US SEC deems spot Bitcoin ETFs filings as inadequate: Report

June 30, 2023 Coin Telegraph

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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German dwpbank to offer Bitcoin trading to 1,200 affiliate banks on new platform

March 24, 2023 Coin Telegraph

Banking

Securities processor Deutsche WertpapierService Bank (dwpbank) will provide its affiliates seamless integration with their current offerings, with more digital assets to come.

Deutsche WertpapierService Bank (dwpbank), which offers securities processing to around 1,200 banks in Germany, is creating a new platform, wpNex, that will offer Bitcoin (BTC) to all of its affiliates’ retail customers in the second half of this year.

The new service will feature crypto accounts alongside bank customers’ other accounts and will not require additional Know Your Customer procedures, according to local media reports.

Wallet-as-a-service provider Tangany and Bankhaus Scheich’s tradias digital asset trading service will also participate in the new offering. Retail customers will not hold private keys. Dwpbank CEO Heiko Beck said the bank planned to add other cryptocurrencies, digital assets and tokenized securities to the service in the future.

MLB Banking was the first dwpbank affiliate to sign on to the platform and has already performed a transaction on it. MLP Banking account and securities processing head Paul Utzat said in a statement:

“In our MLP customer portal, it is a logical addition to the existing wealth management offering.”

Crypto accounts are linked to euro cash accounts, so transactions can take place without going through a separate payments account.

Germany has been named one of the world’s most favorable countries for crypto. DZ Bank announced in February that it was adding crypto to its asset management service. DZ Bank is Germany’s second-largest bank by assets and a central institution for a network of bank coops with 8,500 branch offices.

Great news for #BTC adoption and access in

Through its new wpNex platform, the dwpbank will allow up to 1200 German banks to offer #Bitcoin trading - and soon more crypto-assets.

The crypto holdings will be integrated into the customers's online banking securities account.
— Patrick Hansen (@paddi_hansen) March 24, 2023

German crypto bank Nuri, however, shut down in November under stress of the crypto bear market. It had half a million customers. On the traditional finance side, Deutsche Bank shares plummeted on March 24 as instability spread among European banks. Deutsche Bank asset management division DWS was reportedly in talks with tradias on investment in the service.

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Coinbase announces acquisition of One River Digital Asset Management

March 3, 2023 Coin Telegraph

Business

As part of the acquisition, Coinbase said One River Digital’s team would join the exchange and CEO Eric Peters would stay to lead the firm under the name Coinbase Asset Management.

United States-based cryptocurrency exchange Coinbase has acquired cryptocurrency-focused hedge fund One River Digital Asset Management, or ORDAM.

In a March 3 blog post, Coinbase said One River Digital will transition to become Coinbase Asset Management, “an independent business and wholly-owned subsidiary” of the crypto exchange. One River Digital is registered as an investment adviser under the U.S. Securities and Exchange Commission, and has previously accepted investments from Coinbase to scale its operations.

“Coinbase and ORDAM share an ethos grounded in prudent risk management, a trait which has enabled both firms to successfully navigate the recent market turmoil,” said Coinbase. “Culturally, our two organizations are strongly aligned on pursuing the opportunity in digital assets with an uncompromising priority on safety and soundness.”

As part of the acquisition, Coinbase said One River Digital’s team would join the crypto exchange and chief executive officers Eric Peters would stay on as leader under the rebranded firm. The exchange suggested “minimal disruption to current business activities” amid the transition.

News of the acquisition followed Coinbase leading the charge in a slew of crypto firms cutting ties with Silvergate amid reports the bank was under investigation from the U.S. Department of Justice over its alleged involvement in the collapse of FTX. The crypto exchange has already announced Signature Bank will take over institutional client cash transactions for its prime customers.

Celsius’ co-founder Daniel Leon follows Mashinsky out as crypto exec flight continues

October 4, 2022 Coin Telegraph

Coin Telegraph

Leon is at least the eighth crypto sector executive who has resigned in recent months; Celsius CEO Alex Mashinsky resigned a week ago.

