Blackrock Updates Bitcoin ETF Custody Terms with Coinbase

The Breakdown First Five - Tuesday, September 24, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. DTCC Completes Blockchain Pilot

The DTCC has completed their blockchain pilot aimed at testing the function of tokenized US Treasuries in a digitized collateral network. The tech passed with flying colors, with the DTCC impressed with “'significant” improvements to liquidity and collateral optimization. With regulations in place it seems the DTCC can move forward with larger scale testing and system design. 

4. Telegram Changes ToS

Telegram founder Pavel Durov has announced major changes to the platform's terms of service. Telegram will now respond to “valid legal requests” regarding all criminal activity and provide users’ IP address and phone number. Previously, Telegram would only respond to terrorism related court orders. Content moderation is also being increased, with Durov stating he hopes to “turn moderation on Telegram from an area of criticism into one of praise.”

3. SEC Smackdown

The SEC had another underwhelming performance in court, leaving a panel of judges confused why they can’t do clear rulemaking. The hearing regarded Coinbase’s petition for rulemaking with the judges characterizing the SEC strategy as "We won't tell you the answer until we prosecute you". They suggested the regulator’s conduct only makes sense if they’re trying to snuff out the industry. At one stage, SEC lawyers said there is no requirement that securities laws can actually be complied with. 

2. Lawmakers Urge SAB121 Removal

Over 40 GOP Lawmakers led by Cynthia Lummis and Patrick McHenry have written to the SEC, urging them to rescind SAB121. The nonsensical crypto custody rule that prohibits banks from offering services and increases customer risk was already bad enough before the SEC began handing out exemptions exclusively to the largest custody banks. The lawmakers said the closed door waivers were inappropriate and breach the spirit and the letter of administrative law. 

1.  Blackrock Varies Custody Arrangement

Blackrock and Coinbase have altered their Bitcoin ETF custody arrangement, requiring Coinbase to process withdrawal requests within 12-hours. The change comes after a week of crypto twitter accusing Coinbase conspiring with Blackrock to suppress the price using “paper Bitcoin”. The change appears unrelated, having been filed a few days before the controversy kicked off. More likely is that simple efficiency is allowing settlement to speed up.