Ben Strack

On-chain debt capital markets platform Obligate has launched on Coinbase&#8217;s layer-2 network.



This new deployment aligns with the protocol&#8217;s strategy to increase institutional engagement with blockchain-native assets. It comes just after the Switzerland-based firm made its initial entry into on-chain investment products; a decision that aligns with a larger trend across the industry.



Obligate lets companies issue on-chain bonds and other debt securities to receive funding from investors. These bonds, initially issued via smart contracts on Polygon, have now expanded to another venue.&nbsp;



The deployment on Base — a Coinbase-incubated layer-2 built on the Optimism stack <a href="https://blockworks.co/news/inside-coinbase-base-launch">and launched in July</a> — “represents a paradigm shift in the integration of blockchain technology into institutional finance,” according to Matthias Wyss, Obligate’s head of strategic partnerships.



Read more: <a href="https://blockworks.co/news/coinbase-base-home-degens">The ‘crypto degen crowd’ has settled in on Coinbase layer-2, Base</a>



“Our capabilities are especially relevant in the current macro environment as they allow small- and medium-sized enterprises cheap and efficient access to debt capital, which is crucial in the rising interest rate environment,” Wyss told Blockworks.



Obligate issued its first bond on the <a href="https://blockworks.co/tag/polygon">Polygon</a> blockchain in March. Investors in the protocol include Blockchange Ventures, Circle Ventures, Earlybird and SIX Fintech Ventures.



Investors fund their orders into escrow before capital and bonds are exchanged, according to the company’s <a href="https://docs.obligate.com/obligate/enote-protocol">site</a>. From issuance to maturity, investors hold ERC20 bond tokens in their wallets and — unless transfer limitations are set by the issuers — can move or sell them to other wallets.&nbsp;



Users receive payment redemption tokens at maturity, at which time the investors can burn their tokens for the final payments. Issuers can also secure their bonds with collateral, leading to the liquidation of that collateral in the case of default.&nbsp;



The deployment to <a href="https://blockworks.co/tag/base">Base</a> comes a couple weeks after STS Digital issued a structured investment product — a barrier reverse convertible linked to bitcoin — on Polygon as an Obligate eNote.



Obligate said in a Nov. 15 blog <a href="https://obligate.medium.com/obligate-launches-first-usdc-denominated-structured-investment-product-on-polygon-e0404e774b8b">post</a> that it intends to build “an extensive product suite alongside a broad spectrum of digital asset services” — including products with “bespoke payoff profiles.”



<a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">Moving real-world assets</a> onto the blockchain via tokenization has gained steam in recent months as financial players and investors seek to boost efficiency and lower costs.



Read more: <a href="https://blockworks.co/news/blackrock-ceo-us-lagging-innovation-tokenization">BlackRock CEO touts tokenization, warns US ‘lagging’ in innovation</a>



Various projects have sought to offer <a href="https://blockworks.co/news/on-chain-investors-us-treasury">on-chain access to US Treasury securities</a>, for example — the largest and most liquid government bond market globally.



Traditional finance giants, such as <a href="https://blockworks.co/tag/jpmorgan">JPMorgan</a>, continue exploring ways to use blockchain technology. The company most recently carried out tests designed <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">to let fund managers tokenize their portfolios</a> on chosen blockchains.&nbsp;



Wyss said all institutional blockchain applications reaffirm the path to a future where all capital market transactions are issued and settled on-chain.



“We already see an expansion of blockchain native assets along the risk curve from payment to debt to equity and, as pioneered by Obligate recently, to structured investment products,” he added. “This will continue to grow with the…institutional adoption of Tier1 [traditional finance] players.”



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Protocol Obligate ramps up push to boost institutional blockchain use

David Canellis

Bitcoin is again inching closer to a potential price breakout, even as it hovers at its highest point in 18 months.



Markets priced bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) above $38,600 on Friday morning — up 9% over the past month and more than double since this time last year.



Number-two crypto ether (<a href="https://blockworks.co/price/eth">ETH</a>) is meanwhile playing catch-up. It’s also at its highest point since mid-last year, but trails bitcoin’s returns by nearly half.



The ETH/BTC ratio (the bitcoin cost of ether) has fallen by one-fifth over the past six months. It’s showing signs of closing the gap, however, having regained almost 4.5% in November.



Bitcoin bulls may explain the crypto’s strength with hype around <a href="https://blockworks.co/bitcoin-etf">spot bitcoin ETFs</a> — like the one BlackRock wants to launch — which could be approved any day now.



Those ETFs will be forced to buy BTC to meet investor demand, representing perhaps billions in upward pressure. They might even reason that the DOJ’s <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">indictment of Binance and CEO Changpeng Zhao</a> gives a certain clarity to the crypto market that can only be good for prices.



Crypto investors could even feel a little floaty due to arrests of hombres like <a href="https://blockworks.co/news/sbf-guilty-verdict-sentencing">FTX fraudster Sam Bankman-Fried</a>, Terra <a href="https://www.reuters.com/world/europe/montenegro-court-approves-extradition-cryptocurrency-king-do-kwon-2023-11-24/">ringleader</a> Do Kwon and Celsius <a href="https://blockworks.co/news/celsius-founder-alex-mashinsky-freed-on-bail-pleads-not-guilty">rabble-rouser Alex Mashinsky</a>.&nbsp;



So, the tide went out, took the bad actors with it and now billions in fresh ETF money might wash ashore, bringing the bull market back along with it, some might say.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/15969053/embed#?secret=TTmy9sYF6a" data-secret="TTmy9sYF6a" frameborder="0" scrolling="no" height="575" width="700"></iframe>
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Caption: The ETH/BTC ratio has even underperformed BNB over the past year



Bears would say it&#8217;s <a href="https://www.ft.com/content/298aed3a-d855-4e01-8e6c-7bae5dd87bc5">unclear</a> whether ETFs would actually move the needle, considering the relatively small interest in the three spot funds already available to North American investors via Canadian markets.&nbsp;



A fresh wave of spot ETFs could even be bad for bitcoin’s price, especially if Grayscale Bitcoin Trust (GBTC) loses ground to Wall Street operators like BlackRock and Fidelity.&nbsp;



JPMorgan analyst Nikolaos Panigirtzoglou <a href="https://www.linkedin.com/feed/update/urn:li:activity:7133832125031567361/">reckons</a> up to $2.7 billion might flow out of GBTC and potentially be dumped on the market.



Still, by some definitions, the <a href="https://blockworks.co/news/longest-bitcoin-bear-market-survival">bear market is squarely over</a>. That doesn’t explicitly mean the start of a new bull market.



Although momentum does count for something, and if Bitcoin went up in November, could it do the same in December?



It turns out Bitcoin’s price direction in December has matched November 10 times in its 13 years of existence, with only 2011, 2013, and 2014 not aligning — a 77% strike rate, per TradingView data.



That’s more common than with months overall: 94 of the 170 months on record, or 56%, have aligned with the previous month’s candle.&nbsp;



All this is probably statistically insignificant, on par with <a href="https://theconversation.com/can-maths-help-you-win-at-roulette-69440">roulette </a>math, given the small sample size.&nbsp;



But considering the crypto winter we’ve had, markets will take what they can get.



