The White House has signalled it won’t veto the passage of the FIT21 bill despite U.S. Securities and Exchange Commission Chair Gary Gensler advocating against it. In a new press release, the White House says it does not support HR 4763, also known as the Financial Innovation and Technology for the 21st Century Act (FIT21), […]
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A March 4 filing for BlackRock's spot Ether ETF called for feedback on whether the investment vehicle could be listed as a commodity.
Analysts have unearthed details from a March filing with the United States Securities and Exchange Commission (SEC) that suggest the regulator may consider labeling Ether (ETH) a security.
In a May 13 X post, Davis Polk and Wardwell Associate Scott Johnsson reviewed a March 4 filing from BlackRock over its application to list and trade a spot Ether exchange-traded fund on the Nasdaq. The filing delayed the deadline for the commission to decide on a spot Ether ETF from BlackRock until June but also called for public feedback on whether the investment vehicle could be filed as a commodity.
“The obvious purpose is to potentially deny on the basis that these spot filings are improperly filed as commodity-based trust shares and do not qualify if they are holding a security,” said Johnsson.
The World Gold Council, an authority in global gold markets, expects the recent gold price rally to continue, supported by geopolitical risks, steady central bank purchases, and demand for coin and jewelry. The council also sees gold ETFs fueling a future rise in prices given their precious metal’s low ownership levels. World Gold Council Paints […]
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler is declining to comment on whether smart contract platform Ethereum (ETH) counts as a security or a commodity. In a new interview with Bloomberg Television, Gensler says he does not want to answer questions about Ethereum’s classification as an asset amid anticipation of the regulatory agency’s […]
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Two of the CFTC’s crypto tipsters scored $15 million alone which brought successful enforcement cases for the regulator.
The United States commodities regulator has paid $16 million this year to whistleblowers who gave information leading to successful enforcement actions with a majority of the tips involving crypto.
In an Oct. 31 statement, Commodity Futures Trading Commission (CFTC) commissioner Christy Goldsmith Romero said most of the tips received this year involved crypto which she claimed was “an area that continues to have pervasive fraud and other illegality.”
Very proud of these offices and their outsized results. As a former IG, I know firsthand how important whistleblowers
— Commissioner Christy Goldsmith Romero (@CFTCcgr) October 31, 2023
are. The CFTC could not fully protect customers and markets w/o them. Click to read about the highest # of tips, crypto tips & environmental fraud tips. https://t.co/C4I9tgnxRU
Two whistleblowers received $15 million alone for their information which led the CFTC to successful enforcement cases in September — however, the regulator didn’t delve into the nature of those cases in its statement at the time.
Romero said whistleblowers are vital to mitigate commodities fraud and that the CFTC wouldn’t be able to “fully protect” customers and markets without them:
“Whistleblowers help identify fraud and other illegality, interpret key evidence, and save considerable Commission resources and time. The faster we can stop fraud, the more we can protect customers from harm.”
Romero acknowledged the efforts of CFTC’s Office of Customer Education and Outreach which teaches people to spot, avoid and report cryptocurrency fraud.
“With the rise of crypto, more retail customers have come under the CFTC’s jurisdiction,” Romero said.
Related: CFTC issues $54M default judgment against trader in crypto fraud scheme
The CFTC has doled out almost $350 million since the program started in 2014. It’s led to over $3 billion in enforcement sanctions ordered in cases tipped off by whistleblowers.
The CFTC won a record $3.4 billion penalty payment in a Bitcoin-related fraud case in April and won its case against Digitex CEO Adam Todd in July who was ordered to pay $16 million in penalties.
In April, Romero iterated that managing the risks associated with cryptocurrency would be crucial to upholding market integrity, national security and financial stability.
She’s advocated integrating stronger identity verification measures saying it would minimize illicit finance in the cryptocurrency market.
As the bear market deepens, more crypto companies will have to lay off employees to keep the lights on.
— Jake Chervinsky (@jchervinsky) December 29, 2018
This creates a new risk: disgruntled former employees often become whistleblowers, especially if they have valuable intel that entitles them to an SEC or CFTC bounty reward.
