - link - @Bloomberg
Defunct crypto lender BlockFi is finalizing its winddown and has partnered with Coinbase for client fund withdrawals. Following its November 2022 bankruptcy in conjunction with FTX's collapse, BlockFi announced plans for customer crypto returns, with a target withdrawal deadline during this quarter. - link - @Cointelegraph
Kraken has asked a US court to dismiss an SEC lawsuit. The exchange argues that crypto should be considered commodities, not securities, challenging the SEC's jurisdiction. Kraken's defense hinges on the Howey test's criteria not being met for cryptocurrencies listed in the SEC's complaint. - link - @CoinDesk
India's anti-money laundering unit approved Binance and KuCoin as offshore crypto entities. Following a prohibition for unauthorized activities, both firms registered with the Financial Intelligence Unit. KuCoin has already paid a penalty of USD 41,000 and resumed operations, while Binance is currently undergoing compliance processes and is awaiting a determination of its penalty. - link - @CoinDesk
EigenLayer's new token launch attracted USD 14B in assets amid controversy over user exclusions. Supported by a16z Crypto, the DeFi protocol is distributing EIGEN tokens via airdrop, but has excluded users in the US, China, and other countries because of regulatory concerns. - link - @Bloomberg
TOP ARTICLES
OPEN-SOURCE RESEARCH / LONG-READ OF THE DAY
Harvest CEO Wants Its Bitcoin, Ether ETFs On The Stock Connect For Mainland Chinese Investors, But Ecosystem Must Develop, South China Morning Post, May 9, 2024
Hong Kong outlet South China Morning Post discusses future plans for BTC and ETH spot ETFs in the city by issuer Harvest, including offering the products to mainland investors.Â
CRYPTO MULTIMEDIA
The Power Of Bitcoin With Gloria Zhao, What Bitcoin Did, May 8, 2024
Gloria Zhao, as BTC Core maintainer, discusses her work and her views on the asset.Â
CHART OF THE DAY
USDt has proven to be a popular means of gaining exposure to USD in emerging markets. In Turkey, USDt priced against the local lira sees consistently higher volumes compared to BTC/TRY...
About FRNT Financial
FRNT: TSXV is an institutional capital markets and advisory platform focused on digital assets. FRNT aims to bridge the worlds of traditional and web-based finance. Business lines include deliverable trading services, structured derivative products, merchant banking, advisory, consulting and principal investments.