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Bitcoin price went up in November — will it go up in December?

Katherine Ross

Circle, in a public letter addressed to Senator Elizabeth Warren, D-Mass., and Chairman Sherrod Brown, D-OH, on Thursday to push back against claims that it banked Justin Sun and, separately, had financed Hamas.&nbsp;



The letter — penned by Circle’s Chief Strategy Officer Dante Disparte — was written in response to a Nov. 9 letter from the Campaign for Accountability which claimed that Circle does not prevent illicit finance activities.&nbsp;



The letter from the Campaign for Accountability executive director Michelle Kuppersmith <a href="https://campaignforaccountability.org/watchdog-asks-senators-to-include-tron-circle-in-crypto-terror-financing-probe/">claimed</a> that there were ties from Circle to Sun, based on “recently published studies and reports of law enforcement operations.”



<a href="https://blockworks.co/tag/circle">Circle</a>, in its Nov. 30 <a href="https://www.circle.com/blog/circle-refutes-false-claims-on-illicit-financing">letter</a>, said, “neither Mr. Sun nor any entity owned or controlled by Mr. Sun, including the TRON Foundation or Huobi Global, currently have accounts with Circle.”



Read more: <a href="https://blockworks.co/news/htx-hack-ethereum-crypto-assets">Huobi’s ‘Heco’ chain bridge drained of $87M in crypto assets</a>



“To date, the US government has not specifically designated Mr. Sun or his entities as Specially Designated Nationals.&nbsp; Nonetheless, Circle terminated all accounts held by Mr. Sun and his affiliated companies in February 2023,” the letter continued.&nbsp;



In March, the <a href="https://blockworks.co/news/sec-sues-justin-sun">US Securities and Exchange Commission sued Sun</a> for allegedly selling securities.&nbsp;



&nbsp;“As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities,” Gurbir Grewal, director of the <a href="https://blockworks.co/tag/sec">SEC’s</a> Division of Enforcement, said in a March statement.



Both Warren and Brown <a href="https://blockworks.co/news/crypto-financing-terrorism-biden">signed off on a letter back in October</a> pushing the Biden Administration to “address crypto-financed terrorism.” The basis of the letter stemmed from a report in the Wall Street Journal which claimed that Hamas used crypto to fund its attacks on Israel.&nbsp;



Elliptic, which provided the data used by the Journal report, <a href="https://blockworks.co/news/wsj-elliptic-crypto-fundraising">refuted the conclusion</a> saying that there was “no evidence” that Hamas raised millions in crypto.



Circle said that it “would be happy to discuss any of the above” with both Warren and Brown.



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Circle denies alleged ties to Justin Sun and Hamas in letter to lawmakers

If US regulators approve spot bitcoin ETFs, Ark Invest and 21Shares are well-positioned to rapidly accumulate assets, according to Bloomberg Intelligence analysts.



The Grayscale Bitcoin Trust (GBTC) could also have a leg up — if allowed to launch at the same time — given its current asset base of roughly $23 billion assets under management, according to Bloomberg Intelligence’s James Seyffart and Eric Balchunas.



The US Securities and Exchange Commission is <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf">set to rule on the Ark 21Shares Bitcoin ETF (ARKB) by Jan. 10</a>, and industry watchers expect the regulator could greenlight a bunch of other similar offerings at that time.&nbsp;



The regulator could also choose to deny these applications.&nbsp;&nbsp;&nbsp;



Segment observers have said a bitcoin ETF, or multiple, could be <a href="https://blockworks.co/news/approved-spot-bitcoin-etf-launch-size">one of the biggest ETF launches of all-time</a>. A fight for assets between traditional finance giants such as BlackRock, Fidelity and Invesco — not to mention more specialized firms like Grayscale, VanEck, Bitwise and WisdomTree — is set to be fierce.



Flows and volumes are “crucial” to marketing an <a href="https://blockworks.co/tag/etfs">ETF</a>, Seyffart and Balchunas said in a Wednesday research note. Capital flowing into a fund gives the appearance of success and interest, they added, which can spur other traders and investors to follow.&nbsp;



With that in mind, the analysts argued that Ark Invest might choose to sell its current positions in the Grayscale Bitcoin Trust (<a href="https://blockworks.co/tag/gbtc">GBTC</a>) and port those assets over to ARKB.



The discount to net asset value at which GBTC’s shares trade <a href="https://blockworks.co/news/grayscale-gbtc-shrinking-discount">has recently shrunk to a two-year low</a>, and Grayscale executives have said such a discount would essentially disappear if it is allowed to convert to an ETF.&nbsp;



The Ark Next Generation Internet ETF (ARKW) currently holds nearly 4.3 million shares of GBTC — worth roughly $133 million.



“This influx of flows and volumes might come in chunks, which could even be better for ARKB, since it would help make it look as though the ETF was attracting consistent interest in the first week,” Seyffart and Balchunas wrote.



An <a href="https://blockworks.co/tag/ark-invest">Ark Invest</a> spokesperson did not immediately return a request for comment.&nbsp;



The capital injection would be especially important given the size of its largest competitors. While Ark Invest’s US ETFs manage roughly $13 billion in assets, BlackRock ETFs, including those under its iShares brand, hold about 2.4 trillion.



Dave Nadig, financial futurist at data firm VettaFi, previously said capital markets depth and institutional volume would play a key role, noting BlackRock’s institutional relationships could help its bitcoin trust become a quick asset leader.



“[BlackRock and] Fidelity will add their bitcoin ETFs to their modeled/managed funds&#8230;possibly immediately to get a head start,” Michael Nasser, co-founder of digital currency brokerage Satstreet, said in an X <a href="https://twitter.com/MikeNasser91/status/1730243523595624848">post</a>.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Agree, this is why they are the favorites! But BlackRock model port only moves into stuff when they have tactical motive, so not guaranteed early&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1730243871236325744?ref_src=twsrc%5Etfw">November 30, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Seyffart and Balchunas added that GBTC will also have an advantage if allowed to convert into an ETF when other firms launch bitcoin ETFs. The trust, which launched in 2013 and has eligible shares trading on OTC Markets Group, is <a href="https://blockworks.co/news/grayscale-bitcoin-etf-milestone">set to become an ETF with regulatory approval</a>, executives have said.



Read more: <a href="https://blockworks.co/news/grayscale-sec-advantage">Grayscale to SEC: Don’t grant ‘prejudicial first-mover advantage’ for bitcoin ETFs</a>



<a href="https://blockworks.co/news/grayscale-bitcoin-etf-sec">Grayscale Chief Legal Officer Craig Salm noted</a> in an Aug. 31 <a href="https://www.bnnbloomberg.ca/video/grayscale-s-top-reasons-why-the-sec-should-approve-their-bitcoin-spot-etf~2756421">interview</a> with Bloomberg: &nbsp; ​​”We’re the only ones with an actual fund today with [assets under management], trading volume and investors.”