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?
Bitcoin price is closely linked to several financial assets but the reasons for correlation with certain precious metals and stocks can be quite different.
The financial media often points out Bitcoin’s (BTC) correlation to big tech. “Bitcoin is trading like a tech stock” is a common narrative alongside BTC's often acute inverse-relationship with the United States dollar.
But are these correlations set in stone, and can they be useful for predicting future price moves? Let's take a closer look at several reports analyzing the relationship between Bitcoin and various asset types.
A report published in October 2022 by the Multidisciplinary Digital Publishing Institute arrived at several key conclusions regarding Bitcoin’s correlations with traditional financial assets, including:
While some of these points can be countered with newer price data over the last 9 to 10 months, such as a major drop in volatility, insight can still be gained from examining them. In addition, other researchers have gone deeper into the relationship of specific assets to Bitcoin during set timeframes.
A few crypto-related equities have been more correlated to Bitcoin than any other assets on the market. The 90-day correlation coefficient for BTC/MSTR, BTC/COIN, and BTC/RIOT have all remained near 1 for the last several months. The symbols "BTC/xxxx" indicate the correlation coefficient for each asset as measured against Bitcoin.
For MSTR, the coefficient has fallen no lower than 0.68 since September 2022. The coefficient for RIOT fell to roughly 0.75 in June 2023, while COIN trended near 0 for a time during May and June.
All of these stocks have outperformed Bitcoin so far this year while also showing greater volatility. Investors may be using these assets as proxies for Bitcoin, which can't be bought through a brokerage account.
One reason these three stocks are so closely correlated to Bitcoin has to do with the balance sheet of their respective companies. They all have a substantial amount of Bitcoin holdings.
As seen in the table below, MSTR has the most holdings of any public company with 152,333 Bitcoin. COIN comes in 4th place with 10,766 Bitcoin, and RIOT is in 8th place with 7,094 Bitcoin.
When it comes to correlation with commodities and precious metals, in particular, silver actually beats gold in mirroring Bitcoin's price moves since 2019.
A November 2022 report by Jordan Doyle and Urav Soni of the CFA Institute entitled “How do cryptocurrencies correlate with traditional asset classes?” shed some light on Bitcoin's most-correlated assets.
Silver has been the commodity most closely-correlated to Bitcoin from October 2019 and to October 2022 with a correlation coefficient of 0.26, according to the report. Gold’s correlation, by comparison, was just 0.15, perhaps due to silver’s greater volatility.
The report notes:
Silver has the highest correlation, peaking at 0.26 for silver and bitcoin. Bitcoin, the so-called 'digital gold,' exhibits only weak correlation with the precious metal.
When speaking of stocks as a whole and their correlation to Bitcoin, looking at an index or ETF would be the most common way to make a comparison. This provides an overview of the asset class in general rather than zeroing in on one specific stock, which may have any number of factors affecting it.
As might be expected, growth funds tend to be more correlated with cryptocurrencies, presumably due to their more speculative nature. Notably:
“Growth funds exhibit a stronger correlation to cryptocurrencies than value funds. The correlation coefficient between small-cap growth funds and bitcoin, for instance, is 0.41, compared to 0.35 for small-cap value funds and bitcoin.”
In other words, crypto markets as a whole are “weakly sensitive to interest rate dynamics” that were at least partially responsible for a broad drawdown in equities throughout 2022.
Finally, Bonds bear little to no relationship with Bitcoin. Passive bond funds showed a correlation of just 0.11, while active bond funds were just two basis points higher at 0.13. All data points are for the timeframe of October 2019-October 2022.
Due to Bitcoin’s large price swings, all correlations can change at a moment’s notice. Still, the data used here provides an accurate picture of the assets most closely correlated to Bitcoin in the recent past.
Related: Bitcoin and correlations: examining the relationship between btc, gold, and the nasdaq
It's likely that crypto-specific stocks will continue having a strong correlation due to their Bitcoin holdings, while the correlation with commodities and equity funds could quickly change course going forward.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The 2018 MIT professor Gary Gensler didn’t think most ICOs triggered U.S. securities laws.
