Casey Wagner

Ben Strack

Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul>
<li>Making sense of the jobs report that didn’t necessarily clear up what size rate cut the Fed could opt for.</li>



<li>The formalized call for a crypto question at next week’s presidential debate, and why it’s needed.</li>



<li>Friday means a recap of economic data and developments!</li>
</ul>



<h2 class="wp-block-heading">More Goldilocks data sends markets lower&nbsp;</h2>



The pivotal report that some analysts say will determine the size of the Federal Reserve’s interest rate cut later this month is here, and, shocker, it was disappointing.&nbsp;



US employers added 142,000 jobs in August, Friday’s <a href="https://www.bls.gov/news.release/empsit.nr0.htm">US Jobs report</a> showed. Economists had expected a net gain of 160,000. Still, it’s better than July’s figure, which was revised down on Friday from 114,000 to 89,000. Another (small) bright spot: unemployment fell from 4.3% in July to 4.2% in August, which was expected.&nbsp;



Markets, expectedly, fell. The S&amp;P 500 and Nasdaq Composite indexes lost as much as 2% and 2.8%, respectively, after the open on Friday. Bitcoin and ether slid as much as 5.8% each in the hours after the report was published.&nbsp;



By 2 pm ET, the S&amp;P 500 and Nasdaq Composite were trading 1.6% and 2.4% lower, respectively. Bitcoin was down 5% over 24 hours, hovering around $53,800 at that time while ether was 6% in the red.&nbsp;



Even so, crypto experts say it’s not the time to worry.&nbsp;



“The August jobs report hit the sweet spot for bitcoin: the labor market has slowed, which will allow the Fed to cut rates, but there are no signs of recession,” said Grayscale research head Zach Pandl.



Pandl and his team remain “optimistic about the outlook for the balance of the year, in light of the favorable macro backdrop, the election year focus on large US budget deficits, and growing institutional adoption through the new spot crypto ETPs,” he added.&nbsp;



Investors had speculated that a larger interest rate cut (50 basis points versus 25bps) would be in store should job growth slow or unemployment rise. Today’s report showed neither.&nbsp;



As so-called Chair Timiraos (Nick from the WSJ) <a href="https://x.com/NickTimiraos/status/1832038957594427441">said</a>, the headline figures aren’t bad enough to guarantee a 50bps cut, but they also aren’t good enough to ensure central bankers will opt for 25bps.&nbsp;



Based on the <a href="https://blockworks.co/newsletter/research/issue/post_ef1be887-fd7e-4298-bb39-c65167eb89bc">reaction</a> we saw to the July jobs report in early August (remember the VIX hit 38 and the Dow lost more than 2,000 points?), today’s market carnage isn’t a shocker.&nbsp;



We’ve decidedly left the era where “bad data is good,” but now we are in what I’m calling the “iffy data is good” era. Today’s report was definitely not too hot, but it also wasn’t bad enough to really intensify fears that a soft landing is impossible.&nbsp;



Tom Essaye, founder of Sevens Report Research, says we are in the “just right” zone, where a September rate cut is all but guaranteed, without full-fledged recession fears being sparked.&nbsp;



Here’s to more iffy data next week. Have a good weekend.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">$51,000</h2>



The bitcoin “support level” that if lost could lead to a steeper drop, according to technical and on-chain analyst Ali Martinez.



Martinez noted in a Wednesday X <a href="https://x.com/ali_charts/status/1831231909898449130">post</a> that BTC falling below $51,000 could lead to a further plummet to $40,600 — citing the <a href="https://tradingcenter.org/index.php/learn/technical-analysis/328-how-to-trade-td-sequential">TD Sequential</a> indicator used to identify trend exhaustion and price reversal. Bitcoin dipped closer to that level Friday, falling below $53,800 by 2 pm ET.&nbsp;



<h2 class="wp-block-heading">Crypto industry looking for stance details at presidential debate&nbsp;</h2>



Yesterday’s <a href="https://blockworks.co/news/on-the-margin-newsletter-crucial-jobs-report">newsletter</a> touched on Donald Trump’s latest crypto mention. It also, separately,&nbsp; discussed a recent <a href="https://blockworks.co/news/blockchain-association-investigation-fed-order">enforcement action</a> against a crypto-friendly bank.&nbsp;



These form a reminder: The ongoing lack of regulatory clarity for industry businesses coincides with a presidential election cycle in which crypto has become a point of discussion.



