The State of Michigan Retirement System’s recent $6.6 million investment in the ARK 21Shares Bitcoin ETF (ARKB.Z) marks a significant step in the institutional adoption of cryptocurrency assets. Managing approximately $143.9 million in total assets for state employees, Michigan’s decision reflects a growing acceptance of digital assets among institutional investors.
The move aligns with a broader trend of diversification within pension fund portfolios, highlighting a shift towards incorporating digital assets into traditional investment strategies. Similarly, the State of Wisconsin Investment Board recently disclosed significant cryptocurrency holdings, including investments in BlackRock’s iShares Bitcoin Trust and the Grayscale Bitcoin Trust.
The influx of institutional capital into Bitcoin ETFs could help stabilise the often volatile cryptocurrency market. Analysts, including Todd Sohn from Strategas, suggest that institutions’ longer investment horizons can mitigate extreme price fluctuations that Bitcoin has historically experienced. As more institutional investors, including public pension funds, allocate capital to Bitcoin ETFs, the overall market dynamics could evolve, fostering a more stable environment for cryptocurrencies. These investments signify a significant shift towards cryptocurrency among public pension funds, traditionally driven by retail investors.
Additionally, the mayor of Jersey City, New Jersey, has indicated plans to allocate a portion of the city’s pension fund to Bitcoin ETFs. Although specific timelines have yet to be announced, this further underscores the trend of public pension funds considering cryptocurrency as a viable investment option. These actions signal the growing legitimacy and acceptance of cryptocurrencies in mainstream finance. As institutional interest grows, stakeholders will closely monitor these developments, potentially paving the way for increased stability and broader acceptance of cryptocurrencies.
Speaking at the Bitcoin 2024 conference, Donald Trump emphasised the importance of the US leading in cryptocurrency, warning that failure to do so would allow China to dominate. He highlighted his plan to create a national ‘stockpile’ of bitcoin and establish a crypto advisory council if elected. Despite previously criticising cryptocurrency, Trump now promotes expanding US bitcoin mining.
Trump’s stance contrasts with that of Democrats, who he claims seek stricter regulation of the crypto sector. He criticised current regulatory actions and suggested that a strategic bitcoin reserve would legitimise digital currencies. The response from the crypto community has been mixed, with some seeing his proposals as a positive step.
Trump also reiterated his intent to commute Ross Ulbricht’s life sentence, creator of the Silk Road marketplace, sparking applause at the event. Meanwhile, some Democratic lawmakers are urging their party to adopt a more progressive approach to digital assets, recognising the growing influence of crypto enthusiasts in politics.
Why does this matter?
The change in Trump’s stance comes as global concerns about cryptocurrencies’ potential risks persist, including their impact on financial systems and susceptibility to crime. Despite these challenges, Trump’s advocacy for cryptocurrency reflects its emerging role in political discourse.
The launch of spot Ether exchange-traded funds (ETFs) in the US on 23 July 2024 marked a significant milestone. On their first day, Ether ETFs attracted about $106 million in net inflows, with BlackRock iShares Ethereum Trust leading at $266.5 million. However, these figures are modest compared to the nearly $7 billion inflows seen by Bitcoin ETFs in their first three weeks. Analysts predict Ether ETFs may capture only 20-25% of Bitcoin ETF inflows, with some estimates as low as 10%, reflecting market complexities and investor sentiment.
Investor reactions to the ether ETF launch are varied, with many experts expressing cautious optimism. Nathan Gauvin, CEO of Gray Digital, suggests that the launch might not have the transformative impact some anticipated, describing it as ‘less of an event than people are making it seem to be.’
A significant concern among investors is the US Securities and Exchange Commission’s decision to exclude staking from these ETFs. Staking allows Ethereum holders to earn rewards by locking up their ether, enhancing potential returns. The current ETF structure only permits holding unstaked ether, leading some investors to compare this to owning a bond without receiving interest payments. Chanchal Samadder from ETC Group echoed this sentiment, likening holding an unstaked ether ETF to owning a stock without the right to dividends.
Why does this matter?
The exclusion of staking options is a major point of contention within the industry. Many experts, including CoinShares’ Steven McClurg, believe that investors may continue to stake their ether outside the ETF framework to earn yields, potentially diminishing the attractiveness of the ETFs. This situation highlights the challenges of regulatory constraints and the need for a more comprehensive approach to integrating staking into these investment vehicles.
Coinbase has added three new members to its board of directors, including an executive from OpenAI, as part of its strategy to influence US crypto policy. The new board members are Chris Lehane from OpenAI, former US Solicitor General Paul Clement, and Christa Davies, CFO of Aon and a board member for Stripe and Workday. This expansion brings the board from seven to ten members.
The additions come as Coinbase and the cryptocurrency industry aim to strengthen their political influence in the upcoming presidential election. Clement will guide Coinbase’s efforts to counter the SEC and advocate for clear digital asset regulations. Lehane, a former Airbnb policy chief, will provide strategic counsel, while Davies will focus on enhancing Coinbase’s financial and operational excellence globally.
Stand With Crypto, a non-profit organisation funded by Coinbase, now boasts 1.3 million members, and three major pro-crypto super political action committees have raised over $230 million to support favorable candidates.
The Financial Conduct Authority (FCA), UK’s financial regulatory body, has fined CB Payments Limited (CPBL), a Coinbase subsidiary, £3.5 million ($4.5 million) for inadequate anti-money laundering controls, marking it FCA’s first action against a crypto trading firm.