The emphasis on marketing is especially pronounced given the rather <a href="https://twitter.com/EricBalchunas/status/1730239437743759505">unprecedented</a> possibility that a bunch of bitcoin ETFs are allowed to launch on the same day.&nbsp;



A dozen fund issuers had filed for spot bitcoin ETFs this year before <a href="https://blockworks.co/news/pando-joins-spot-bitcoin-etf-hopefuls">Switzerland-based Pando Asset entered the race</a> on Wednesday.&nbsp;The asset managers <a href="https://blockworks.co/news/21shares-bitcoin-etf-approval-incoming">have filed amendments to their applications</a> in recent weeks as they continue to meet with SEC officials.



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Ark Invest, 21Shares could jump to bitcoin ETF assets lead: Analysts

Macauley Peterson

A recent initiative by Binance introduces what it describes as “the world&#8217;s first cryptocurrency triparty arrangement with a third party banking partner.” This project aims to attract institutional clients who prefer not having their capital solely under the control of the exchange.



Ever since the FTX fraud, crypto traders have been leery of assurances by exchanges that they always have all the assets they say they do, backing deposited capital. The concept of proof-of-reserves got a big boost in response as one approach to addressing the longstanding issue of counterparty risk.



That’s a risk retail investors became well acquainted with in 2022, when multiple centralized crypto firms crashed into <a href="https://blockworks.co/tag/bankruptcy">bankruptcy</a>.



But as Catherine Chen, Binance’s head of VIP and institutional said in a statement, it’s also a major concern in the realm of institutional investment.



Read more: <a href="https://blockworks.co/news/ftx-meltdown-timeline">FTX began to unravel one year ago today: A timeline</a>



“Our team of crypto natives and traditional finance professionals has been exploring a banking triparty agreement for more than a year to address their concern,” Chen said.



This new arrangement would allow institutional investors to access <a href="https://blockworks.co/tag/binance">Binance’s</a> trading liquidity while placing their trading collateral off the exchange entirely, under the custody of a third-party banking entity.&nbsp;



But, exactly which bank or banks is not yet clear.



&#8220;We are not sharing any additional information regarding our banking partners at this time,” a spokesperson told Blockworks. Binance would only say they “are in discussion with an array of banking partners.”



Binance has been the biggest player in worldwide cryptocurrency exchange for some time, but following its <a href="https://blockworks.co/news/binance-settlement-message-to-crypto-industry">record-breaking $4.3 billion settlement</a> with the US Department of Justice, trading volumes may be <a href="https://coinpaprika.com/exchanges/binance/">waning</a>, even as <a href="https://blockworks.co/news/binance-outflows-stabilize">net outflows remain muted</a>.



While Binance&#8217;s initiative to replicate a traditional financial framework in the crypto sphere seems promising, it’s also not alone in offering custody options. Fireblocks <a href="https://blockworks.co/news/fireblocks-crypto-counterparty-risk">just released a similar system</a> in partnership with derivatives exchange Deribit.



And the newly launched Cube Exchange <a href="https://blockworks.co/news/cube-exchange-crypto-mpc">takes itself out of the custody equation</a> altogether.



For those able to handle self-custody, removing counterparty risk entirely is a major selling point of <a href="https://blockworks.co/tag/dexs">decentralized exchanges</a>, which are designed to facilitate peer-to-pool trading.



As Binance forges ahead with its solution, one perk the company points to is that customer collateral can include fiat equivalents like Treasury bills. These assets not only secure trading activities, but also yield returns simultaneously.



As we await further details on how this feature will work in practice, one thing’s for sure: Binance’s competitors are smelling an opportunity.



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Binance embraces counterparty risk reduction

Elon Musk is going through it. Crypto might just be the answer.



First, he paid way too much to take Twitter private last year. Now, he’s mugging off the biggest companies in the world — specifically Disney and CEO Bob Iger — for pulling advertising from X after Musk’s <a href="https://www.wsj.com/business/media/disney-lions-gate-pause-ads-on-x-after-musk-agrees-with-antisemitic-tweet-641c3ea4?ns=prod/accounts-wsj">comments</a> about Israel and Palestine and <a href="https://apnews.com/article/elon-musk-x-antisemitism-twitter-ads-83e68f03e9bf1d261c1a8c55066c4e59">concerns</a> about pro-Nazi content.



X, formerly known as Twitter, will go bankrupt over a sustained advertising boycott, the world’s richest man told New York Times DealBook’s Aaron Sorkin at an event overnight.&nbsp;



“You’re going to blackmail me with advertising money? Go fuck youself,” Musk said.



Okay, Elon Musk, you’ve previously <a href="https://twitter.com/elonmusk/status/1687662311010631680">said</a> that X would never launch its own token. And you’ve already dabbled in bitcoin, dogecoin and ether — with Tesla still owning 9,720 BTC ($337 million) as of October.



But if the goal is to pay off your financiers and plug a measly $75 million hole in your advertising revenue, there’s no faster solution than crypto.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This is one of the most extraordinary 5-minute clips I’ve ever seen on this app. An epoch-making exchange. <a href="https://t.co/DbAFF5MkWD">pic.twitter.com/DbAFF5MkWD</a>&mdash; Joel Berry (@JoelWBerry) <a href="https://twitter.com/JoelWBerry/status/1730058223271485595?ref_src=twsrc%5Etfw">November 30, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Joel Berry is the managing editor of the Babylon Bee, a satirical outlet previously <a href="https://www.forbes.com/sites/petersuciu/2022/03/21/the-babylon-bees-twitter-account-was-suspended-but-that-made-its-story-go-viral/">banned</a> from Twitter</figcaption></figure>



Musk was already Twitter’s biggest shareholder when he first offered to buy Twitter in April 2022 for $44 billion. At $54.20 per share, Musk <a href="https://www.sec.gov/Archives/edgar/data/1418091/000110465922045641/tm2212748d1_sc13da.htm">told</a> the SEC his bid represented a 54% premium on the stock’s valuation before he’d bought his first shares.



Despite initially fighting to renege — on grounds that Twitter hadn’t proved its claim that 95% of daily active users were actual humans and not bots — Musk eventually was <a href="https://www.cnbc.com/2022/10/06/musk-seeks-to-stop-oct-17-trial-date-to-close-twitter-deal-on-original-terms.html">forced</a> to follow through as his offer was legally binding.



A raft of executives were immediately fired, including CEO Parag Agrawal, who took over from founder Jack Dorsey in 2021, and Chief Financial Officer Ned Segal, who’d been at the company since 2017.&nbsp;



Musk later <a href="https://edition.cnn.com/2023/04/12/tech/elon-musk-bbc-interview-twitter-intl-hnk/index.html">said</a> he had cut 80% of Twitter staff after the buyout, upwards of 6,000 skulls.