S. Daniel Leon, who cofounded Celsius with Alex Mashinsky in 2017, has quit his job as the bankrupt crypto lender’s chief strategy officer, CNBC reported Oct. 4, citing unnamed sources and an internal memo seen by the outlet. Bloomberg later reported receiving confirmation of Leon’s resignation from the company. Leon’s resignation comes one week after Mashinsky’s and is part of an apparently growing trend.

Celsius filed for bankruptcy July 13, while it was under investigation by six American states and a month after freezing withdrawals. The company was reportedly $1.9 billion in debt at the time of its bankruptcy declaration. Mashinsky resigned Sept. 27, saying in a statement, “I regret that my continued role as CEO has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing.” His financial dealings and handling of the firm’s final days of solvency were the subjects of intense scrutiny.

Leon filed in U.S. bankruptcy court to have his 32,600 common shares of the company declared worthless on Sept. 5. Bids on Celsius assets will be accepted through Oct. 17, with an auction set for Oct. 20, if necessary. FTX CEO Sam Bankman-Fried was reportedly among the interested bidders.

Leon has joined a steady stream of executives departing from the crypto sector as the crypto winter stretches on. Some execs, such as former MicroStrategy CEO Michael Saylor, Kraken CEO Jesse Powell, FTX US president Brett Harrison and Genesis CEO Michael Moro and managing director Matthew Ballensweig moved into less visible advisory roles. Others, such as former Alameda Research co-CEO Sam Trabucco, Ignite CEO Peng Zhong and bankrupt Voyager Digital’s chief financial officer Ashwin Prithipaul have changed direction entirely.

All of those leaders have left their positions since July.

Stone Ridge board approved plan for ‘liquidation and dissolution’ of its Bitcoin fund

September 12, 2022 Coin Telegraph

Bitcoin

“Effective after the close of business on October 3, 2022, the Fund’s shares will generally no longer be available for purchase," said a Stone Ridge filing with the SEC.

Stone Ridge Asset Management, whose holding company is behind the New York Digital Investment Group, has filed notice with the United States Securities and Exchange Commission that it will liquidate its Bitcoin Strategy Fund.

In a Monday SEC filing, the asset manager said the Stone Ridge Trust board of trustees approved a Friday plan to liquidate and dissolve its Stone Ridge Bitcoin Strategy Fund, first filed with the SEC in July 2021. According to the plan, the asset management firm will continue to operate the fund through Oct. 3, after which time it will “reduce the fund to cash” in preparation for liquidation and distribution to shareholders.

“The liquidation of the Fund is expected to take place on or about October 21, 2022,” said the filing. “Effective after the close of business on October 3, 2022, the Fund’s shares will generally no longer be available for purchase.”

According to its July 2021 prospectus, the Bitcoin (BTC) strategy fund aimed to offer exposure to the cryptocurrency via futures markets, as the SEC has not approved spot investment vehicles linked to BTC. The asset manager said at the time the objective of the fund was “capital appreciation.”

Data from Yahoo Finance showed the fund held roughly $2.8 million in net assets at the time of publication. A Stone Ridge semi-annual report from April 2022 said more than half — 50.5% — of the funds were allocated to foreign government agency bonds and the fund had more than $10.9 million in total net assets.

In October 2020, Stone Ridge purchased 10,000 BTC through the NYDIG as part of a post-pandemic investment strategy, making it one of the largest BTC holders among private companies. At the time of publication, the price of Bitcoin was $22,230, hitting a three-week high on Monday.

SBF and the Mooch tie the knot as FTX Ventures takes 30% stake of SkyBridge Capital

September 9, 2022 Coin Telegraph

Coin Telegraph

Scaramucci calls Bankman-Fried part of the “small universe of outside investors SkyBridge would ever consider partnering with,” promises SkyBridge’s investment strategy will not change.

