As Christmas knocks on the door, there’s this itch to unwind and gear up for the festivities. But the crypto world’s merry-go-round of events just won’t let that happen. From newcomers racing to catch the ETF train to legal knots, social platform sagas, and regulatory ripples, the crypto sphere has seen no shortage of drama. The world’s buzzing with happenings, let’s not fall behind it.
A Small Crypto Asset Firm Hops Onto the Last Car of the Spot-BTC ETF Train
While financial titans like Grayscale and BlackRock have been pounding on the Securities and Exchange Commission doors, trying to meet all the requirements, proposing new terms, and spending endless hours in negotiations, someone just kicks the door open and tosses their paperwork onto Gary Gensler’s desk.
A small ESG-focused crypto asset manager, 7RCC, joins the ETF race, at the SEC for a spot Bitcoin exchange-traded fund. The company kicked off the ETF creation process 18 months back but held off until the right paperwork infrastructure was in place. So, they’re entering the race fashionably late. But hey, better late than never, right?
Related: ETF Tracking Bitcoin Launches on Euronext Amsterdam Stock Exchange
7RCC sprung up in 2021 to open the crypto and blockchain asset doors for investors who give a darn about the environment, social causes, and governance. Now, what sets their Crypto-ETF application apart? Well, it’s 20% in carbon credit futures and a whopping 80% in bitcoins.
Meta’s biggest haters, the crypto exchange Gemini, will be the custodian for the fund’s bitcoins, announced 7RCC CEO Rali Perdukhova. In Gemini’s press release, they claimed the ETF will let investors blend “Bitcoin’s innovative nature with the avant-garde world of carbon credit futures.” Meanwhile, the fund offers investors a seamless trade-off between digital assets and eco-friendliness.
Well, that sounds like a pretty decent attempt to crash the BTC-ETF scene with something fresh. Let’s hope the SEC takes note of this unconventional approach and green-lights futures for this brave little company.
Twitter will have to Justify Itself to the EU for Illegal Content and Disinformation
Twitter, long accused of being a platform filled with misinformation and shady content, is now facing the first official investigation by the European Union government regarding the handling of messages related to the Israel-Hamas conflict.
Thierry Breton, the head of EU industry, laid out the investigation’s goal in a nutshell. The accusations involve not keeping promises to fight against illegal content and false information, breaking transparency rules, and using a tricky user interface design.
Elon Musk has been quite vocal about platform moderation strategies, challenging the EU’s accusations.
Since Musk took the reins, Twitter has gone through some serious revamping in how it operates as a business. These changes involve tweaking overall political biases and unblocking accounts. They’ve stirred up debates about the platform’s new direction, especially regarding misinformation and finding that sweet spot between open discourse and responsible content management.
The EC’s Grumble Essence
The controversy mainly revolves around the “Community Notes” feature. Rolled out earlier this year, it lets users flag misleading content, basically crowd-checking facts, which, let’s be honest, might seem like an ineffective way to check Twitter content. It’s raising doubts about Twitter’s commitment to responsible information, you know, the real deal.
Following the events on October 7, the newly appointed CEO, Linda Yaccarino, expressed her apprehensions in a letter. She highlighted that the platform had removed thousands of tweets and continues to promptly address law enforcement requests globally, encompassing EU member nations.
The company adds that the misleading info “is identified through a blend of human analysis and tech, plus a dash of teaming up with global third-party experts.”
Twitter, the platform that boasts about open dialogue, now finds itself in the middle of debates about those very principles it champions. As the EU dives deeper into its practices, this could turn into a real eye-opener about the struggles of managing free speech in an era where every word we type can reach every nook and cranny of the globe.
Related: Overview of Binance and CZ Sued by CFTC
Biggest Neobank Hits Pause on Crypto Purchases in the UK
According to reports, Neobank Revolut will temporarily halt cryptocurrency purchases on its business platform in the UK starting from January 3rd, as announced by the media. In the email sent out to inform clients about this decision, they only mentioned buying, implying that storing and selling cryptocurrencies could continue without interruption.
Revolut, not your average bank, is a global fintech loaded with features that go way beyond traditional banking, giving you the power to handle money, invest, and dabble in crypto.
In June, the Financial Conduct Authority (FCA) rolled out rules aimed at bringing cryptocurrency advertising in line with other high-risk investment products. Among the new requirements: warning clients about the risky nature of crypto investments, banning bonuses for luring in new clients, and introducing a “cooling-off period” to delay orders from newbie investors.
