The SEC Gets Reprimanded By the GAO

Plus SBF testimony is complete

Author

Nathaniel Whittemore
November 01, 2023

The Breakdown First Five - Wednesday November 1, 2023

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

Happy November

5. FOMC Meeting

Happy Fed Day to those who celebrate. The Federal Reserve is expected to hold rates steady but all eyes will be on Fed Chair Jerome Powell’s comments. Will he declare the hiking cycle to be over or continue to project a hawkish pause. Markets have no hike fully priced in and are expecting the same decision next month, contradicting Fed forecasts of one hike before the year is out. Earlier this month Powell said inflation is still too high, but what will he do about it?

4. Uptober for the CME.

Open interest is surging on the CME and looks set to overtake Binance as the primary Bitcoin futures trading venue within months. OI spiked over the recent weeks fueled by speculation on impending ETF launches. Binance currently processes around 25% of nominal Bitcoin futures OI. The CME has already overtaken OKX and Bybit and is closing in with 22.5% of trading. The gap is now around $300M, a 10% increase from current OI. 

3. Circle Closes Consumer Accounts

Circle has shut down consumer level USDC minting accounts. The firm claimed this is the latest step in a long process of moving away from servicing individuals. Accounts with zero balance will be sunset at the end of the month. Conspiracies abound, ranging from solvency concerns to wanting to stem outflows. CEO Jeremy Allaire put the rumors to bed, noting that trusted partners can still handle safe retail access to stablecoins. 

2. SBF Testimony Over

Sam Bankman-Fried has uttered the last words in his defense and his fate will soon be in the hands of the jury. His cross examination continued as it began, evasive and complex. The DOJ cut through the waffle and presented simple facts which they hope will prove his guilt beyond a reasonable doubt. To the end of his testimony, Sam denied spending customer funds, noting that “money is fungible anyway.” Closing statements are scheduled today. 

1. SEC Guidance Illegal

The Government Accountability Office has slapped down SEC staff accounting bulletin 121. SAB 121 required firms to hold custodied crypto on their own balance sheet, making banks unable to offer custody services and customers less safe. The GAO said that the bulletin had sidestepped proper rulemaking procedure and needed to be sent to Congress for review. McHenry and Lummis plan to block the rule in due course. 

Thanks for reading -NLW