BlackRock met with SEC officials to discuss spot Bitcoin ETF

November 22, 2023 Coin Telegraph

Representatives from the U.S. Securities and Exchange Commission also met with Grayscale on Nov. 20 in the asset manager’s bid for listing a Bitcoin ETF.

Representatives from BlackRock and the Nasdaq met with the United States Securities and Exchange Commission to discuss the proposed rule allowing the listing of a spot Bitcoin (BTC) exchange-traded fund, or ETF.

According to a Nov. 20 SEC memo, BlackRock provided a presentation detailing how the firm could use an in-kind or in-cash redemption model for its iShares Bitcoin Trust. It’s unclear how SEC officials responded to the two proposed models or if they intend to approve a spot BTC ETF after numerous delays and rejections.

Looks like @BlackRock also met with SEC! There’s a couple slides in relation to in-kind vs cash creation. Based on this it looks like BlackRock prefers in-kind for their #bitcoin ETF (makes sense as its probably cleanest structure for them & end investors)
h/t @btcNLNico https://t.co/AK0XspL4zJ pic.twitter.com/eeuUT9T5mn
— James Seyffart (@JSeyff) November 22, 2023

Many reports have suggested the SEC could be nearing a decision on a spot BTC ETF for listing on U.S. markets, an approval that would be one of the most significant positive trends toward mainstream crypto adoption. SEC officials also met with Grayscale representatives on Nov. 20 in the firm’s bid for listing a Bitcoin ETF.

BlackRock is one of many firms with spot crypto ETF applications in the SEC pipeline awaiting a response, including Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck and Bitwise. The asset management company first applied for listing a spot BTC ETF in June on the Nasdaq stock exchange.

A video of SEC chair Gary Gensler from 2019 resurfaced in October, criticizing the commission’s “inconsistent” approach to spot BTC products. It’s unclear whether the SEC chair will get behind efforts for crypto-linked investment vehicles, but the commission has previously approved ETFs tied to Bitcoin and Ether (ETH) futures.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

CoinShares gets buying rights to Valkyrie’s crypto ETF unit

November 17, 2023 Coin Telegraph

Acquisition

The deal comes as Bitcoin ETF applications in the U.S. are seemingly inching closer toward regulatory approval.

European digital asset management firm CoinShares secured the exclusive option to acquire the exchange-traded fund (ETF) unit of its United States competitor Valkyrie Investments, including the Valkyrie Bitcoin Fund that’s awaiting approval in the U.S.

CoinShares said on Nov. 17 that the move helps it expand to the U.S., which could soon become the epicenter for ETF offerings. The firm’s CEO Jean-Marie Mognetti added he hopes the Valkyrie acquisition will help it capitalize on what is currently a fragmented global ETF market.

“The establishment of crypto spot ETPs in Europe since 2015, a development about to be mirrored in the U.S., is the perfect illustration,” said Mognetti. “This disparity in market evolution presents both challenges and significant opportunities.”

Exciting update! @CoinSharesCo secures an option to acquire @ValkyrieFunds, uniting our strengths to create a global one-stop-shop in digital asset investments. This marks a strategic leap towards market leadership and bolsters our strong presence in the U.S.!… pic.twitter.com/0BPNGC518P
— CoinShares (@CoinSharesCo) November 16, 2023

The option will remain active until March 31, 2024. For now, Valkyrie Funds will continue to operate as an independent entity until an acquisition by CoinShares is finalized.

Big News! Valkyrie is set to join the @CoinSharesCo family! We're thrilled about this partnership, uniting our U.S. market insights with CoinShares' global expertise. Together, we're redefining digital asset investment in the U.S. and beyond!https://t.co/jiLOMIm8qR pic.twitter.com/s5URikl8Ci
— Valkyrie (@ValkyrieFunds) November 16, 2023

The two crypto-centric firms also agreed on a brand licensing term where the CoinShares name would be used in future S-1 filings to the Securities and Exchange Commission — used to register a securities offering with the regulator when companies plan to go public.

If the SEC approves the Valkyrie Bitcoin Fund, Valkyrie plans to incorporate the CoinShares name into the ETF.