The crypto community is calling out the hypocrisy of Gary Gensler, the head of the United States securities regulator, after a 2018 video emerged of him stating that cryptocurrencies are on par with commodities or cash and are not securities.
The video came from a “Blockchain and Money” class in the Fall Semester of 2018 taught by Gensler, a former professor at the Massachusetts Institute of Technology (MIT) before he became chair of the Securities and Exchange Commission (SEC).
On the topic of initial coin offerings (ICOs), Gensler said that "three-quarters of the market are not ICOs or not what would be called securities" and named the U.S., Canadian and Taiwanese markets as the "three jurisdictions that follow something similar to the Howey Test."
"Three-quarters of the market is non-securities, it's just a commodity, cash,crypto,” Gensler then said.
The below clip is from a Fall 2018 Graduate MIT course called "Blockchain and Money"
— zk- (@ZK_shark) April 25, 2023
Gary Gensler - the current President of the SEC, was the professor.
The Hypocrisy speaks for itself
"So we already know in the US and in many other jurisdictions that 3/4 of the market… pic.twitter.com/rjRWeq5P8X
While Gensler briefly acknowledged that ICOs may spark a securities debate, he concluded that “three-quarters of the market is not particularly relevant as a legal matter.”
Several members of the crypto community were stunned by Gensler’s remarks.
Coinbase CEO Brian Armstrong commented a mere “Wow” in response to an April 26 Twitter post shared by cryptocurrency researcher “zk-SHARK.”
— Brian Armstrong ️ (@brian_armstrong) April 26, 2023
Erik Voorhees, the founder of crypto trading platform ShapeShift asked "When does someone get arrested for fraud?" in an April 25 Twitter post to his 658,900 followers.
When does someone get arrested for fraud? https://t.co/5BtU2sT5x2
— Erik Voorhees (@ErikVoorhees) April 25, 2023
Farokh Sarmad, the founder of Web3 podcast Rug Radio called Gensler “disgusting” in a tweet to his 346,200 followers, while a systems engineer, named “JD” called on the SEC Chair to provide an explanation behind the change in opinion.
Not everyone saw eye to eye though.
Related: Gary Gensler refuses to answer if ETH is a security: SEC hearing
U.S. lawyer Preston Byrne explained that professors and law enforcers work in “different capacities” and Gensler shouldn’t be held to the same views he had back then.
I see a lot of people giving Gary Gensler a hard time over this but it’s important to note the different capacities in which he’s speaking. As a professor, he can talk about what things are in the abstract. As a law enforcer, he’s required to enforce the laws as they’re written. https://t.co/mYhd7Hm8I9
— Preston Byrne (@prestonjbyrne) April 26, 2023
Another U.S. lawyer, Jonathan Schmalfeld, who specializes in blockchain technology, challenged Byrne’s opinion by stating that Gensler’s interpretation of the Howey Test shouldn’t change by virtue of his capacity. The response prompted a second explanation from Byrne:
“I mean when I talk with clients about this stuff there are three answers, what I think the law is, how I think enforcers will interpret it, and what the law ought to be. Right now he’s limited to giving only one of those answers by virtue of his position.”
Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?
In a court case linked to the now-defunct crypto exchange Gatecoin, a Hong Kong judge has ruled that cryptocurrencies are “property” which is “capable of being held on trust.” According to the law firm Hogan Lovells, this case should provide greater clarity to insolvency practitioners and other common law jurisdictions. Hong Kong Judge Designates Crypto […]
According to the recent complaint by the U.S. Securities and Exchange Commission (SEC) against Bittrex, the securities regulator insists that a few crypto asset tokens were offered and sold as investment contracts and are securities. The news follows the SEC’s designation of several crypto assets as securities, including the case against Terraform Labs, which insists […]
On Wednesday, the U.S. Bureau of Labor Statistics published the Consumer Price Index (CPI) report, which noted that inflation rose 0.1% last month in March and 5% from a year ago. Annual inflation has dropped for nine consecutive months following the nine times the U.S. Federal Reserve raised the federal funds rate. U.S. Inflation Cools […]