A massively reduced headcount has not been enough to counteract advertiser exodus. Musk’s buyout was confirmed in October and reports indicated Twitter revenues had sunk 40% by December.&nbsp;



Meanwhile, Twitter had unbanned a <a href="https://www.theverge.com/2022/11/24/23476655/elon-musk-general-amnesty-mass-unban-twitter">cavalcade</a> of agent provocateurs including Andrew Tate, Marjorie Taylor Greene, Jordan Peterson, Kanye West and Donald Trump (although the latter has so far <a href="https://www.theguardian.com/us-news/live/2022/nov/21/trump-twitter-elon-musk-joe-biden-politics-latest">snubbed</a> the platform in favor of his own Truth Social).



Apple, IBM, Paramount, Airbnb, Warner Bros. and Comcast — alongside Disney — have since <a href="https://edition.cnn.com/2023/11/17/tech/lionsgate-suspends-advertising-x-musk/index.html">reportedly</a> pulled ads and Twitter, now X, is bleeding cash. The New York Times <a href="https://www.nytimes.com/2023/11/24/business/x-elon-musk-advertisers.html">estimated</a> Twitter could stand to lose $75 million in ad revenue by the end of the year, with more brands expected to leave after Musk’s DealBook appearance.



But there&#8217;s X’s heavy debt load. Musk borrowed $13 billion with the <a href="https://edition.cnn.com/2022/04/26/investing/morgan-stanley-elon-musk-twitter/index.html">help</a> of Morgan Stanley, a loan collateralized by Tesla stock (of which Musk owns $100 billion). 



One estimate suggested Musk’s financiers would’ve made between 1% and 3% on the value of the $44 billion deal. X would owe Morgan Stanley up to $1.3 billion if that’s true (although there&#8217;s some <a href="https://fortune.com/2023/10/04/elon-musk-x-debt-twitter-financials-wall-street-upper-hand/">argument</a> to be made that Musk now has the upper hand against the banks due to rising interest rates).



Read more from our opinion section: <a href="https://blockworks.co/news/michael-saylor-bitcoin-chair">Let Michael Saylor cook</a>



There’s also the suite of equity co-investors that Musk now has to <a href="https://www.theguardian.com/technology/2022/nov/03/saudi-twitter-investment-us-national-security-risk">appease</a>, including former CEO Dorsey, Oracle chief executive Larry Ellison, <a href="https://blockworks.co/news/changpeng-zhao-binance-steps-down">embattled crypto exchange Binance</a> and Prince Al Waleed of Saudi Arabia, among others, who together reportedly contributed more than $8 billion. Musk even borrowed $1 billion from his other company, SpaceX.



All this is, apparently, enough to make a man curse at Disney billionaires. But I’m here to tell Musk there’s another way: Launch your own cryptocurrency.



Projects have found great success in launching tokens over the past 18 months. Arbitrum (<a href="https://blockworks.co/price/arb">ARB</a>), Optimism (<a href="https://blockworks.co/price/op">OP</a>) and Celestia (<a href="https://blockworks.co/price/tia">TIA</a>) are all now valued at more than $1 billion with a tiny fraction of the 300 million-plus monetizable users on X.



Even <a href="https://blockworks.co/price/blur">BLUR</a>, the governance token for the NFT marketplace of the same name, is worth more than half-a-billion, even though the platform has only 50,000 active weekly traders.&nbsp;



Hell, a one-way bridge to a <a href="https://blockworks.co/news/blast-tvl-ethereum">network that doesn’t yet exist</a> has now attracted more than $600 million with nothing but a website and a plan.



An X cryptocurrency could do all sorts of things: Membership and perks through Twitter Blue, tipping or even betting on sports events live-streamed directly on the app.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Origin of Doge Day Afternoon: The ancient Romans sacrificed a Dogecoin at the beginning of the Doge Days to appease the rage of Sirius, believing that the star was the cause of the hot, sultry weather.&mdash; Elon Musk (@elonmusk) <a href="https://twitter.com/elonmusk/status/1370883943143251968?ref_src=twsrc%5Etfw">March 13, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Would launching an X cryptocurrency really be cringier than this?</figcaption></figure>



X could even pay <a href="https://techcrunch.com/2023/09/29/x-twitter-has-paid-almost-20m-to-creators-ceo-says/">creators</a> their cut of advertising revenue in the token, saving the company real US dollars it needs to pay back its backers.



I could probably understand the hesitancy to mint a cryptocurrency in cycles past. Selling a token seemed cheap in 2018 and 2019 — even cheaper than <a href="https://protos.com/elon-musk-dogecoin-cryptocurrency-bitcoin-ethereum-tweets/">peddling</a> dogecoin — but cycles of influencer NFT drops and DAO launches have since freed crypto of all its shame.&nbsp;



Dragging your feet any longer makes little sense. You’re already on record <a href="https://www.youtube.com/watch?v=cRNypdYQoWk">stating</a> you have no respect for the SEC, which means you’ll fit in perfectly round here.



And besides, what better way to stick it to the SEC, who, coincidentally has a <a href="https://blockworks.co/news/hester-pierce-dont-regulate-courtroom">bonafide bone to pick</a> with crypto?&nbsp;



Go on, use crypto for its number-one use case: Attracting pseudonymous liquidity with few questions asked. At this point, there’s nothing left to lose.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">David is an Editor based in The Netherlands focused on data-driven journalism. Previously, he wrote for TheNextWeb&#8217;s crypto vertical before launching Protos in 2021. He&#8217;s a reformed hardline Bitcoiner passionate about permissionless and decentralized networks. Contact David at david@blockworks.co</div>


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Hey, Elon, forget about Disney. Save X by launching your own crypto.

Casey Wagner

Hester Peirce, commissioner at the US Securities and Exchange Commission, isn’t quite sure what her agency’s endgame appears to be. 



“There doesn’t seem to be a rhyme or reason for a lot of cases we bring,” Peirce said Thursday during a fireside discussion at the Blockchain Association Policy Summit in Washington, DC.&nbsp;



Peirce’s agency brought a total of 784 enforcement actions during the 2023 fiscal year, a 3% increase from 2022, largely thanks to SEC Chair Gary Gensler’s escalating interest in the cryptocurrency space.&nbsp;



The SEC increased its enforcement actions involving securities offerings by 48% in 2023, one of which was the agency’s case against NFT issuer Stoner Cats 2 LLC.



“I don’t really view it as my primary objective” to stop people from purchasing Stoner Cats, Pierce quipped.&nbsp;



“We need to just also remember that there&#8217;s a lot of traditional securities fraud going on, and resources that were spent going after Stoner Cats are not being spent to go after [other actors.],” she added.&nbsp;



The trend of taking its battles to the courts is not new for the SEC, and Peirce has made her criticism of the strategy known.&nbsp;



“I will say that litigation is not the most effective way to carry out regulations,” Peirce said during an <a href="https://www.bloomberg.com/live/us">appearance</a> on Bloomberg TV last week.&nbsp;



The SEC’s case against LBRY, a saga that eventually ended in the content sharing platform shutting its doors last month, was a particularly troubling instance, Peirce said.&nbsp;



“I was really heartbroken that we were bringing the case,” she said Thursday. “Here was a project that had actually built a functioning blockchain that was being used…and there had been efforts made to try to launch in a way that was consistent with the securities laws.”&nbsp;



The SEC has a difficult job determining which enforcement actions to pursue, Peirce said, making the entire process somewhat arbitrary.&nbsp;



“We have to make resource allocation decisions; where does it make sense to spend our resources?” she said. “[LBRY] is just a case where I would have made a different call.”&nbsp;



Looking ahead, when asked what she envisioned the SEC’s ‘endgame’ in terms of crypto to be, Peirce didn’t have an answer, but she did have an opinion. 