Valkyrie filed for the spot Bitcoin ETF on June 21, along with BlackRock and a host of other financial firms.

CoinShares, which oversees over $3.2 billion in assets under management, expressed its optimism toward the U.S. cryptocurrency ETF market in September and iterated that the economic powerhouse isn’t lagging on digital asset regulation.

Magazine: Bitcoin ETF optimist and Worldcoin skeptic Gracy Chen: Hall of Flame

Crypto portfolio management platform MC2 Finance joins Cointelegraph Accelerator

November 5, 2023 Coin Telegraph

Asset Management

Decentralized crypto wealth management platform MC2 Finance becomes the latest participant of the Cointelegraph Accelerator program.

Decentralized finance (DeFi) might hold immense potential to solve the problems faced by traditional finance (TradFi). However, DeFi still struggles with onboarding new users -both retail and institutional- due to its limitations on the user experience side.

Despite all the innovation and development happening on the infrastructure level, the “DeFi revolution” is presented to users with unnecessarily complicated screens that would require expert-level technical knowledge.

To reach the mainstream, blockchain protocols need a robust infrastructure on the back while delivering a smooth, clean and user-friendly experience on the front. The easiest way to achieve this is to take a cue from what has worked in TradFi and fintech all these years in terms of user experience.

MC2 Finance, a decentralized crypto asset management platform, aims to onboard both TradFi users and crypto newcomers by simplifying the investment experience in DeFi. It offers an infrastructure for creating KYC-free digital asset funds that are aligned with regulatory requirements.

Asset managers can instantly create non-custodial portfolio structures across multiple blockchains using MC2 Finance and trade a strategy as a token. Users can then follow experts’ strategies with their own cross-chain portfolios automatically. Once a user connects to MC2 Finance with a Web3 wallet, they’re free to explore different token strategies and review risks and ratings to make informed decisions based on their goals.

DeFi needs simple screens

The simplistic design of the platform allows DeFi newcomers to easily mix their strategies through an uncluttered interface while learning from the expert community by joining exclusive traders’ clubs.

The true strength of social trading?

It's the art of tapping into the shared wisdom and varied experiences of a community, empowering individuals to make informed decisions with newfound knowledge.

🤝Share
💡Create
🙌Discover pic.twitter.com/xsFD5YggQd
— MC²Fi (@mcsquaredfi) October 5, 2023

The platform features a white-label marketplace that is integrated into popular decentralized exchanges (DEXs). The integration means increased trading volume and total value locked (TVL) for some of the biggest DEXs in the space. MC2 Finance also offers automated auditing and strategy verification to ensure the safety and reliability of investments. What’s more, by implementing trading competitions, the platform will allow users to have access to tested out investment strategies.

“The digitization and decentralization of all asset classes is a clear trend in the financial sector,” an MC2 Finance spokesperson commented, adding that MC2 Finance is bridging traditional finance and DeFi by bringing TradFi standards to DeFi and introducing decentralization to traditional funds.

“By creating a compliant, non-custodial, and decentralized fund management infrastructure, we're addressing key challenges in both sectors and facilitating the transition to on-chain financial systems.”

MC2 Finance joins Cointelegraph Accelerator

MC2 Finance joined the Cointelegraph Accelerator, a program designed to help up-and-coming Web3 projects benefit from Cointelegraph’s established media presence and marketing opportunities. Cointelegraph Accelerator picked MC2 Finance due to its team expertise and vision of the potential to disrupt the traditional investment industry using the blockchain technilogy .

Having 14 employees across Europe, the project already has partnerships with several blockchains and DEXs. The platform hosted over a thousand users during its testnet phase, and a full launch is slated for early 2024.

GAO finds controversial SEC guidance is subject to congressional oversight

October 31, 2023 Coin Telegraph

Asset Management

The SEC’s Staff Accounting Bulletin 121 has been the target of much criticism in the crypto community.