This brings hope to those wanting to see crypto regulatory change. And while there have been promises from one candidate and mostly silence from the other, people want more details.&nbsp;



A Chamber of Progress executive formalized this wish via a <a href="https://progresschamber.org/wp-content/uploads/2024/09/Letter-to-ABC-Debate-Mods_-Crypto-Question-1.pdf">letter</a> to ABC News’ Linsey Davis and David Muir ahead of the Sept. 10 debate between Trump and Kamala Harris. These moderators “have an opportunity to illuminate the candidates’ stances on crypto,” wrote Kyle Bligen, the tech industry coalition’s director of financial policy.



After all, “passing bipartisan digital asset regulations is front and center this election cycle” for the 18 million Americans (by their count) currently holding or trading crypto.



Another quick reminder: Trump has expressed <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">support</a> for US bitcoin mining, <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">vowed</a> to fire SEC Chair Gary Gensler and promised to make the US the “world capital for crypto and bitcoin.” Though Harris hasn’t yet addressed the topic of crypto much, a campaign adviser <a href="https://www.bloomberg.com/news/articles/2024-08-21/harris-supports-policies-to-expand-crypto-industry-aide-says?srnd=phx-crypto&amp;utm_source=on-the-margin.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=first-month-s-a-doozy&amp;_bhlid=791e8f2e2b8483dd7e2d676dc6e16698a3b3fcc1">said</a> she would “support policies that ensure that emerging technologies and that sort of industry can continue to grow.”



Former SEC senior counsel Ashley Ebersole previously told me “talk is cheap.” Big statements on the campaign trail do not always lead to practical actions, <a href="https://blockworks.co/news/kamala-harris-crypto-policy-reset-outlook">added</a> Exodus legal chief Veronica McGregor, alluding to Trump’s Gensler remarks.



Still, any crypto-related pledges uttered by either candidate (or lack thereof) may hold a bit more weight on a debate stage.&nbsp;



“Both candidates should shed more light on their positions and explain how we can nurture digital assets while also providing greater consumer protection,” Bligen added in the letter.&nbsp;



Such a debate question could go to Harris given she has so far not been as clear on her crypto stance, Ebersole said. Any pro-crypto statements from Harris in particular “might cause a bit of a market bounce,” BDE Ventures CEO Brian Evans told Blockworks.



We know Elon Musk and the Winklevoss twins support Trump. We’ve seen SkyBridge Capital founder Anthony Scaramucci (who had a brief stint as White House communications director under Trump) repeatedly share his support for Harris.&nbsp;



More recently, Ripple co-founder Chris Larsen came out — along with 87 other corporate leaders, CNBC <a href="https://www.cnbc.com/2024/09/06/harris-endorsed-trump-murdoch-yelp-snap-ripple.html">reported</a> — to endorse the vice president.&nbsp;



Though some may be willing to <a href="https://blockworks.co/news/single-issue-crypto-voter">vote on the crypto issue alone</a>, some <a href="https://blockworks.co/news/only-a-fool-would-vote-on-crypto-alone">may not</a>. Others may be on the fence. However people are thinking about it, it seems hard to argue that more substantive dialogue around the topic can only be positive for all.&nbsp;



— Ben Strack



<h2 class="wp-block-heading">Did You Notice</h2>



Happy Friday! It was a short week for our US readers, but there was still plenty of data to unpack. It’s less than two weeks until the next policy-setting Federal Reserve meeting, and markets have a bit more clarity now. Here’s this week’s recap:&nbsp;



