8 March

The company went to court Tuesday to argue the SEC’s denial of its ETF application was “arbitrary,” telling the panel of judges that Grayscale is “asking to be regulated” by the SEC through its conversion of GBTC to an ETF.

The panel of appeals court judges questioned the SEC’s logic in drawing a distinction between bitcoin spot market prices and futures market prices. Chief Judge Sri Srinivasan and Judges Neomi Rao and Harry Edwards of the District of Columbia Circuit Court of Appeals in Washington, D.C., asked SEC Senior Counsel Emily Parise a number of questions about the agency’s argument that bitcoin futures prices underlying futures ETFs were more resistant to manipulation than spot bitcoin markets might be if a spot bitcoin futures ETF was approved.

It seems to me that [what] the Commission really needs to explain is how it understands the relationship between bitcoin futures and the spot price of bitcoin … it seems to me that … one is just essentially a derivative. They move together 99.9% of the time. So where’s the gap, in the Commission’s view?

The other judges also asked a number of questions ranging from the legal defense by the SEC to how it evaluated the tests it used to reject Grayscale’s bid.

The judges’ apparent skepticism of the SEC’s position is sending GBTC higher by 5% on Tuesday while the price of bitcoin is flat. That’s further narrowing the closed-end fund’s discount to net asset value (NAV), which had fallen to a one-month low of 42% on Monday.”

See Also: A Dozen Reasons Why the SEC Should Have Approved Grayscale’s Spot Bitcoin ETF
See Also: GBTC Discount Narrows to Lowest Level Since November Following Court Hearing

“The bankruptcy judge in the Voyager Digital case chose to allow the deal with Binance.US over objections from the U.S. Securities and Exchange Commission and state regulators.

Early on in the hearing, Judge Wiles took a dim view of objections from the Securities and Exchange Commission. ‘If the government wants to litigate that Voyager’s sale of VGX tokens was an offering of securities, it should have done so‘, he said, referring to an SEC attorney’s statement that the proposed sale may have securities law tie-ups.

Judge Wiles ultimately ruled that these regulators’ objections did not outweigh the need to proceed with the restructuring of Voyager.

While the judge said he would still work through the confirmation order, he indicated he was in favor of approving the deal. Binance.US may still have to clear certain regulatory hurdles before the deal can be finalized. Voyager’s VGX token surged over 8% in the minutes after the ruling.

The plan, assembled after previous bidder FTX itself filed for bankruptcy protection in November, had been supported by 97% of Voyager creditors who responded to the proposal, which could see them recovering nearly three-quarters of their holdings.”

See Also: Voyager Bankruptcy Judge Expresses Skepticism Over U.S. SEC Objection to Binance US Deal

Federal Deposit Insurance Corp (FDIC) officials have been consulting with executives of troubled crypto-focused bank Silvergate Capital (SI) on how to keep the company in business, according to a report from Bloomberg.

One option may involve recruiting crypto industry investors to help boost Silvergate’s liquidity, according to one of Bloomberg’s sources. Silvergate shares were rising 2.5% to $5.34 in after-hours trading on Tuesday.”

“MakerDAO, the decentralized autonomous organization (DAO) behind the DAI stablecoin, is reviewing a proposal that would allocate an additional $750 million to invest in U.S. Treasurys as it looks to take advantage of a favorable yield environment. If passed, the resolution would add to the $500 million approved in October, bringing the ceiling to $1.25 billion.

After review of various highly liquid money market options, we found that the simple solution of laddering U.S. Treasurys over a six-month period with biweekly maturities presents a strong, flexible and effective solution for Maker.”

See Also:

“Bitcoin dropped below $22,000 after U.S. Federal Reserve Chair Jerome Powell said in prepared remarks in his two-day semiannual monetary policy testimony before Congress that inflation had remained unexpectedly high. But the largest cryptocurrency by market capitalization quickly recovered to trade above the threshold for much of Tuesday.

The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.

The prospect of a 50 basis point (bps) interest rate hike instead of a more dovish 25 bps now rests at over 70%, roughly the reverse of the probability last week. Bitcoin has been largely holding over $22,000, even as a flurry of jobs and price indicators have raised inflationary concerns anew.

The S&P 500 closed down 1.5%, and the Dow Jones Industrial Average (DJIA) and tech-heavy Nasdaq Composite dropped by 1.7% and 1.2%, respectively.”

See Also: Federal Reserve’s Powell: We Don’t Want to Strangle Crypto Innovation, but Sector Is a Mess

“U.S. lawmakers are planning on reintroducing a bill that will reform the way crypto is treated for tax purposes. Lawmakers want to put this reform forward because they believe the current reporting requirements for companies are hindering innovation in the crypto sector.

The bill, called the Keep Innovation in America Act, would narrow the definition of a crypto broker. For example, miners and validators, hardware and software developers do not have reason to collect the information required under the the Infrastructure Investment and Jobs Act.

The reporting requirements under current law require digital asset market participants to adhere to standards that are incompatible with this technology’s operation.”

See Also: Thailand Offers $1B Tax Break for Firms Issuing Investment Tokens: Reuters
See Also: ‘Home’ regulator could solve crypto’s ‘fragmented supervision’ issue: Comptroller