CBPL is a platform for trading cryptoassets within Coinbase Group and the FCA stated how after an FCA visit in October 2020, it voluntarily agreed to enhance its financial crime controls. The agreement required CBPL to halt accepting new high-risk customers until the issue was resolved. Nevertheless, the company continued providing e-money services to 13,416 such customers, with nearly a third of them depositing $24.9 million. The fund in turn facilitated various cryptoasset transactions through other Coinbase entities, amounting to approximately $226 million in total. The FCA reported that this repeated breaches of the voluntary agreement went undetected for about two years.
Despite these breaches, CBPL agreed to a resolution, receiving a 30% reduction on its fine—lowering it from £5 million to £3.5 million. Coinbase, for its part, reiterated its commitment to working with top financial regulators like the FCA to ensure their platform remains compliant, secure, and trusted by customers.
Former US President Donald Trump, who once called cryptocurrency a ‘scam,’ is now headlining the Bitcoin 2024 convention in Nashville. He will speak on the final day of the three-day event, joining other prominent figures such as Republican former candidate Vivek Ramaswamy, Senator Bill Hagerty, and Senator Cynthia Lummis. The convention also includes Democratic Representative Ro Khanna of California.
The cryptocurrency industry is bouncing back after significant setbacks in 2022, including the collapse of FTX. Proponents argue that crypto users are becoming a significant political force, with the Republican Party courting their votes by promising lighter regulation. The shift has seen major pro-crypto political action committees raise over $230 million to support favourable candidates.
Trump’s appearance at the convention marks a notable shift in his stance on crypto. He has recently criticised Democratic regulatory efforts and expressed support for increased bitcoin mining in the US. That support has been well-received by the crypto industry, which has faced increased scrutiny from the Biden administration. As the crypto community rallies around supportive politicians, Trump’s new embrace of the industry is seen as a strategic move to align with emerging political forces.
Ferrari announced on Wednesday that it will expand its cryptocurrency payment option for luxury sports cars to its European dealers starting at the end of this month. The Italian automaker introduced this payment method in the United States last year to cater to its wealthy clientele’s requests.
The company plans to extend this scheme to other international markets by the end of 2024, where cryptocurrencies are legally accepted. While many major companies have avoided cryptocurrencies due to their volatility, Ferrari’s move aims to meet its customers’ evolving needs.
In the US, Ferrari partnered with BitPay to facilitate bitcoin, ether, and USDC transactions, converting crypto payments into traditional currency to shield dealers from price fluctuations. Ferrari has not disclosed whether it will use the same payment processors in Europe or other regions.
Asia’s first inverse bitcoin exchange-traded fund (ETF), designed to allow investors to profit from a decline in cryptocurrency values, will launch in Hong Kong on Tuesday. The CSOP Bitcoin Futures Daily (-1x) Inverse Product, introduced by CSOP Asset Management, will debut on the Hong Kong Stock Exchange.
The new ETF aims to capitalise on the increasing demand for investment opportunities linked to volatile cryptocurrencies. After a batch of spot crypto ETFs launched in Hong Kong in April, bitcoin experienced a turbulent second quarter, falling over 12%. The inverse ETF allows investors to benefit from bitcoin’s price drops.
Bitcoin has been notably volatile, with its fluctuations in 2023 surpassing those of crude oil and the Nasdaq 100. Recent weeks saw a rebound in bitcoin’s value, trading around $67.400 following political developments in the US.
CSOP’s inverse bitcoin product will track the daily inverse performance of the S&P Bitcoin Futures Index. CSOP, which introduced Asia’s first bitcoin futures ETF in 2022, saw its market value rise to over $100 million earlier this year but has since decreased to approximately $58 million.
According to blockchain data, a major Cambodian payments firm, Huione Pay, received over $150,000 in cryptocurrency from a digital wallet linked to the North Korean hacking group Lazarus. The funds were sent between June 2023 and February this year from an anonymous wallet used by Lazarus to launder money stolen from three crypto companies through phishing attacks. The FBI reported that Lazarus stole around $160 million from Atomic Wallet, CoinsPaid, and Alphapo last year to fund North Korea’s weapons programs.
Huione Pay, based in Phnom Penh, stated it was unaware of receiving funds indirectly from the hacks and cited multiple transactions between its wallet and the source as the reason. The company declined to explain why it had received the funds or provide details on its compliance policies. Despite blockchain tools allowing companies to identify high-risk wallets, Huione Pay claimed it had no control over the anonymous wallet’s transactions.
The National Bank of Cambodia (NBC) prohibits payment firms like Huione Pay from dealing with cryptocurrencies due to risks like money laundering and financing terrorism. The NBC indicated it might take corrective measures against Huione Pay. Meanwhile, US blockchain analysis firms reported that Huione Pay was among several platforms receiving stolen crypto, which was converted into different currencies, including tether (USDT), to obscure the money trail. Southeast Asia has become a hotspot for high-tech money laundering and cybercrime operations, highlighting the need for stronger regulatory measures.
Bitcoin surged to a two-week high on Monday following the attempted assassination of US presidential candidate Donald Trump. Trump, who was shot in the ear during a rally in Pennsylvania, is recovering well, according to his campaign. The attack is seen by some investors as boosting his chances of winning the upcoming election, leading to increased trades betting on his victory.
The cryptocurrency saw an 8.6% rise, reaching $62,508, with a session high of $62,698, marking a 47% annual gain. Ether also experienced a boost, climbing 6.8% to $3,322. Trump has criticised Democratic efforts to regulate the crypto sector and positioned himself as a pro-crypto candidate, which has resonated with the market.
Market analyst Tony Sycamore from IG noted that the assassination attempt has significantly bolstered Bitcoin, adding that the cryptocurrency could see further gains. Trump is set to speak at the Bitcoin 2024 conference in Nashville on 27 July, a move likely to keep the crypto market’s focus on his campaign. Despite a rocky start to July, Bitcoin’s recent rebound suggests it could approach $65,000 by the end of the week.