Everything sounds so serious as if it’s about a complete ban on buying cryptocurrencies in the UK, but no, relax, guys. The rules just pertain to advertising requirements, but even the regulator itself calls them strict.
So strict that, since June, the bank’s lawyers can’t wrap their heads around them. Revolut says the pause is needed to give them more time to comply with the new rules set by the FCA for crypto promotion.
Bybit simply didn’t feel like shelling out overtime pay to their lawyers to decipher these new rules and bid farewell to the UK market. Following suit, Binance also halted registering new clients in October after their compliance partner, Rebuildingsociety.com, broke the rules.
Careful, Britain, with that approach, you might just scare off all the crypto enthusiasts, or they’ll vanish into the shadows!
The U.S. Hand of Justice Shook Hands with Binance and CZ
While some are fighting it out for the introduction and approval of legal cryptocurrency trading through ETFs, in neighboring offices, others are getting their well-deserved punishment.
Judge Manish Shah from the U.S. District Court for the Northern District of Illinois delivered a verdict, mandating cryptocurrency exchange Binance and its former CEO Changpeng “CZ” Zhao to cough up a whopping $2.85 billion to the Commodity Futures Trading Commission (CFTC). Changpeng Zhao himself got a personal ticket of $150 million in civil monetary penalties. Additionally, the former compliance director, Samuel Lim, must pay off a civil penalty of $1.5 million. Quite the price tag for not playing by the rules, huh?
Furthermore, the court ruling slaps additional duties on Zhao and Binance, demanding certificates regarding the existence, implementation, and effectiveness of Binance’s reinforced compliance controls. The court also mandated Binance to deactivate any account not up to snuff with compliance standards, once all KYC policies have been applied.
Additionally, the court ruling requires Binance to implement a corporate governance structure, complete with an independent board, compliance, and an audit committee.
As part of the settlement, CZ agreed to step down from his role at the helm of Binance. Additionally, on December 7th, CZ was instructed to remain in the USA until the sentencing date of February 23, 2024. He faces up to 18 months behind bars on money laundering charges.
Zhao pleaded guilty to a bunch of civil and criminal charges related to anti-money laundering laws and agreed not to appeal any sentence within the specified timeframe. Quite the harsh penalty, right? But hey, don’t think Zhao didn’t earn it!
Zhao’s Guilt
The court found that under Zhao’s guidance, Binance actively attracted clients in the United States, namely quantitative trading firms, facilitating deals with digital asset derivatives directly on the platform. Plus, Binance breached its Terms of Use by allowing a minimum of two prime brokers to open “sub-accounts” without KYC. This let U.S. customers engage in direct trading, which was a clear violation of regulatory norms.
Despite Zhao and Binance being well aware of U.S. regulatory requirements, they intentionally turned a blind eye and kept quiet about having U.S. customers on their platform. The court ruling also revealed that top Binance brass, including Zhao, actively contributed to breaking U.S. laws, giving American clients tips on dodging compliance checks.
It’s yet another reminder that laws aren’t just there for decoration; they’re meant to be followed. Whether you’re a regular Joe or the big shot behind a multibillion-dollar business, you can’t pull a disappearing act from justice.
The Ethereum ETF listing has been pushed back to May
The SEC has decided to delay its verdict on several Ethereum exchange-traded funds (ETFs) until May 2024. The agency also canceled its decision on the Ethereum spot ETF by VanEck and the spot ETF by ARK Invest’s Cathie Wood and 21Shares. While the SEC has previously green-lit Ethereum futures ETFs, the agency hasn’t yet given the nod to spot or mixed products.
In their paperwork, the agency stated they’re launching an inquiry, basically asking for extra info from the public on whether to add the ETFs to the listing.
But don’t see this as a bad omen on the doorstep of BTC-ETF approval! Bloomberg ETF analyst James Seyffart reassured everyone, saying these delays were highly anticipated and shouldn’t stir up any worry.
This is nothing serious. Completely standard and doesn’t change things positively or negatively. Just part of the process and standard procedure.
James Seyffart
But let’s be real, we weren’t exactly sweating over the Ethereum ETF news, were we? It’s all about that Bitcoin, right? But don’t worry, we’ve got some good news here too. According to Seiffart and his Bloomberg ETF buddy, Eric Balchunas, the likelihood of approving a spot Bitcoin ETF is at a 90%.
That’s all the breaking news from us this week. Nothing shocking, just the usual hullabaloo where everyone gets their fair share. Don’t miss us too much until the next digest issue, and have a holly jolly Christmas!
Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice of this sort, HODL FM strongly recommends contacting a qualified industry professional.