United States Senator Cynthia Lummis has scored another one for crypto with a Government Accountability Office (GAO) decision issued on Oct. 31. The GAO found that Securities and Exchange Commission (SEC) Staff Accounting Bulletin 121 should be subject to congressional review. That bulletin, issued in March 2022, has been a source of ire for many pro-crypto lawmakers.

The GAO was acting on a letter sent by Lummis to the U.S. Comptroller General in August 2022. It considered whether the bulletin was a rule subject to the Congressional Review Act (CRA). Under the CRA, a report on an agency rule must be submitted to the comptroller general and both chambers of Congress, with a procedure for Congress to disapprove the rule. Using the definition of a rule found in the Administrative Procedures Act (APA), the GAO found the SEC bulletin to be subject to the CRA. The GAO said:

“It is reasonable to believe that companies may change their behavior to comply with the staff interpretations found in the Bulletin […] The Bulletin is also of future effect and was designed to interpret and prescribe policy. Accordingly, we conclude that the Bulletin meets the definition of rule under APA.”

The bulletin “expresses the views of the staff regarding the accounting for obligations to safeguard crypto-assets an entity holds for platform users,” according to the SEC. It said, “The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission’s official approval. They represent staff interpretations and practices.”

This is huge.

The GAO reviewed SAB 121, an illogical anti-crypto accounting bulletin issued by the SEC last March, and found that it's a "rule" under the CRA and APA.

The SEC didn't comply with either.

This is a clear statement from a federal agency that the SEC broke the law. https://t.co/brglK3sm8S
— Jake Chervinsky (@jchervinsky) October 31, 2023

The bulletin used hypothetical situations to describe what the SEC considered best practices to safeguard crypto-assets held by platforms for their users. Coinbase and PayPal are examples of such platforms. It advises platforms to list their users’ assets on their books as liabilities and assets at their fair value at initial recognition. This represented a sharp turn in accounting practice as custodied assets were not previously recorded on balance sheets.

The bulletin was quickly met with objections from several sides. SEC commissioner Hester Peirce released a critical response within days. Peirce stated that the accounting procedure described in the bulletin was a response to risk that the SEC itself was partially the source of.

Five Republican senators, including Lummis, wrote to SEC chairman Gary Gensler in June 2022 to express their disapproval of the bulletin’s “backdoor regulation.” Gensler was further lectured on the bulletin by Representative Mike Flood when he appeared before the House Financial Services Committee this September.

GAO findings are recommendations only. However, the agency notes, “Clearly, agencies are taking our recommendations.”

Magazine: Gary Gensler’s job at risk, BlackRock’s first spot Bitcoin ETF and other news: Hodler’s Digest, June 11-17

VanEck amends application for spot Bitcoin ETF

October 29, 2023 Coin Telegraph

Asset Management

VanEck joins the group of asset managers updating applications for a spot Bitcoin ETF in the United States.

Asset manager VanEck filed an amended application for a spot Bitcoin (BTC) exchange-traded fund (ETF) on Oct. 27 with the United States Securities and Exchange Commission (SEC), according to the regulator’s database.

The amended filing highlights that a seed capital investor purchased in October the Seed Creation Baskets — a block of 50,000 shares of the proposed ETF — with Bitcoin prices determined by MarketVector Bitcoin Benchmark Rate, an index used as a reference price of the cryptocurrency.

According to finance lawyer Scott Johnsson, the filing suggests the fund seeding will be carried out with Bitcoin, different from other spot Bitcoin ETF proposals with seeding in cash.

Andddddd @vaneck_us joins the amendment filings for spot #bitcoin ETF issuers. h/t @NateGeraci pic.twitter.com/zdYuUTAaE6
— James Seyffart (@JSeyff) October 29, 2023

A spot Bitcoin ETF would directly invest in Bitcoin, as opposed to existing ETFs that invest in Bitcoin futures. The spot version of the product is expected to draw substantial investments from investors seeking Bitcoin exposure via traditional asset managers.

With this new filing, VanEck joins a growing list of asset managers updating their applications for a spot Bitcoin ETF. In September, Bitwise Asset Management also filed an amended application responding to the SEC’s objections to the product.