“I really can&#8217;t tell you definitively,” she said. “We need to stick to the mandate Congress gave us and not extend beyond that.”



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SEC’s Hester Peirce doesn’t know what her agency is trying to accomplish

MicroStrategy continues to buy bitcoin. The company announced in an 8K filing on Thursday that it had bought roughly $593 million worth of bitcoin throughout the month of November.&nbsp;



From Nov. 1 to Nov. 29, the company bought 16,130 bitcoin along with its subsidiaries. The average price works out to be nearly $36,000.&nbsp;



The company now holds roughly 174,530 bitcoin, worth roughly $5.2 billion at a purchase price of $30,000.



Prior to the November buys, <a href="https://blockworks.co/news/microstrategy-largest-btc-buy-2-years">MicroStrategy disclosed a huge buy</a> back in June when it bought 12,000 bitcoin over a span of two months at an average price of $28,136 per bitcoin.&nbsp;



The price of bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) took a dip following the 8K disclosure, though the price is still above $37,000 at the time of publication.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-price-mirrors-2012-halving">Bitcoin flirts with breakout, price mirrors lead-up to 2012 halving</a>



Back in early November, <a href="https://blockworks.co/news/microstrategy-q3-earnings-results">during the company’s earnings call</a>, MicroStrategy founder Michael Saylor said that the approval — then launch — of spot bitcoin <a href="https://blockworks.co/tag/etfs">ETFs</a> would be a “catalytic event” that would benefit both his company and other entities with bitcoin exposure.&nbsp;



“I think we’ll see more and more analyst coverage from traditional Wall Street banks as these ETPs make bitcoin exposure available,” Saylor said on the earnings call. “More coverage means more education, means more awareness, and that results in more interest.”&nbsp;



<a href="https://blockworks.co/tag/microstrategy">MicroStrategy</a> would continue to allow investors to gain exposure to bitcoin through its holdings, and that’s — Saylor believes — is not something that would go away if the world’s largest asset manager BlackRock or any of the other <a href="https://blockworks.co/news/pando-joins-spot-bitcoin-etf-hopefuls">entities vying for a spot bitcoin ETF</a> get the green light from the US Securities and Exchange Commission.&nbsp;



While it’s unclear what exactly made MicroStrategy so bullish on bitcoin in the month of November, <a href="https://blockworks.co/news/crypto-etf-updates-thanksgiving">there have been a slew of bitcoin ETF-related headlines</a>. Additionally, the next bitcoin halving is roughly five months away — both of which have been identified as potential catalysts for positive price action.



As MicroStrategy prepared its 8K filing on Nov. 28, the <a href="https://blockworks.co/news/sec-frank-templeton-bitcoin-etf">SEC initiated the comment period for the Franklin Templeton</a> spot bitcoin ETF proposal, a move that surprised some since it began earlier than expected.



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MicroStrategy bought nearly $600M bitcoin in less than 1 month

US Treasury Deputy Secretary Wally Adeyemo has a message for digital asset firms: Get in line, or end up like Binance.&nbsp;



“I hoped the digital asset industry would take up this call to partner with government, design new tools and pursue new ways to protect digital assets from being abused,” Adeyemo said at the Blockchain Association Policy Summit in Washington DC Wednesday.&nbsp;



While many digital asset firms have taken steps toward compliance, others have failed to act. According to Adeyemo, this “represents a clear and present danger for national security.”&nbsp;



The Treasury Department sent a legislative proposal to <a href="https://blockworks.co/tag/congress">Congress</a> on Tuesday asking for additional authority to oversee the crypto space, including allowing it to step outside of the United States.&nbsp;



Read more: <a href="https://blockworks.co/news/biggest-court-cases-2023">From SBF to Binance: Biggest court cases of 2023</a>



Treasury officials have asked Congress to expand the International Emergency Powers Act to explicitly allow the agency to “designate blockchain nodes or other elements of cryptocurrency transactions,” according to a copy of the proposal obtained by Blockworks.&nbsp;



Some industry members argue that given the <a href="https://blockworks.co/tag/treasury">Treasury</a>’s apparent success thus far in sanctioning exchanges, mixing services and other actors, granting the agency greater authority is unnecessary.&nbsp;



The rules cannot always keep up with the technology, Adeyemo said in response to the criticism.&nbsp;



“The thing that I learned most from being at Treasury during the financial crisis is that innovation outpaced regulation,” he added. “Our goal is to make sure that we have the flexibility.” 



Read more: <a href="https://blockworks.co/news/treasury-crypto-terrorist-financing">Treasury urges crypto companies to ‘prevent’ terrorist financing</a>



Adeyemo’s remarks came hours after his office announced <a href="https://blockworks.co/news/sinbad-sanctioned-ofac-treasury">sanctions against cryptocurrency mixing service Sinbad</a> for allegedly facilitating North Korea state-sponsored hacking group Lazarus’ money laundering.&nbsp;



For illicit actors, the digital asset ecosystem is the “prefered” method of moving assets, as opposed to the traditional financial system, Adeyemo said.&nbsp;



“My message is simple: We will find you and hold you accountable,” he said to the digital asset industry and those enabling or facilitating illicit actions.



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Treasury’s Wally Adeyemo: My agency needs more power to regulate crypto 

Bessie Liu

The team behind popular decentralized exchange Uniswap has partnered with Talos, an institutional investing technology firm, to bring decentralized finance (DeFi) liquidity to institutional traders.



Uniswap Labs will be providing its Trading APIs to Talos clients in a familiar Talos order book format. There are also plans to enable Talos clients to use the UniswapX ecosystem in the near future. Institutional access to Uniswap will be supported by <a href="https://blockworks.co/tag/fireblocks">Fireblocks</a>, a platform designed to store, move, and issue digital assets.&nbsp;



This latest partnership exemplifies growing institutional interest in crypto assets, driven primarily by the need for market depth and breadth, Roland Jarquio, the vice president of growth and product marketing at Talos told Blockworks.



