Uniswap Receives SEC Wells Notice

The Breakdown First Five - Thursday, April 11, 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. More Young People Own Crypto than Stocks

A survey from Policygenius found that 20% of Gen Zers own crypto, while 18% own stocks. For reference, a third of Boomers own stocks and only 5% have a crypto bag. Only 13% of Gen Zers own real estate, which Policygenius said could explain their willingness to take more risk in their investments. 

4. Grayscale Outflows Hit Record Low

GBTC saw just $17.5M worth of outflows on Wednesday, its lowest mark to date. CEO Michael Sonnenshein said the fund has reached an “equilibrium.” You would hope so after outflows of almost $16B. Inflows were unremarkable, below average across the board but a healthy $123M in net inflows is a relief after red days to begin the week.

3. Hong Kong ETFs Could Be a Big Deal

Analysts think anticipated Hong Kong based Bitcoin ETFs could move the needle. While flows won’t compare to the US based products, the introduction of easily available crypto exposure could be a release valve for trapped Chinese capital. Local real estate and stocks have been crushed, leading Chinese investors to bid up offshore assets. Gold ETFs hit a 30% premium earlier this week and domestically traded US Stock ETFs traded at huge premiums earlier in the year. There’s just not many easily available hard assets. 

2. Bitcoin Survives Hot CPI

US CPI inflation came in slightly hotter than expected, driving a big drawdown in stocks, gold and Bitcoin. Only one asset recovered to close the day, the hardest money on earth. The dip was bought up to $69,000 with Bitcoin seeing $71,000 overnight. Stubborn inflation has pushed back Fed rate cut expectations, with only two cuts now anticipated this year. Biden said he still expects a cut by the end of the year in a stunning demonstration of central bank independence. 

1. War On DeFi Escalates

Uniswap Labs has received a Wells notice from the SEC informing them to expect enforcement action. We don’t know what the topic will be, but operating an unregistered securities exchange is the current best guess. This enforcement action will likely be the most serious DeFi litigation to date and could determine the rules for protocols in the US. Uniswap Labs have committed to fighting the case. The protocol will continue operating as an immutable smart contract can’t be stopped.