Early this month, ARK Invest and 21Shares amended their joint application as well, providing additional information about their proposed spot Bitcoin ETF, including practices for asset custody and valuation.

The wave of amended filings may indicate that negotiations between asset managers and regulators are progressing. Commenting on filings awaiting regulatory approval, ETF analyst Eric Balchunas recently noted the changes in ETF proposals may reflect SEC requests for issuers to address concerns.

“It means ARK got the SEC’s comments and has dealt with them all, and now put [the] ball back in [the] SEC’s court,” Balchunas explained on X (formerly Twitter). “[In my opinion] good sign, solid progress.”

The U. S. SEC has delayed its decision on several proposals for spot Bitcoin ETFs in the country, including from BlackRock, Invesco, Bitwise, VanEck and Valkyrie. Market participants and analysts predict that a decision should be made within weeks.

Magazine: Ethereum restaking — Blockchain innovation or dangerous house of cards?

BlackRock fined $2.5M by SEC for incorrect investment disclosure

October 25, 2023 Coin Telegraph

BlackRock fined .5M by SEC for incorrect investment disclosure

Asset Management

The SEC charges for the world’s largest asset manager came on the same day as a DTCC listing of its spot Bitcoin ETF was spotted, however, a spokesperson from DTCC confirmed that the listing has been there since August.

The United States Securities and Exchange Commission has fined investment adviser BlackRock Advisors, LLC $2.5 million, accusing it of failing to accurately describe investments in the entertainment industry that comprised a significant portion of a publicly traded fund it managed.

According to the SEC's filing, between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) made sizeable investments in a print and advertising business called Aviron Group, LLC, that worked on one to two films annually, through a loan facility.

The SEC alleged that BlackRock incorrectly referred to Aviron as a company that provided "Diversified Financial Services" in a number of BIT's annual and semi-annual reports that were made available to investors publicly. The SEC also alleged that BlackRock misrepresented Aviron's interest rate by claiming that it was higher than it actually was. However, the asset manager discovered these errors in 2019 and corrected information about Aviron's investment in the following years.

Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit at the SEC said that the investment advisers have a responsibility to provide accurate vital information about the assets of the funds it manages, and “BlackRock failed to do so with the Aviron investment.”

BlackRock agreed to pay a $2.5 million penalty for the incorrect investment disclosure agreement. Although the investment was unrelated to the crypto ecosystem, the world’s largest asset manager has been in the crypto limelight for its proposed spot Bitcoin ETF.

The SEC charges against BlackRock for investment discourse failure came on the same day as its spot Bitcoin exchange-traded fund (ETF) was noticed listed on the Depository Trust & Clearing Corporation (DTCC) listing prompting many to believe the spot Bitcoin approval is near.

*iShares Bitcoin ETF listing on DTCC. Source: DTCC*

Bloomberg ETF analyst Eric Balchunas called DTCC listing “all part of the process” of bringing a crypto ETF to market. However, within hours of the DTCC listing, the spot Bitcoin ETF was removed from the platform and reappeared within hours, creating confusion among the crypto community, However, a DTCC spokesperson later confirmed that iShares Bitcoin ETF has been listed on the platform since August, and said the move is not indicative of any regulatory approval.

Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis

3AC co-founder avoids contempt charges following evidence of Singaporean citizenship

August 11, 2023 Coin Telegraph

Asset Management

Lawyers for Kyle Davies filed evidence that his U.S. citizenship had been renounced in 2021, which, according to a bankruptcy judge, left him outside the court's jurisdiction.

A judge in the bankruptcy case of defunct crypto hedge fund Three Arrows Capital (3AC) has denied a motion that would have held co-founder Kyle Davies in contempt of court and imposed sanctions.

In an Aug. 11 filing with the United States Bankruptcy Court for the Southern District of New York, Judge Martin Glenn said rulings on motions regarding a subpoena issued to Davies via X — formerly Twitter — were considered without the knowledge the 3AC co-founder was a non-U.S. citizen residing outside the country. He cited federal laws for compelling compliance outside the U.S., adding that his approval of motions starting in December 2022 “presumed based on the record at that time that Mr. Davies was a United States citizen.”

