Will Gensler Like Bitcoin ETFs Better at the SEC?

What you need to know today in crypto and beyond

March 2, 2021

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Welcome to The Node, CoinDesk's newly redesigned flagship daily newsletter.

Formerly known as Blockchain Bites, The Node aims to be your daily pulse check for what matters in crypto and beyond. In every issue, you'll find a digestible summary of the day's most important news, a thoughtful take on current trends by one of our writers and, to wash it all down, our favorite trending meme or tweet. It's all part of a balanced information diet.

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– Marc Hochstein, Executive Editor

Top Shelf

Today's must-reads

The time is now: The Chicago Board Options Exchange (CBOE) has officially filed to list shares of VanEck's bitcoin exchange-traded fund (ETF), starting the clock to launch the much-anticipated financial instrument in the U.S. The Securities and Exchange Commission (SEC) has been hesitant to move on approving a bitcoin ETF, citing market risks, though experts think it's well past due. Two ETFs launched in Canada, with one mopping up more than 6,000 bitcoin in two days.

Back in business: Goldman Sachs will relaunch its cryptocurrency trading desk as early as mid-March (though probably later). The investment bank will support bitcoin futures trading and may move to stage a bitcoin ETF. It's a hot futures market: Institutions have loaded up on bets bitcoin could surge to $75,000 and $100,000 by June.

Tokens rise: Cardano became a "multi-asset blockchain" yesterday following a hard fork, called "Mary." Coming after the Shelley update, this upgrade allows users to create tokens that run natively on-chain, similar to Ethereum's ERC-20 standard that ignited the 2017 initial coin offering boom. Like Mary Shelley's Frankenstein, Cardano's native ADA token has risen from the dead to become the best-performing crypto asset in February.

– Daniel Kuhn

Sound Bite

Overheard on CoinDesk TV

Digital artist and communications expert Dave Krugman sees non-fungible tokens (NFT) as the next technological trend artists could capitalize on. Easy for him to say. Krugman sold a single NFT, made in collaboration with crypto artist Xsullo, for 20 ETH (about $40,000).

But it may not be easy for crypto neophytes. Krugman saw previous success leveraging social media platforms like Instagram for his work. While there are similarities, NFTs are in a world of their own.

"This isn't a new social platform, this is a new technology, a new scaffolding for artists to engage with," he said on CoinDesk TV.

Both social media and NFTs reduce friction between artists and collectors, though in crypto reputation may carry more weight.

"There's going to be a ton of people flooding in, a ton of competition. You have to stand out amongst that noise," Krugman said. "I've never been a part of a culture that's moving so quickly."

Get the full interview from First Mover here.

- D.K.

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Introducing "The Hash," news analysis on CoinDesk TV

From the world leader in crypto news and events, the all-new CoinDesk TV covers the rapidly evolving world of digital finance and its role in the global economy.

We cut through the hyperbole and confusion to explain what's happening in this fast-changing industry and why it matters to investors, companies and governments.

On "The Hash," a daily panel show, CoinDesk journalists Zack Seward, Benjamin Powers and Will Foxley choose five of the day's big stories to hash out and analyze. With a personality-driven, fast-paced, entertaining format, it presents themes ranging from serious to fun.

Watch "The Hash" daily on YouTube or CoinDesk.com.

The Takeaway

Putting the news in perspective

Default ETF?

It's Gary's day.

Gary Gensler, a former head of the Commodity Futures Trading Commission, is due before the U.S. Senate Banking Committee Tuesday to discuss his nomination to head to the SEC.

The testimony will be closely watched for clues as to how Gensler might regulate cryptocurrency and related technology.

We could use some guidance.

The SEC has been criticized for both failing to clamp down on dodgy crypto (during the 2017 ICO boom) and for being too cautious about green-lighting legitimate activity.

One example: how it has batted back numerous applications for Bitcoin exchange-traded funds (ETFs), which are widely seen as key to getting investors into the space.

Will Gensler be more open to innovation?

A CoinDesk op-ed from 2019 suggested so. And, from Gensler's background, it seems likely.

Former SEC Branch Chief Lisa Bragança noted on CoinDesk TV today that, unlike the former chairman, Jay Clayton, Gensler is not a lawyer. He can see the bigger picture beyond technical details.

"I think we are well on the way to having [a BTC ETF] in the U.S. A lot of the concerns the SEC has raised in the past are again coming from the perspective of .. very cautious lawyers," she said.

That doesn't mean Gensler, if confirmed, will be a soft touch. Bragança said in the same conversation the SEC is worried about the recent spate of companies buying big into bitcoin.

The likes of MicroStrategy, which has bought almost 91,000 BTC with a current cumulative value of $4.3 billion, may be creating default ETFs before ETFs are approved. There is "huge concern that companies are turning themselves into crypto bitcoin ETFs," she said.

With the crypto industry going full tilt, Gensler is going to have his hands full. As explained by Nik De, CoinDesk's regulatory expert, he also faces the ongoing XRP controversy, a booming (and lightly regulated) stablecoin market, and questions about whether the U.S. should launch its own central bank digital currency.

How he comes down on these topics, starting today, will have ramifications for years.

– Ben Schiller

Join CoinDesk Research on March 3 at 12:30 p.m. ET for a look at bitcoin and ether from an investment perspective.

In this 30-minute webinar, research analysts Christine Kim and Damanick Dantes will give an overview of the investment case and some key metrics for the two largest crypto assets by market capitalization.

This discussion will dive deeper into the topics featured in the CoinDesk Research report "Bitcoin + Ether: An Investor's Perspective." Download the free report next week on the CoinDesk Research Hub.

Off-Chain Signals

What others are reporting....

Rapper Lil Bubble released a tune for the DeFi crowd. Maybe he should have made it into an NFT?

Are we in a bubble of bitcoin bears? Legendary investor Jim Rogers thinks crypto and SPACs are scams. Michael Burry, of Big Short fame, called bitcoin a "speculative bubble." NPR plays it down the middle.

FT's Jemima Kelly digs into CitiBanks' bitcoin report. Here's the original, by the way.

- D.K.

The Chaser...

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