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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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Prime Trust subsidiary Banq files for bankruptcy amid BitGo acquisition deal

June 14, 2023 Coin Telegraph

Coin Telegraph

Prime Trust payment subsidiary Banq files for bankruptcy, citing “unauthorized’ asset transfers to Fortress Group.

The payments subsidiary of crypto custodian Prime Trust, Banq, filed for bankruptcy protection in the United States on June 13, court documents show..

The move comes just days after wallet infrastructure provider and digital asset custodian BitGo signed a non-binding letter of intent to acquire Prime Trust, which was announced on June 8.

Banq’s bankruptcy filing listed $17.72 million and liabilities of $5.4 million and cited the “unauthorized transfer” of $17.5 million in assets to Fortress NFT Group as well as the illicit transmission of trade secrets and proprietary information to Fortress.

*Excerpt from Banq's bankruptcy filing detailing summary of assets and liabilities.*

Fortress NFT Group was set up by Banq’s former CEO, CTO and CPO, reports say, and Banq is currently in arbitration with Fortress NFT Group over these allegations.

The timing of the filing, just after the BitGo acquisition deal of Banq’s parent Prime Trust was announced, raises questions about how it might affect the agreement.

While the terms of the deal were not disclosed, if it goes through, BitGo will acquire Prime Trust’s payment rails and cryptocurrency IRA fund and increase its wealth management offerings.

Prime Trust’s Nevada Trust Company will also join BitGo’s network of regulated trust companies in South Dakota, New York, Germany, and Switzerland. Prime Trust’s API infrastructure and exchange network will “map over 1:1” with BitGo services. BitGo stated:

“This acquisition makes BitGo the first global digital asset company to provide a full suite of solutions for institutions and fintech platforms.”

The crypto custody market is evolving rapidly, with recent deals including Ripples acquisition of Swiss digital asset custody provider Metaco in May for $250 million.

The BitGo/Prime Trust deal, if it goes ahead, comes just as the United States Securities and Exchange Commission has proposed rule changes that would make it harder for crypto companies to act as custodians of their customers’ funds.

Prime Trust has been under pressure for a while, having reportedly laid off a third of its staff in January. Later, it stepped in to hold Binance.US customer funds through a network of partner banks after the banking crisis in March.

It was the center of a scandal in the U.S. state of Oregon last year when it was identified as the source of a $500,000 contribution to the state Democratic Party that later turned out to have come from FTX executive Nishad Singh.

BitGo itself was close to being acquired by Galaxy Digital for $1.2 billion last year and sued Galaxy for acquisition breach after the deal was canceled.

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Coinbase legal chief sends letter to SEC on RIA rulemaking

May 9, 2023 Coin Telegraph

Asset Management

Coinbase's chief legal officer requests revisions to SEC's RIA custody rule to safeguard all asset classes, including cryptocurrencies, criticizing the rule for unfairly targeting crypto.

Coinbase legal chief has requested that the U.S. Securities and Exchange Commission (SEC) make several revisions to its proposed regulation on the responsibilities of registered investment advisers (RIAs) to store client assets with qualified custodians.

Although the U.S. SEC acknowledges Coinbase Custody as a "qualified custodian," Coinbase contends that the updated RIA custody rule unfairly targets crypto and makes improper assumptions about custodial practices based on securities. According to the letter Coinbase chief legal officer Paul Grewal sent on May 9, the proposed SEC rulemaking fails to safeguard other asset classes, such as cryptocurrencies.

Coinbase is the owner and operator of Coinbase Custody Trust Company, which is recognized as a qualified custodian for RIA clients. This custodian is responsible for protecting client assets from potential threats such as bankruptcy and cyber-attacks.

This letter advocates for an expansion of the custody obligations proposal to ensure that it remains adaptable to future investments and protects them appropriately.

Earlier this year, @SECGov proposed major revisions to a rule requiring RIAs to hold client assets at qualified custodians (QCs). Today we're adding our comments to the pile to explain where this proposal is misguided and how it can be improved. 1/7 https://t.co/2Zpfc5rjfb
— paulgrewal.eth (@iampaulgrewal) May 9, 2023

An RIA is a company that provides advice to clients on investments in securities and may handle their investment portfolios. These firms are registered with the SEC or state securities administrators.

In the letter addressed to the SEC, Grewal criticized the proposed rulemaking titled "Safeguarding Advisory Client Assets, Proposed Rule 223-1" as being misguided. Grewal called for a revision to the proposal and staff guidance, highlighting the need to safeguard all asset classes, including crypto assets, which haven't been classified as securities until now.

Several revisions to the rule are suggested by Paul Grewal to protect investors, which includes defining state trust companies and other state-regulated financial institutions as qualified custodians, a longstanding Congressional and SEC policy. He also proposes allowing limited exposure to non-qualified custodians and removing the ban on RIA client trades on crypto exchanges that are not qualified custodians.

The U.S. SEC is expected to comply with the court order and respond to Coinbase’s writ of mandamus this week. Coinbase filed a lawsuit in April 2022, requesting that the court compel the SEC to publicly disclose its stance on a petition submitted several months prior. In the petition, the exchange posed 50 specific questions about the regulatory treatment of certain digital assets.

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Deloitte on a crypto hiring spree, reveals LinkedIn job postings

April 26, 2023 Coin Telegraph

Coin Telegraph

Deloitte highlights its commitment to Web3 and crypto through its intent to hire cryptocurrency experts to join its team, with over 300 positions posted on LinkedIn.

According to the latest updates on LinkedIn, Big Four accounting firm Deloitte — which primarily deals in audit, consulting, financial advisory, risk advisory, tax and legal services — is actively seeking individuals with expertise in cryptocurrency to join their team.

A search for cryptocurrency job opportunities in the United States on LinkedIn shows that there are currently over 300 available positions at Deloitte, and almost all of them were posted just a week ago. However, when conducting a similar search for crypto-related job openings at the other three “Big Four” accounting firms, namely Ernst & Young, KPMG, and PricewaterhouseCoopers, no results are returned.

Deloitte has several job titles related to cryptocurrency, such as Blockchain & Digital Assets Manager, with openings in 97 different locations across the United States. Other job titles include Tax Manager, Blockchain & Cryptocurrency, which is available in 18 U.S. locations, and Tax Manager, Blockchain & Cryptocurrency in NFTs, which has openings in three US locations.

*Screenshot of Blockchain & Assets Manager job posting. Source: LinkedIn*

The role of Blockchain & Digital Assets manager lists responsibilities to include providing various services such as financial statement audit, internal controls specific to blockchain and digital assets, audit readiness for blockchain and digital asset transactions, IPO readiness and SEC reporting services, SPAC transactions and accounting advisory services for digital asset transactions.

Applicants for the role of Tax Manager will manage teams providing tax advisory and compliance services to a diverse range of clients, including those in the cryptocurrency and blockchain industries. The responsibilities include leading clients in legal entity structuring and analyzing tokens and deals, among others.

*Screenshot of Tax Manager, Credit & Incentives job posting.* *Source: LinkedIn*

This comes as Deloitte signals its continued support and interest in Web3 and crypto. In late February, Deloitte announced a partnership with Vatom, a Web3 platform, to provide immersive experiences to different industries.

This collaboration offers various opportunities for companies looking to enhance culture using virtual reality, as well as for brands aiming to improve community engagement. Circle reportedly hired Deloitte to audit its proof-of-reserves in January.

As of now, LinkedIn has received applications from multiple locations for the different job roles, totaling over 1,000. There are several crossover listings on Deloitte’s website, and for now, it is unclear if these positions that it seeks to fill were advertised previously.

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Digital Asset Management