FTX Ventures, an arm of Sam Bankman-Fried’s FTX crypto exchange, will acquire a 30% stake in alternative asset manager SkyBridge Capital, the firms announced Sept. 9. The terms of the deal were not disclosed, but SkyBridge will use $40 million of the proceeds to purchase cryptocurrencies to hold as a long-term investment, according to a statement.

SkyBridge founder and managing partner Anthony Scaramucci said about the deal on Twitter, “There's a small universe of outside investors SkyBridge would ever consider partnering with, and @SBF_FTX is one of them.” He added separately, “This won’t significantly impact our day-to-day business and doesn’t change our strategy. […] We will remain a diversified asset firm, while investing heavily in blockchain.” SkyBridge managed about $2.5 billion, including over $800 million in digital assets, as of June 30, according to its website.

There's a small universe of outside investors SkyBridge would ever consider partnering with, and @SBF_FTX is one of them. Sam is the real deal, and, in my opinion, is building @FTX_Official into the Amazon of financial services. He even has me dressing like a millennial. pic.twitter.com/yO9N6u24Rz
— Scaramucci.algo (@Scaramucci) September 9, 2022

The two firms have collaborated on SALT (SkyBridge Alternatives) Conferences and the Crypto Bahamas conference for the past year. Bankman-Fried told CNBC:

“We’ve gotten to know the team over the last year. […] We’ve been really excited about what they’ve been doing […] from the investment angle, growing out the community – the digital assets community and the traditional asset community – bringing them together.”

SkyBridge began investing in Bitcoin (BTC) in 2020 and Scaramucci has become a vocal proponent of crypto since then. The firm has been relatively untouched by the meltdown of the crypto market, although it announced the suspension of withdrawals from its crypto-exposed Legion Strategies fund in July.

Bankman-Fried’s firms have entered into a flurry of acquisition activity since the crypto winter began. Bankman-Fried bought a 7.6% share in online brokerage Robinhood in May. FTX US extended a $400 million revolving credit to BlockFi, and FTX offered to buy out some of the debts of bankrupt Voyager Digital in July. It has also made inroads into traditional finance.

VTB sealed the first deal with digital financial assets in Russia

June 29, 2022 Coin Telegraph

Bank of Russia

VTB Factoring acquires a tokenized debt pool of industrial companies via the Lighthouse blockchain.

VTB Factoring, a subsidiary of Russia’s state-owned bank, reported the first major deal with digital finance assets. As part of the deal, the bank subsidiary acquired a tokenized debt pool of the engineering company Metrowagonmash, issued via the fintech platform Lighthouse.

On Wednesday, June 29, VTB reported the deal on its webpage, claiming it to be the first issuance and placement of digital financial assets secured by cash in the Russian Federation. In the announcement, the bank compares it with the issue of short-term commercial bonds.

Anton Musatov, CEO at VTB Factoring, emphasized the new technology’s potential regarding the access of Russian businesses to the funds necessary for operational activities:

“Apart from the standard factoring procedure, [here] a client shouldn’t necessarily sign a service contract to sell its debt pool. The issuer’s readiness to tokenize it and the factoring bank’s decision to acquire it.”

In June 2022 the largest Russian bank Sber announced its first operation with the digital financial assets (DFA) to take place in Mid-July, after finally obtaining a license from the country’s central bank.

While current legislation on the DFA was put in force in 2020, in June 2022 the head of the Financial Markets Committee of the Russian parliament’s lower chamber introduced a bill that would prohibit the use of DFA as a “monetary surrogate”.

In February 2022 VTB conducted the first successful testing of the operation with “digital rubbles”, a central bank digital currency (CBDC) project of the Bank of Russia. Later, the bank announced its first purchase of DFAs in exchange for the digital ruble. By the press time, there is no information on whether the aforementioned deal was made via CBDC.

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