GBTC: Surge in Outflows

Plus Peirce on ETH ETFs: No More Lawsuits

Author

Nathaniel Whittemore
January 24, 2024

The Breakdown First Five - Wednesday, January 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. Trucker Crackdown Unconstitutional

A Canadian court has ruled there was no national emergency to justify the crackdown on truckers in 2022. Prime Minister Trudeau used the Emergencies Act to freeze protestors bank accounts and stymie protests. This was ruled unconstitutional, setting a clear precedent for future governments. The Judge said the government “cannot invoke the Emergencies Act because it is convenient, or because it may work better than other tools at their disposal.”

4. FINRA: 70% of Crypto Comms Noncompliant

Brokerage watchdog FINRA says that 70% of communications about crypto from regulated firms breached their rules. Common themes were claims that crypto functioned like cash, comparisons to stocks and misrepresentations about securities law protections. FINRA looked at 500 communications and said that violations were concentrated in a handful of firms. FINRA officials said that crypto communications need to “clearly describe its risks and features.”

3. BIS Pushing Tokenization

The BIS has announced six new projects to advance asset tokenization and CBDC tech. The projects build on pilot programmes already completed, with a focus on tokenized assets useful in Central Bank infrastructure. The Swiss National Bank and Hong Kong Monetary Authority are on board to test new systems, involving tokenized promissory notes and a “full-stack CDBC system” respectively. Another project will focus on CBDC privacy. 

2. Peirce: We Don’t Need Another Lawsuit

SEC Commissioner Hester Peirce thinks the agency shouldn’t need another lawsuit to approve ETH ETFs. “We shouldn’t need a court to tell us that our approach is ‘arbitrary and capricious’ in order for us to get it right.” Applications are due for their first final decision in May and it sounds like Peirce is on board with approval. Gensler is outspokenly against an ETH ETF, but is he willing to drag the SEC into another pointless lawsuit over them?

1. GBTC Outflows Speed Up

Another day, another half a billion in GBTC outflows. $515M fled GBTC yesterday bringing the total to $3.96B in 8 trading days. The new ETFs are starting to struggle to offset daily flows, with $106M in net outflows for the day. Price has been crushed as the GBTC unwind shows no sign of slowing down. With news that the FTX estate exited and rumors of DCG selling, hopefully the bulk of the selling will be over soon.

Thanks for reading -NLW