“Some institutional investors are looking for exposure to certain protocols and projects that can only be traded on DEXs like Uniswap,” Jarquio said. Others, Jarquio notes, are looking to trade at a scale and need deeper liquidity in assets such as ether (<a href="https://blockworks.co/price/eth">ETH</a>).&nbsp;



<h2 class="wp-block-heading">Why are institutions interested in DeFi?&nbsp;</h2>



Following Ethereum’s <a href="https://blockworks.co/news/shapella-upgrade-brings-ethereum-closer-to-long-awaited-withdrawals">Shapella upgrade earlier this year</a>, many institutions have <a href="https://blockworks.co/news/shapella-institutional-interest-blockchain">started to make moves</a> in the DeFi space.&nbsp;



Generally speaking, DeFi lending protocols offer <a href="https://blockworks.co/news/some-defi-yield-could-still-be-higher-than-10-year-us-treasurys">higher yields</a> than many traditional financial opportunities.&nbsp;



Liquid staking, for example, allows institutional investors to deposit assets into a proof-of-stake protocol while retaining a token with which they can generate additional yield by providing market-making liquidity. The result is higher-yield-bearing portfolios than they could construct in traditional financial markets.&nbsp;



A <a href="https://uniswap.org/TheDominanceofUniswapv3Liquidity.pdf">recent report</a> further shows that for certain trading pairs, AMMs such as <a href="https://blockworks.co/tag/uniswap">Uniswap</a> v3 have proven to have deeper liquidity than centralized exchanges. The report highlights that:



<ul>
<li>For ETH/USD, Uniswap has ~2x more liquidity than both Binance and Coinbase.</li>



<li>For ETH/BTC, Uniswap has ~3x more liquidity than Binance and ~4.5x more liquidity than Coinbase.</li>



<li>For ETH/mid-cap pairs, Uniswap has, on average, ~3x more liquidity than major centralized exchanges.</li>
</ul>



Tokenized real-world assets are also gaining traction, with DeFi protocols having facilitated over <a href="https://app.rwa.xyz/">$4.5 billion</a> in private credit across the globe.&nbsp;



Jarquio notes that it is “hard to say” what the growing interest from institutional investors in the DeFi sector could imply, but for its institutional clients, this partnership gives them an additional source of liquidity.



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Uniswap Labs partnership brings institutional access to DeFi

Jack Kubinec

The perpetuals trading platform and layer-1 blockchain, dYdX, is set for a significant event on Friday. Founders, investors, and other key figures involved with the project will gain access to about 150 million previously locked DYDX tokens, currently valued at around $490 million. This unlocking event will increase the circulating supply of DYDX by roughly 80%.



Traditional wisdom <a href="https://x.com/CryptoGirlNova/status/1621560996153245696?s=20">says</a> unlocks are bearish, since supply suddenly rises while demand stays static — but DYDX’s price rose 30% this month and open interest <a href="https://www.coinglass.com/BitcoinOpenInterest">grew</a> after dYdX’s chain <a href="https://blockworks.co/news/dydx-staking-goes-live">went to beta mainnet on Nov. 14</a>.&nbsp;



Ultimately, some of the unlocked tokens will be difficult to sell, and doing so may not be the most profitable strategy for investors, who can stake DYDX for USDC rewards and hedge their bets with short positions.&nbsp;



A majority of the unlocked tokens will go to past investors in dYdX, which has <a href="https://www.crunchbase.com/organization/dydx/investor_financials">raised</a> $87 million over four funding rounds, according to Crunchbase. 



Read more: <a href="https://blockworks.co/news/dydx-staking-goes-live">dYdX tokenomics scrutinized as staking goes live</a>



The tokens to be unlocked are also partly <a href="https://docs.dydx.community/dydx-governance/start-here/dydx-allocations#what-is-the-lockup-for-usddydx-issued-to-investors-existing-and-future-employees-and-consultants">allocated</a> in an Ethereum-native version of the token (<a href="https://blockworks.co/price/ethdydx">ethDYDX</a>). There is a <a href="https://docs.dydx.community/dydx-token-migration/migration-of-dydx-from-ethereum-to-dydx-chain/migration-and-bridge-overview">one-way</a> bridge for ethDYDX to the dYdX chain, meaning that if investors bridge their tokens to dYdX, they cannot move the tokens back to Ethereum. 



Some of the unlocked tokens will also be native DYDX and wrapped ethDYDX, the dYdX foundation told Blockworks.



Native DYDX holders would have trouble selling their tokens en masse, as DYDX does not currently trade on centralized exchanges. The asset is <a href="https://app.osmosis.zone/assets">listed</a> on Osmosis, a decentralized exchange in the Cosmos ecosystem.



However, according to data from CoinGecko, a mere $1600 worth of DYDX sales would lead to a 2% <a href="https://www.coingecko.com/en/coins/dydx-chain#markets">drop</a> in its price. Consequently, attempting to sell large tranches of DYDX tokens would likely result in considerable price slippage, adversely impacting the asset&#8217;s value.



Regardless of whether the tokens are sellable, Matt Fiebach from Blockworks Research pointed out that DYDX perpetual futures are actively traded. Locked token holders can already hedge their exposure to the token with short positions, which he says is likely a more profitable strategy than dumping the tokens post-unlock.



Native DYDX can also be staked on the dYdX chain for USDC rewards after <a href="https://blockworks.co/news/dydx-staking-goes-live">trading was enabled earlier this month</a>.&nbsp;



Representatives from dYdX investors <a href="https://blockworks.co/tag/a16z">a16z</a> and Electric Capital declined to comment on whether the firms would stake their unlocked tokens. Multiple other dYdX investors did not return requests for comment. 



Other layer-1s that underwent token unlocks this month saw mixed results. Sui&#8217;s (<a href="https://blockworks.co/price/sui">SUI)</a> price rose following its Nov. 3 unlock, while Aptos (<a href="https://blockworks.co/price/apt">APT</a>) and Avalanche’s (<a href="https://blockworks.co/price/avax">AVAX</a>) tokens slid following unlocks on Nov. 12 and 24, respectively.



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Why DYDX insiders are unlikely to sell their $490M unlock

Pando Asset is the latest fund group looking to launch a spot bitcoin ETF in the US.&nbsp;



The Switzerland-based asset manager joins a crowded field of issuers looking to bring to market a type of fund the US Securities and Exchange Commission has never approved.&nbsp;



The company proposed its Pando Asset Spot Bitcoin Trust in a Wednesday filing. The trust’s&nbsp; assets would consist primarily of bitcoin held by its custodian — Coinbase Custody Trust company. The <a href="https://www.sec.gov/Archives/edgar/data/2001771/000182912623007712/pandoasset_s1.htm">disclosure</a> names BNY Mellon as the trust administrator.



A Pando Asset spokesperson did not immediately return a request for comment.&nbsp;



About a dozen issuers — including traditional finance giants BlackRock, Fidelity and Invesco — have live spot bitcoin ETF filings in front of the SEC.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">13 potential <a href="https://twitter.com/hashtag/bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#bitcoin</a> ETF Issuers now. Doubt this is ready to go on first day with the others but crazier things have happened I guess <a href="https://t.co/W8kfemI6Uc">https://t.co/W8kfemI6Uc</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1729938389552497075?ref_src=twsrc%5Etfw">November 29, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Regulators in Canada, Brazil and the Netherlands have approved spot crypto ETFs in recent years. Crypto exchange-traded notes (ETNs) — debt instruments typically collateralized by the underlying exposure, such as bitcoin — have been around even longer.