On Aug. 1, lawyers for Davies filed evidence that he had applied to renounce his U.S. citizenship in December 2020 and had become a citizen of Singapore following his marriage to a national. Singapore does not allow dual nationality. His filing was in response to a contempt motion filed by 3AC’s foreign representatives in the U.S. bankruptcy case for a lack of response to the online subpoena.

“Until Mr. Davies filed his Opposition, the Court was operating under the presumption that Mr. Davies was a United States national, and that personal jurisdiction might be established at some point if that presumption continued to hold and other jurisdictional facts were proven,” said Glenn. “Because Mr. Davies’ United States citizenship was a prerequisite for valid service on him in the manner effected, he was not properly served with the subpoena issued by this Court.”

The judge hinted that the foreign representatives could consider compelling Davies’ compliance through Singaporean courts. He denied the contempt motion and said the U.S. court could largely not “exercise jurisdiction over Mr. Davies.”

3AC co-founder Su Zhu, who was also issued a summons on X, is a Singaporean national and not subject to the subpoena, as he resides outside the United States. Both Zhu’s and Davies’ whereabouts have been largely unknown since the collapse of 3AC in July 2022, but Davies’ lawyers listed his Singaporean residence in the Aug. 1 filings.

Liquidators behind 3AC are seeking to recover roughly $1.3 billion in funds from the two co-founders, with the firm reportedly owing creditors $3.5 billion. In April, the pair helped launch Open Exchange, a platform aimed at allowing users to trade claims against bankrupt crypto companies.

Magazine: Get your money back: The weird world of crypto litigation

‘Bitcoin is an international asset’ — BlackRock CEO’s bullish remarks

July 5, 2023 Coin Telegraph

Asset Management

The CEO of the world’s largest asset management firm, Larry Fink, spoke on BlackRock's spot Bitcoin ETF filing and the potential benefits of crypto.

Larry Fink, the CEO of BlackRock, has delivered pro-crypto remarks amid the asset manager applying to list a spot Bitcoin exchange-traded fund (ETF) in the United States.

Speaking on Fox Business on July 5, Fink said the role of cryptocurrency was largely “digitizing gold,” suggesting U.S. regulators consider how an ETF directly linked to Bitcoin (BTC) could democratize finance. During his time at BlackRock, Fink has often commented on major events affecting the crypto space, including the collapse of FTX in 2022 and rising interest in BTC.

“Let’s be clear: Bitcoin is an international asset,” said Fink. “It’s not based on any one currency, and so it can represent an asset that people can play as an alternative.”

#Bitcoin is an International Asset. - Larry Fink, BlackRock CEO pic.twitter.com/WIVKITXYPj
— Michael Saylor⚡️ (@saylor) July 5, 2023

Fink suggested that investors could turn to Bitcoin as a hedge against inflation or the devaluation of certain currencies. As CEO of the largest asset management firm in the world, with more than $9 trillion in assets under management as of April, Fink’s pro-crypto sentiment could create ripples in and out of the space.

Many crypto users on social media reacted positively to Fink’s interview, with at least one suggesting his words could cause the price of certain assets to surge in what the user called the “Fink Pump.” At the time of publication, the BTC price was $30,473, having dropped by roughly 1% in the previous 24 hours.

Under Fink, BlackRock has attempted to launch a spot BTC ETF with cryptocurrency exchange Coinbase acting as a surveillance partner. It’s unclear if the Securities and Exchange Commission will approve the investment vehicle, given its track record of rejecting all previously filed spot BTC ETF applications to date.

Magazine: Gary Gensler’s job at risk, BlackRock’s first spot Bitcoin ETF and other news: Hodler’s Digest, June 11-17

Nasdaq refiles Valkyrie’s spot Bitcoin ETF application, includes Coinbase as surveillance partner

July 5, 2023 Coin Telegraph

Asset Management

The filing followed similar applications from asset managers BlackRock and Fidelity in the last 7 days to include information on surveillance-sharing agreements.

