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CPI Drop Sparks Fears of Downturn
Plus German Bitcoin Sales Near Completion
The Breakdown First Five - Friday, July 12, 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. Gensler Undiscoverable
A Federal court has pushed back on Coinbase’s attempt to subpoena Gary Gensler’s personal communications. Coinbase had claimed that Gensler’s views on crypto policy from before he became SEC chair were relevant to their case. The judge was skeptical, stating she was surprised by the request, “and not in a good way.” The subpoena will move forward on a formal motion, but it seems dead on arrival.
Tenreiro's hammering on the request for communications Gensler may have made before becoming SEC chair: "We're going to start searching the phones of how many academics because they might be heard on the application of law? ... there's just no basis"
— @[email protected] (@nikhileshde)
6:40 PM • Jul 11, 2024
4. Veto Stands
The House has failed to overturn the veto of SAB 121 repeal. A two-thirds majority was required, but the vote fell far short with minimal Democrat support. The controversial accounting guidance will remain in force, albeit with major new carve outs from the SEC. It appears that some banks will be given ad hoc exemptions, allowing them to provide crypto custody.
“This SEC has chosen…to work with allies to give one-off approvals behind closed doors … What the SEC is now doing, according to the Chair's own leak, is prudential regulation of banks.”
A scathing assessment of the @SECGov’s backtracking on SAB 121.
— Eleanor Terrett (@EleanorTerrett)
3:19 AM • Jul 12, 2024
3. Paxos Investigation Dropped
The SEC has closed their investigation into Paxos given a recent court ruling that BUSD is not a security. That ruling suggested that stablecoins in general fall outside of the SEC’s jurisdiction, largely because there is no expectation of profits from a dollar-pegged asset. Paxos received a formal termination notice earlier this week and said “this development will unlock a new wave of stablecoin adoption by leading global enterprises.”
Crazy how the SEC deleted an American business making ~$1 billion in annual profit.
BUSD stablecoin TVL down 99.5%, then the SEC was like, "We're done here".
Literal gangsters
— Ryan Berckmans ryanb.eth (@ryanberckmans)
5:41 PM • Jul 11, 2024
2. Germans Running Out
The German government continues to dump their Bitcoin at a tremendous pace. A further $450M was sold on Thursday and more sales are already being prepped this morning. The wallets only have 6,900 BTC remaining, around their average daily sales this week. It seems as though the German sales will be finished either today or on Monday.
TODAY: German Government selling up to 2700 BTC ($154.60M)
In the past hour, the German Government has sent 2700 BTC ($154.60M) to Kraken, Bitstamp, Coinbase, 139Po (likely institutional deposit/OTC service) and address bc1qu.
Since yesterday’s movements, the German Government… x.com/i/web/status/1…
— Arkham (@ArkhamIntel)
8:42 AM • Jul 12, 2024
1. Inflation Cools
CPI has come in cooler than expectations, triggering fears that an economic downturn is already in progress. Headline CPI fell to 3% with core CPI at 3.3%. Month over month headline inflation fell by 0.1%, the first deflationary print in four years. We’re now at the lowest inflation rate since June of last year. Fed rate cuts are all but confirmed, with CME Fedwatch odds for a September cut rising to 86%. Three rate cuts to end the year are firmly in play but not yet the baseline.
Inflation being done is consensus now. Need to skate to what’s next. I’m moving on from that battle.
Two possibilities now:
1. Fed is caught offside now and will need to cut aggressively to stave off a recession, but it might be coming anyway
2. They cut into a head fake… x.com/i/web/status/1…
— fejau (@fejau_inc)
1:54 PM • Jul 11, 2024