MCS Crypto News - Issue #7

Crypto News Made Simple - Straight to your inbox, every Monday and Thursday

Hi all. Due to a personal matter, I missed yesterday’s letter - and I hope you did too. Today’s letter will be yesterday’s, and we’ll do our MCS 101 tomorrow, in a special Saturday edition.

Let’s dive into the news.

Entertainment never seems to be lacking in the cryptoverse. This weeks event came from the notoriously anit-crypto head of the SEC, Gary Gensler. He recently testified at a congressional hearing. Let's dissect the key takeaways and what they mean for the crypto landscape.

🔍 Gensler's Combative Stance 🔍

• Crypto "Hucksters": Gensler continued his criticism of certain practices within the crypto industry, particularly targeting what he perceives as "hucksters."

• Carelessness with Assets: He expressed concerns about how crypto companies manage customer funds, emphasizing that commingling assets has historically led to unfavorable outcomes.

• Spot Bitcoin ETFs: Gensler remained tight-lipped about the SEC's future actions regarding spot bitcoin ETFs, especially after a judge's ruling that challenged the SEC's position. The verdict deemed the SEC's rejection in the Grayscale Investments case as "arbitrary and capricious."

📈 The Bigger Picture 📈

• Court Battles: The SEC's recent legal battles with crypto firms have been a focal point. Notably, a D.C. Circuit Court of Appeals judge instructed the SEC to reconsider its stance on bitcoin ETF applications.

• Partisan Divide: The hearing revealed a clear partisan split, with Democrats largely supporting Gensler and Republicans accusing him of potentially harming consumers and small businesses.

• Bitcoin's Status: In a significant acknowledgment, Gensler confirmed that bitcoin is "not a security."

🚀 Implications & Future Outlook 🚀

• Potential Government Shutdown: Gensler indicated that a looming government shutdown could significantly reduce the SEC's operational capacity, slowing down day-to-day reviews and approvals.

• Ripple Case: Gensler refrained from commenting on the ongoing Ripple case, where a judge ruled that the company hadn't violated federal securities law in selling XRP to retail investors.

• Congressional Action: Gensler suggested that any congressional intervention should address the issue of commingled assets in crypto.

Gary Gensler's recent testimony has left the crypto community with more questions than answers. His consistent reluctance or refusal to provide clear guidance on pressing crypto matters is becoming a significant point of contention. While the SEC's mandate is to protect investors, maintain fair markets, and facilitate capital formation, its current approach towards crypto seems to be more evasive than constructive.

Gensler's "regulation by enforcement" strategy, as perceived by many, is not only counterproductive but also raises concerns about the fairness and justice of such actions. Instead of fostering an environment of collaboration and understanding, this approach is punitive, targeting crypto enterprises without providing them with a clear regulatory framework to operate within.

The crypto industry, still in its early stages, holds immense potential for innovation and economic growth. It deserves a regulatory approach that is clear, fair, and conducive to its development, rather than one that seems to stifle its progress through ambiguity and enforcement actions.

Speaking of Gary and the SEC, It seems they’ve played all their cards regarding Bitcoin ETFs. With rejections seemingly off the table, the SEC's last resort appears to be... delays. Let's break it down.

🔍 The SEC's Delay Tactic 🔍

• Repeated Postponements: The SEC has once again pushed back its decisions on several high-profile Bitcoin ETF filings, including those from BlackRock, Bitwise, Invesco Galaxy Digital, and Valkyrie.

• Second Extensions: Many of these applications are facing their second extension within just a month.

• Government Shutdown Excuse: While the decision deadline was initially set between October 16 to 19, the looming government shutdown has been used as a reason to expedite the SEC's announcement.

📈 The Bigger Picture 📈

The SEC's pattern of delays isn't limited to a handful of firms. The broader landscape reveals:

• Numerous Applications: At least seven investment entities have either newly filed or resubmitted spot Bitcoin ETF applications this year.

• Overturned Decisions: Grayscale's move to convert its Bitcoin trust shares to an ETF saw a U.S. court overturn the SEC’s initial disapproval, hinting at the regulator's waning grip.

• Other Delays: Ark Invest's ETF application, along with those from WisdomTree, Fidelity, and VanEck, are all in the SEC's delay loop.

🌐 Implications of an Inevitable Approval 🌐

The crypto community believes that the SEC's delay tactics can only last so long. Once Bitcoin ETFs get the green light:

• Mainstream Adoption: They will offer a more accessible route for mainstream investors to gain Bitcoin exposure without holding the actual cryptocurrency.

• Increased Institutional Participation: Approval could lead to higher liquidity and more institutional involvement.

• Stamp of Legitimacy: The broader financial sector might view this as a nod of legitimacy for the crypto realm.

Remember that these are spot BTC ETFs. This means that each share of the ETF will need to be backed by phsyical bitcoin. Demand for Spot Bitcoin ETF shares will have a direct impact on the price of Bitcoin.

🚀 Wrapping Up 🚀

The writing's on the wall. The SEC's arsenal of rejections is depleted, leaving only the tactic of delay. But as the crypto community knows, every delay brings us one step closer to inevitable approval.

In my book, the longer they delay, the better. Each delay gives us more time to accumulate BTC at a discount.

Google to validate on Polygon network.

The first ETH futures ETF gets approved,

Universal partners with Aptos.

The Nomic project has it’s X account hacked. WARNING - do not click any links posted by the Nomic account or its founder, Matt Bell.

Here’s how they did it:

Skip partners with Leap Cosmos to add 1-transaction, in-wallet, cross chain swaps.

Toki Finance brings IBC to The Binance Smart Chain.

That’s all for today. We’ll be back tomorrow with MCS Crypto 101 - Issue #8.

Thank you so much for subscribing to Make Crypto Simple.

Chris Schawel


^{The content provided in this newsletter is for entertainment purposes only and should not be construed as financial advice. All information, including but not limited to market analysis, price predictions, and investment strategies, is purely speculative in nature. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. We are not responsible for any losses incurred as a result of the information presented in this newsletter.}