Five Things to Know in Crypto This Week: SEC v Crypto and BTC-Spot ETFs

Key Insights:

• The crypto market was in negative territory Monday to Saturday morning on increasing scrutiny of the US crypto space.
• The SEC v Terraform Labs ruling sent the crypto market into negative territory.
• Progress toward a BTC-spot ETF market limited the downside.

Crypto Market Faces Second Weekly Loss in 11 Weeks.

The total crypto market cap was down 0.53% to $1,560 billion, Monday to Saturday morning.

Increasing US lawmaker scrutiny and the SEC v Terraform Labs/Do Kwon ruling left the crypto market in negative territory.

However, progress toward a BTC-spot ETF market limited the losses.

Cryptomarket Reacts to Terraform Labs Ruling

On Thursday, Judge Rakoff delivered a blow to the crypto market. The presiding Judge in the SEC v Terraform Labs case ruled that TerraUSD and Luna were securities. However, Judge Rakoff denied Summary Judgment from the SEC and the Defendants. As a result, the SEC v Terraform Labs/Do Kwon trial begins on January 29, 2024.

The ruling and the trial could have implications for the US crypto market. Significantly, the ruling gives the SEC legal jurisdiction over token sales to institutional investors.

The timing of the trial is significant. On January 17, 2024, the SEC and Coinbase (COIN) will deliver oral arguments on the Coinbase motion to dismiss (MTD). In August 2024, Coinbase filed an MTD, arguing the SEC has no statutory authority to regulate crypto exchanges.

Coinbase shares slid by 6.68% on Friday, ending the session at $173.92. The Friday sell-off ended an eight-week winning streak.

BTC-Spot ETF Issuers Meet December 29 SEC-Imposed Deadline

BTC-spot ETF issuers fulfilled the remaining requirements of the SEC. These included the removal of references to In-kind creation and the naming of Authorized Participants (APs).

On Friday, several BTC-spot ETF issuers, including Bitwise, Blackrock (BLK), Fidelity, Franklin Templeton, Invesco/Galaxy, Valkyrie, VanEck, and WisdomTree, submitted amendment S-1s.

Significantly, Invesco/Galaxy will waive fees for the first six months, while Fidelity has the lowest annual fee of 0.39%. Several issuers, including BlackRock, named JPMorgan (JPM) their Authorized Participants (APs).

JPMorgan will be an AP, despite the CEO Jamie Dimon anti-crypto tirade at a Banking Committee Hearing on Capitol Hill. Dimon said,

“If I was government, I would close it down.”

US Republican Lawmakers Respond to Anti-Crypto Rhetoric

On Thursday, the SEC Stabilization Act and the #FireGaryGensler movement grabbed the crypto headlines. GOP Majority Whip Tom Emmer voiced support for #FireGaryGensler. Significantly, Tom Emmer announced he will co-lead Warren Davidson’s SEC Stabilization Act. The Act aims to remove Gary Gensler and restructure the SEC.

Before the holidays, SEC Chair Gary Gensler delivered a crypto market message, irking the crypto market. Gensler shared a December 14 speech. The speech discussed noncompliance with securities laws and highlighted the level of fraud and the number of bad actors in the crypto space.

Other News

MicroStrategy (MSTR) acquired 14,620 BTC for approximately $615.7 million. The purchase took the total BTC holding to 189,150 BTC, acquired for ~ $5.9 billion at an average price of $31,168 per BTC.

Last week, MSTR founder Michael Saylor delivered a bullish outlook on BTC. Saylor discussed the likely increase in demand stemming from the launch of BTC-spot ETFs and the Bitcoin halving event.