The most recent filing involving cryptocurrency fund manager Valkyrie’s application for a spot Bitcoin exchange-traded fund (ETF) in the United States followed others by including a “surveillance-sharing agreement” with Coinbase.

According to a July 3 filing with the U.S. Securities and Exchange Commission (SEC), the Nasdaq stock exchange refiled for a proposed rule change allowing the listing of a spot Bitcoin (BTC) ETF fo the Valkyrie Bitcoin Fund. The filing included details of a June 30 agreement with Coinbase aimed at giving Nasdaq “supplemental access to data regarding spot Bitcoin trades”.

Valkyrie also re-filed their 19b-4, like BlackRock they mention specific SSA agreement w/ Coinbase, even seems more aggressive (more use of the words 'executed' and 'agreement') They also, like BlackRock, call Coinbase largest US spot bitcoin exch h/t @NateGeraci pic.twitter.com/NDYKSzJeq9
— Eric Balchunas (@EricBalchunas) July 5, 2023

The filing followed similar refilings from asset manager BlackRock and Fidelity in the last 7 days to include information on surveillance-sharing agreements. On June 30, the SEC reportedly said that crypto ETF filings with the Nasdaq and the Cboe were not “sufficiently clear and comprehensive,” hinting that surveillance arrangements could work in applicants’ favor for regulatory approval.

Valkyrie’s most recent attempt applying for a spot BTC ETF with the SEC was in June, but the asset manager’s applications date back to 2021. The firm successfully launched an ETF linked to Bitcoin futures in October 2021, but the SEC has neve approved any spot ETF linked to crypto.

Many firms have applied with the SEC over the last few years for such a crypto investment vehicle without success. Following the SEC’s denial of its spot Bitcoin ETF in June 2022, Grayscale Investments filed a lawsuit alleging the regulator had failed “to apply consistent treatment to similar investment vehicles.”

Magazine: SEC calls ETF filings inadequate, Binance loses euro partner and other news: Hodler’s Digest, June 25 – July 1

US SEC deems spot Bitcoin ETFs filings as inadequate: Report

June 30, 2023 Coin Telegraph

Asset Management

In the eyes of the SEC, the recent filings from BlackRock, ARK Invest, Fidelity and other asset managers are not "sufficiently clear and comprehensive."

There may be a longer wait for a spot Bitcoin exchange-traded fund (ETF) in the United States as the Securities and Exchange Commission (SEC) labeled investment managers' recent applications inadequate.

According to the Wall Street Journal, the securities regulator told the Nasdaq and the Chicago Board Options Exchange (Cboe) that their filings are not "sufficiently clear and comprehensive." These exchanges represent asset managers in the filing of the financial product.

In the eyes of the SEC, the exchanges should have named the spot Bitcoin exchange with which they would have a "surveillance-sharing agreement" or provided sufficient information about the details of those surveillance arrangements. However, asset managers can resubmit the filings after clarifying the information.

Bitcoin ETFs: A beginner's guide to exchange-traded funds

A flurry of applications have been filed over the past few weeks since BlackRock joined the list of companies seeking to debut the first spot Bitcoin ETF of Wall Street. BlackRock's application introduced a "surveillance sharing agreement", under which information about market trading and clearing activities are shared between entities to avoid the possibility of market manipulation.

BlackRock's application led to ARK Invest and 21Shares to amend their third application for a spot BTC ETF to include a similar surveillance agreement. Other asset managers that refiled or amended their applications in the past days include Invesco, WisdomTree, Valkyrie, and Fidelity. ARK Invest, however, is reportedly a front-runner in this race.

ETFs track a specific index and are generally traded on exchanges. In the cryptocurrency market, a fund that tracks the price of one or the multiple digital tokens and consists of various cryptocurrencies is called a cryptocurrency ETF.

Spot Bitcoin ETFs have been denied since 2017 by the SEC. In Canada, however, the financial product are already available. Three significant funds — Purpose Bitcoin, 3iQ Coinshares and CI Galaxy Bitcoin — are all directly invested in spot Bitcoin.

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Asset Management

DeFi needs simple screens

MC2 Finance joins Cointelegraph Accelerator

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