Grayscale Advocates Simultaneous Approval of ETFs by SEC to Foster Fairness and Market Integrity; FTX and Genesis Reach Settlement in Bankruptcy Cases; Record-Breaking Participation in BTC and ETH Futures at CME Group
Digital asset management firm Grayscale has taken a bold step by urging the U.S. Securities and Exchange Commission (SEC) to approve all exchange-traded funds (ETFs) concurrently. The company’s intention is to prevent any entity from gaining an advantage over others in the market.
Craig Salm, Chief Legal Officer at Grayscale, made a compelling argument for the SEC to adopt a fairer decision-making approach that goes beyond merely distinguishing winners and losers. He conveyed this message through a formal letter sent in response to eight Bitcoin ETF applications, including Grayscale’s own ETF application.
In the letter, it was suggested that the SEC’s approval for Bitcoin futures ETFs might also lead to the approval of spot ETFs, as the two types of funds are interconnected.
Moreover, Grayscale pointed out that recent custody sharing agreements (SSAs) between Coinbase and spot ETF providers are not an innovative concept and may not meet the SEC’s stringent standards.
Notably, prominent investment firms like Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest have recently updated their ETF filings to include Coinbase and SSAs. The objective is to enable Coinbase to share trading ledger information and other relevant data to aid the SEC in monitoring potential market manipulation or erratic trading activities.
However, the SEC had previously rejected ETFs in June, citing the need for SSAs due to concerns over potential crypto market manipulation.
Grayscale’s counter argument revolves around the fact that Coinbase is not registered with the SEC as a stock exchange, rendering SSAs potentially unnecessary and unsatisfactory in accordance with the standards set by the securities regulator.”
FTX and Genesis Reach Settlement in Bankruptcy Cases
Crypto exchange FTX and crypto loan company Genesis have made significant strides towards settling claims raised in the bankruptcy case, reaching an agreement in principle. Legal representatives from both firms communicated this development in a letter to bankruptcy judge Sean Lane.
While the details of the settlement were not disclosed in the initial announcement, the agreement is expected to address FTX’s claims against Genesis borrowers. It has also been reported that any pending lawsuits related to these claims will be dropped. Both companies aim to expedite the finalization of the agreement and seek court approval at the earliest.
In a previous claim, FTX contended that Genesis, which is a subsidiary of Digital Currency Group, owed the bankrupt exchange as much as $4 billion. However, this amount has been subsequently revised to $2 billion, as per a letter submitted to Judge Lane earlier this month.
Meanwhile, Genesis sought Chapter 11 bankruptcy protection in a New York bankruptcy court in January, following the collapse of crypto hedge fund Three Arrows Capital.
According to court filings, Genesis is the largest unsecured creditor, with FTX and its subsidiaries owing the crypto lender a sum of $226 million.
As both companies navigate their bankruptcy proceedings, the settlement marks a significant step forward in their efforts to raise funds for creditors and resolve outstanding claims in a legally compliant manner. The crypto community will be closely watching the court’s approval process and its impact on the broader industry.
Record-Breaking Participation in BTC and ETH Futures at CME Group
During the second quarter, the Chicago Mercantile Exchange (CME), the world’s largest futures and options exchange, witnessed a remarkable surge in participation in Bitcoin (BTC) and Ethereum (ETH) futures.
CME reported a notable increase in large open interest investors, representing organizations holding a minimum of 25 Bitcoin futures contracts. The number of such organizations rose to 107 in Q2. Additionally, Ethereum’s large open interest investors saw an average increase, reaching 62.
This surge in institutional interest in Bitcoin futures can be attributed to investors seeking regulated products to hedge against the escalating market volatility. It’s important to highlight that CME’s futures are fully regulated by the U.S. Commodity Futures Trading Commission (CFTC), making them a preferred choice for institutions looking to invest without the need to hold cryptocurrencies for prolonged periods.
The record turnout of large investors in the second quarter coincided with the continued upward momentum of cryptocurrencies like Bitcoin and Ethereum, which extended the minor rally that commenced in the first quarter.
CME acknowledged that the strong demand for hedging products significantly contributed to driving BTC and ETH futures volumes to all-time highs in the first half of the year.
Furthermore, it has been reported that interest in Bitcoin futures contracts broke records, totaling 14,800 contracts in the first half, marking a 15% increase compared to 2022. Additionally, the interest in Bitcoin options saw a remarkable surge, growing by 175% compared to the previous year, with an average of 9,400 contracts traded.