Read more: <a href="https://blockworks.co/news/us-spot-bitcoin-etf">US spot bitcoin ETF not impossible — just ask the rest of the world</a>



Pando Asset currently offers three exchange-traded products (ETPs) that trade on the SIX Swiss Exchange, including ones focused on bitcoin and ether. The third allocates to six crypto assets: bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), ether (<a href="https://blockworks.co/price/eth">ETH</a>), binance coin (<a href="https://blockworks.co/price/bnb">BNB</a>), cardano (<a href="https://blockworks.co/price/ada">ADA</a>), solana (<a href="https://blockworks.co/price/sol">SOL</a>) and polkadot (<a href="https://blockworks.co/price/dot">DOT</a>).&nbsp; &nbsp;&nbsp;



The company is not the first looking to bring its European crypto product expertise to the US.&nbsp;



21Shares, which also offers a range of ETPs in Europe, has filed for spot bitcoin and ether products with US-based partner Ark Invest.&nbsp;



<a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf#:~:text=Ark%20Invest%20and%2021Shares%20filed,11.">The SEC is expected to rule</a> on the proposed Ark 21Shares Bitcoin ETF by Jan. 10. Industry watchers have said the regulator could choose to greenlight a bunch of such products at that time, with <a href="https://blockworks.co/news/21shares-bitcoin-etf-approval-incoming">Bloomberg Intelligence analysts giving 90% odds</a> of such approval.&nbsp;



A spokesperson for the regulator has declined to comment on this matter.



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Spot bitcoin ETF market sees new applicant ahead of SEC ruling

The Securities and Exchange Commission of the Philippines has reminded citizens that Binance is not permitted to operate or offer its services in the country, even though it is trying to.&nbsp;



“Binance has been actively employing promotional campaigns on various social media platforms to attract and entice Filipinos to engage in investment and trading activities using its platforms,” the Philippines SEC wrote in an advisory Tuesday.&nbsp;



Binance does not hold the required licenses to advertise and serve customers in the Philippines, the agency added. The Philippines SEC advised citizens to exercise caution when engaging and investing with unregistered entities.&nbsp;



“Those who act as salesmen, brokers, dealers or agents, representatives, promoters, recruiters, influencers, endorsers and enablers of the <a href="https://blockworks.co/tag/binance">Binance</a> platform in selling or convincing people to invest in this platform within the Philippines even through online means may be held criminally liable,” the notice said.&nbsp;



The news comes days after the <a href="https://blockworks.co/news/binance-settlement-message-to-crypto-industry">US Department of Treasury announced a settlement with the exchange for a historic $4.3 billion</a>. In an <a href="https://blockworks.co/news/doj-indictment-binance-changpeng-zhao">unsealed indictment made public</a> last week, the US government accused Binance and CEO Changpeng Zhao of violating anti-money laundering laws, and sanctions laws.&nbsp;



Read more: <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">Here are the details of Binance and Changpeng Zhao’s plea deal</a>



“Defendants chose not to comply with US legal and regulatory requirements because it determined that doing so would limit its ability to attract and maintain US users,” the <a href="https://blockworks.co/tag/doj">DOJ</a> claimed.&nbsp;



Zhao, who <a href="https://blockworks.co/news/changpeng-zhao-announces-resignation-binance">pleaded guilty and agreed to pay $50 million in fines</a>, stepped down from his role as CEO and resigned from the board of directors. The government has asked the court to keep Zhao in the US until his sentencing, which is scheduled for Feb. 23, 2024. He faces up to 10 years in prison.&nbsp;



Zhao’s legal team has opposed the motion. The judge has not yet ruled.



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Philippines issues warning to citizens about using Binance 

The first and largest bitcoin futures ETF is the biggest it’s ever been.&nbsp;



The ProShares Bitcoin Strategy ETF (BITO) reached $1.47 billion assets under management on Tuesday — its highest mark ever.



BITO had <a href="https://blockworks.co/news/bito-on-track-to-be-first-fund-in-history-to-hit-1b-in-aum-in-two-days">quickly grown above $1 billion in assets</a> after launching in October 2021, reaching as high as $1.42 billion in assets the following month, according to YCharts.com.&nbsp;



But the fund’s assets had sunk to as low as about $500 million in November 2022 amid the <a href="https://blockworks.co/news/ftx-meltdown-timeline">collapse of crypto exchange FTX</a> — an event that spurred bitcoin price declines.&nbsp;



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1694" height="710" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1024&amp;h=1024" alt="" class="wp-image-74641" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1694 1694w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=80 80w" sizes="(max-width: 1694px) 100vw, 1694px" /><figcaption class="wp-element-caption">BITO AUM chart (source: <a href="https://ycharts.com/companies/BITO/assets_under_management#:~:text=BITO%20Share%20Class%20Assets%20Under%20Management%3A%201.401B%20for%20Nov,22%2C%202023">YCharts</a>)</figcaption></figure>



Its assets under management stood at $850 million as recently as Oct. 12, the YCharts data <a href="https://ycharts.com/companies/BITO/assets_under_management#:~:text=BITO%20Share%20Class%20Assets%20Under%20Management%3A%201.401B%20for%20Nov,22%2C%202023">shows</a>. The fund has seen net inflows of $202 million since that date, according to ETF.com.&nbsp;



Other crypto investment products have seen inflows of late. These products brought in roughly $350 million last week, <a href="https://jbutterfill.medium.com/volume-159-digital-asset-fund-flows-weekly-report-0103828f4a3d">according</a> to CoinShares — the ninth consecutive week of positive flows.&nbsp;



Market appreciation has also contributed to BITO’s asset rise. Bitcoin’s (<a href="https://blockworks.co/price/btc">BTC</a>) price was about $37,750 at 11:30 am ET on Wednesday — up about 130% from a year ago, and roughly 9% in the last 30 days.



Read more: <a href="https://blockworks.co/news/bitcoin-price-mirrors-2012-halving">Bitcoin flirts with breakout, price mirrors lead-up to 2012 halving</a>



<a href="https://blockworks.co/tag/proshares">ProShares</a> investment strategist Simeon Hyman said in a statement that BITO’s asset peak “speaks to the demand for a familiar, accessible and regulated way to target the returns of bitcoin.”



<a href="https://blockworks.co/tag/bito">BITO’s</a> average daily trading volume of $160 million puts it in the top 5% of all US <a href="https://blockworks.co/tag/etfs">ETFs</a>, Hyman added.&nbsp;



But the fund could soon have more competition, as many industry watchers expect the US Securities and Exchange Commission to soon approve ETFs that would hold bitcoin directly — marking a first for the regulator.&nbsp;



<a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf#:~:text=Ark%20Invest%20and%2021Shares%20filed,11.">The SEC’s deadline to rule on such a proposal</a> by Ark Invest and 21Shares is Jan. 10, at which time various segment observers believe the SEC could also greenlight spot bitcoin ETFs from BlackRock, Fidelity, Invesco and others.&nbsp;



Read more: <a href="https://blockworks.co/news/21shares-bitcoin-etf-approval-incoming">Bitcoin ETF saga reaches ‘pattern break’ as amendments pile up</a>



Bloomberg Intelligence analyst Eric Balchunas said during a Nov. 20 segment on Bloomberg TV that BITO’s increase in assets is a bit ironic considering its potential fate.&nbsp;



“This is the ETF that’s probably going to be sort of under pressure, or seeing some exodus, once the spot ETFs come out, because people prefer those,” he said. “But until then, it’s being used in anticipation of those ETFs.”&nbsp;



21Shares president Ophelia Snyder said during a Bloomberg TV interview last week that while she believes spot bitcoin ETFs have “broader appeal,” she doesn’t expect them to make futures-based products obsolete.&nbsp;



Ark Invest and 21Shares 21Shares and Ark Invest <a href="https://blockworks.co/news/spot-crypto-etf-ark-invest-21shares">launched crypto futures ETFs</a> earlier this month.



