BTC-spot ETF market net inflows fuel a five-day BTC winning streak.
US Treasury Secretary Janet Yellen called on Congress to roll out a crypto regulatory framework.
US Senators Target the SEC over the SEC Motion to Dismiss the charges in the SEC versus Debt Box case.
BTC-Spot ETF Market: Net Inflows Fuel a Five-Day BTC Winning Streak
BTC was up 10.92% to $47,277 from Monday to Saturday. BTC-spot ETF market net inflows for the week fueled the investor fear of missing out (FOMO). BTC struck a Friday high of $48,175 on a Thursday jump in BTC-spot ETF market net inflows.
BTC Weekly Chart 100224
On Thursday, BTC-spot ETF market net inflows surged from $146.1 million (February 7) to $405.0 million (February 8). iShares Bitcoin Trust (IBIT) leads The Nine (January 2024 SEC-approved BTC-spot ETFs). IBIT saw net inflows of $204.1 million, taking total net inflows to $3,499.7 million.
Fidelity Wise Origin Bitcoin Fund neared the $3 billion mark, with net inflows of $128.3 million, taking total net inflows to $2,934.2 million.
BTC-Spot ETF Volumes and Flows 080224
The FOMO phenomenon extended beyond BTC, with the total crypto market cap increasing by 9.46% ($150 billion) to $1,739 billion from Monday to Saturday.
SEC v Coinbase: US Treasury Secretary Janet Yellen Calls for Regulatory Framework
On Tuesday February 10, US Treasury Secretary Janet Yellen gave testimony at a House Financial Services Committee hearing. Referencing the US crypto market, Secretary Yellen had this to say,
“The council is focused on digital assets and related risks, such as from runs on crypto asset platforms and stablecoins. Potential vulnerabilities from crypto asset price volatility, and the proliferation of platforms acting outside of or out of compliance with applicable laws and regulations. Applicable rules and regulations should be enforced, and Congress should pass legislation to provide for the regulation of stablecoins and of the spot market for crypto assets that are not securities. We look forward to continuing to engage with Congress on this.”
The call for a crypto regulatory framework is not the first from Capitol Hill. However, the call for legislation comes as the markets await a ruling on the Coinbase (COIN) Motion to Dismiss (MTD).
Coinbase filed the Motion to Dismiss, arguing that the SEC lacks the statutory authority to regulate US crypto exchanges. Yellen’s call for a regulatory framework could inadvertently support the Motion to Dismiss.
Ripple Chief Legal Officer Stuart Alderoty and Coinbase Chief Legal Officer Paul Grewal responded to the Yellen testimony. Paul Grewal agreed with Stuart Alderoty, saying,
“Exactly right. The Secretary, like the two House committees, Cynthia M Lummis, and others has put the lie to the fallacy that crypto regulation isn’t a Major Question reserved to the Congress. There couldn’t be a more contemporaneous, more bipartisan record.”
Stuart Alderoty had this to say about the Yellen testimony and the SEC’s self-assigned right to regulate the crypto market,
“In Coinbase, the SEC told the judge that crypto is a “rounding error,” no legislative gaps exist and thus, crypto can be “swept” into its authority. Yesterday, Sec. Yellen told Congress crypto legislation is needed to fill regulatory gaps. Both statements can’t both be true.”
Coinbase shares rallied 9.88% to $141.99 in the week ending February 9. Investor sentiment toward the SEC versus Coinbase case and the BTC-spot ETF market contributed to the gains.
Coinbase Weekly Chart 100224
US Lawmakers Target the SEC Over the SEC Versus Debt Box Case
On February 7, US senators JD Vance, Thom Tillis, Bill Hagerty, and Cynthia Lummis co-signed a letter to SEC Chair Gary Gensler. The US Senators raised concerns about the SEC and its unethical behavior in the SEC versus Debt Box case.
In January 2024, the SEC filed a Motion to Dismiss the charges against Debt Box. The unexpected filing followed a December court order, calling on the SEC to,
“Show cause why it should not be sanctioned for making false and misleading representations to the court.”
The Motion to Dismiss may have been an attempt to avoid further court scrutiny that could impact ongoing cases against other crypto firms.
Significantly, the US Senators threatened an investigation into SEC cases, saying,
“Regardless of whether Commission staff deliberately misrepresented evidence or unknowingly presented false information, this case suggests other enforcement cases brought by the Commission may be deserving of scrutiny. It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations.”
The SEC filed the Motion to Compel, asking the court to order Ripple to provide the following as part of remedies-related discovery:
2022/2023 financial statements.
Post-complaint contracts governing XRP sales to institutional investors.
Answer an interrogatory regarding the amount of XRP institutional sales proceeds after the SEC filed the complaint.
The SEC is pursuing a punitive disgorgement for breaching Section 5 of the Securities Act. In July, Judge Torres ruled that Ripple failed to register XRP as a security in sales to US institutional investors.
Judge Torres made this comment as part of her ruling, suggesting she will consider post-complaint breaches in the penalty ruling.
“The SEC credibly argues that the District Judge may consider post-complaint conduct when determining whether an injunction is necessary and just.”
XRP is up 4.95% to $0.5277 Monday to Friday. However, XRP trails the broader market. SEC plans to appeal the Programmatic Sales of XRP ruling remains an XRP headwind. In the July 2023 ruling, Judge Torres also ruled that Programmatic Sales of XRP do not satisfy the third prong of the Howey test.
The SEC has shown intent to appeal against the Programmatic Sales ruling. In October, Judge Torres rejected an SEC interlocutory appeal. The ruling means the SEC must wait until the end of the trial to lodge an appeal.
XRP Weekly Chart 100224
Craig Wright: The Craig Wright trial started on Monday. The Crypto Open Patent Alliance (COPA) allege Craig Wright is not Satoshi Nakamoto. Despite openly claiming to be Satoshi since 2016, no one has come forward to dispute his claim.
However, Dr. Craig Wright has also been unable to produce the private keys that give access to over 1 million BTC coins mined by Satoshi. Craig Wright could give further testimony on Monday, February 12.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.