“I think there’s still a role for futures products to play in this market,” Snyder said. “I think that is a smaller role than what spot will play.”



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BITO hits asset peak as possible spot bitcoin ETF approval looms

SoFi, an online banking platform, has announced that it is discontinuing its cryptocurrency trading service. Customers were notified of this decision via an email sent on Wednesday morning.



The company&#8217;s existing crypto customers will have the opportunity to migrate their assets to Blockchain.com, known primarily for its digital wallet services.



SoFi, a high-yield savings account provider-cum-investing platform, first offered crypto trading in 2019. Until recently however, it has been managing its operations under a two-year conditional approval granted by the Federal Reserve.



The San Francisco-based bank appears to be the first domino to fall following the <a href="https://blockworks.co/news/federal-reserve-crypto-oversight">Fed’s “novel activities supervision program”</a> introduced over the summer. This program imposes stringent requirements on how banks interact with emerging financial technologies, including cryptocurrencies.&nbsp;



A SoFi spokesperson said the decision to end SoFi’s crypto services was spurred by the <a href="https://blockworks.co/tag/federal-reserve">Federal Reserve’s</a> regulatory guidance for its digital asset business following SoFi’s <a href="https://www.sec.gov/Archives/edgar/data/1818874/000181887423000018/sofi-20221231.htm">approval</a> as a bank holding company. SoFi found it increasingly unlikely their crypto business would be fully approved after seeing the Fed’s crypto requirements grow more strict over time, the spokesperson said.



Read more: <a href="https://blockworks.co/news/sofi-crypto-sec-banking">SoFi says ‘no assurance’ of meeting Federal Reserve crypto standards</a>



SoFi customers have <a href="https://x.com/michaelgmcquaid/status/1729866201730601208?s=20">until</a> Dec. 19 to shuttle funds to Blockchain.com, but state regulations will force some out of their crypto investments entirely.&nbsp;



New York residents will be <a href="https://www.sofi.com/invest/buy-cryptocurrency/">forced</a> to sell all their SoFi crypto, while residents in a smattering of other states including Texas have to sell a set of tokens including DeFi-natives AAVE, COMP, MKR, and UNI.&nbsp;



A spokesperson for Blockchain.com said the company saw “tens of thousands” of SoFi customers agree to migrate their crypto to the platform immediately following the announcement. Blockchain.com expects that the majority of SoFi&#8217;s crypto clients will choose to migrate, as selling their holdings could result in tax liabilities.



<a href="https://blockworks.co/news/blockchain-com-raise-110m">Blockchain.com announced a $110 million funding round</a>, the fourth-largest crypto raise in 2023, earlier this month.



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SoFi shutters crypto trading following Fed regulation

The US Department of the Treasury has sanctioned a cryptocurrency mixing service the government claims is a key money-laundering tool for the Lazarus Group.&nbsp;



“Sinbad has processed millions of dollars’ worth of virtual currency from Lazarus Group heists, including the Horizon Bridge and Axie Infinity heists,” the Office of Foreign Asset Control (OFAC), the Treasury’s department that oversees sanctions, said in a statement Wednesday.&nbsp;



Sinbad.io, a cryptocurrency mixing service created by an anonymous founder, became a favorite for North Korean-state sponsored hacking organization Lazarus in 2022, researchers from analytics firm Chainalysis said in its last <a href="https://www.chainalysis.com/blog/2022-biggest-year-ever-for-crypto-hacking/">annual report</a>. Researchers from <a href="https://www.elliptic.co/blog/analysis/over-1-billion-stolen-from-bridges-so-far-in-2022-as-harmony-s-horizon-bridge-becomes-latest-victim-in-100-million-hack/hss_channeltw-1344645140">Elliptic</a> agreed, saying in February they believed Sinbad is simply a relaunched version of Blender, the mixer OFAC blacklisted in 2022.&nbsp;



As of Wednesday, the US government had seized Sinbad’s website.&nbsp;



“Mixing services that enable criminal actors, such as the Lazarus Group, to launder stolen assets will face serious consequences,” Deputy Secretary of the Treasury Wally Adeyemo said in a statement Wednesday. “The Treasury Department and its US government partners stand ready to deploy all tools at their disposal to prevent virtual currency mixers, like Sinbad, from facilitating illicit activities.



Read more: <a href="https://blockworks.co/news/stake-hack-lazarus-group-north-korea-fbi">FBI blames North Korea’s Lazarus Group for $40M Stake hack</a>



Lazarus Group was added to <a href="https://blockworks.co/tag/ofac">OFAC’s</a> sanction list in September 2019.&nbsp;



Sinbad was used to launder a significant portion of the $100 million worth of crypto Lazarus stole in June 2023 from customers of Atomic Wallet, OFAC said. Lazarus also used the mixer “to launder a significant portion” of crypto stolen in the $620 million Axie Infinity heist, the office alleges.&nbsp;



“Sinbad is also used by cybercriminals to obfuscate transactions linked to malign activities such as sanctions evasion, drug trafficking, the purchase of child sexual abuse materials, and additional illicit sales on darknet marketplaces,” OFAC added.&nbsp;



The announcement comes as cryptocurrency advocacy groups <a href="https://blockworks.co/news/tornado-cash-fans-appeal">continue to fight OFAC in the courts</a> over the agency’s sanctions against Tornado Cash — a mixing service <a href="https://home.treasury.gov/news/press-releases/jy0916">sanctioned</a> in August 2022 for its alleged role in helping Lazarus launder more than $455 million in stolen funds.&nbsp;



Plaintiffs in two cases are bringing their battle against the Treasury to federal appellate courts. Joseph Van Loon, along with five other self-identified “Ethereum blockchain users” sued the US Treasury Department, Secretary Janet Yellen, the Office of Foreign Asset Control (OFAC) and OFAC Director Andrea Gacki in September 2022. A federal judge in Texas <a href="https://blockworks.co/news/judge-backs-us-treasury-tornado-cash-sanction">sided with the federal government</a> in August, rejecting the argument that OFAC was acting outside its jurisdiction.&nbsp;



Coin Center, Bankless co-founder David Hoffman and others <a href="https://blockworks.co/news/coin-center-sues-over-treasurys-tornado-cash-sanctions">filed a lawsuit against the same federal parties</a> in October 2022. Like in Loon’s case, a federal judge in Florida sided with the US government last month, prompting Coin Center and its co-plaintiffs to file an appeal in the Eleventh Circuit earlier this month.



Updated Nov. 29, 2023 at 11:06 am ET: Modified headline.



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