<ul>
<li>The latest Fed <a href="https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20240904.pdf">Beige Book</a>, released Wednesday, shows that economic activity in the US is mostly flat or declining. Employment remained fairly stagnant, the survey indicates, and companies reported few layoffs. The report paints a picture that shows the labor market is tightening, a situation Fed Chair Jerome Powell has said he does not want to aggravate. That bodes well for a rate cut later this month, which we of course already knew was coming. But having supporting economic reports never hurts. </li>



<li>As Felix <a href="https://blockworks.co/news/on-the-margin-newsletter-ism-pmi-goods-disinflation">unpacked</a> on Tuesday, the latest ISM manufacturing report left investors with much to be desired. The Purchasing Managers Index for August came in at 47.2% after analysts expected 47.9%, fueling fears that economic growth is on the decline and leading to the biggest sell-off in stocks since early August. </li>



<li>New York Fed President John Williams and Fed Gov. Christopher Waller made separate appearances on Friday morning. Both reiterated that rate cuts will be starting this month, but, unsurprisingly, gave no indication as to the size of such a cut. We’re 12 days out from the next FOMC decision day, and markets are still mostly betting on a 25-basis point decrease. I’m not one to make wagers, but I’d be shocked if the Fed opts for 50bps on Sep. 18. Powell hates surprising the market, and central bankers have given no indication that anything greater than 25bps is on the table. </li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board</h2>



<ul>
<li>New York judge Juan Merchan on Friday <a href="https://www.cbsnews.com/news/trump-sentencing-delay-hush-money-case-new-york/">delayed</a> the date of Donald Trump’s “hush money” case sentencing (from Sept. 18 to Nov. 26), meaning it will come after the presidential election.   </li>



<li>Barclays analysts upgraded their stock rating for Coinbase and Robinhood to “equal weight,” according to a Friday research note. For COIN specifically, the analysts cite an apparently improving regulatory environment “with both presidential candidates becoming increasingly friendly towards crypto.” Coinbase has <a href="https://blockworks.co/news/coinbase-q3-earnings-analysis">diversified</a> its business model in recent quarters, most recently tallying <a href="https://blockworks.co/news/coinbase-reports-1-4b-in-revenue-beating-estimates">$1.4 billion in total revenue</a> during Q2. </li>



<li>Investment firm VanEck said it plans to <a href="https://blockworks.co/news/vaneck-closing-ether-futures-etf">close its ether futures ETF</a> nearly a year after launching it. The plan — made after evaluating its performance, liquidity, assets under management and investor interest, the company said in a statement — comes following VanEck’s launch of a spot ETH fund in July.</li>



<li>Speaking of ETFs, Blockworks’ Empire <a href="https://blockworks.co/news/how-safe-is-the-money-sitting-in-bitcoin-etfs">newsletter</a> team breaks down how safe the $50 billion or so sitting in US spot bitcoin ETFs is given the FBI’s latest warning about North Korean hackers.</li>
</ul>



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More Goldilocks data sends markets lower

While Donald Trump has engaged the crypto community ahead of the November election, Vice President Kamala Harris has some catching up to do on that front.&nbsp;



Whether Harris intends to do so, and how detailed each candidate will get on crypto-related policies over the next two months, remains to be seen.&nbsp;



But Ashley Ebersole, general counsel at 0x and a former senior counsel at the SEC, told Blockworks in an interview that he expects both will speak more about the topic.&nbsp;&nbsp;



At this point though, the Trump-would-be-better-for-crypto narrative has “more substance to support it,” he said.



The former president in July <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">made some promises at Bitcoin 2024</a> in Nashville and has said he would <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">support American bitcoin miners</a>.&nbsp;



That said: “Harris is new enough that her policy positions are still being built out in a lot of areas, not just in crypto,” Ebersole said.



Read more: <a href="https://blockworks.co/news/novogratz-hopeful-vp-harris-will-be-pro-crypto">Galaxy’s Novogratz ‘hopeful’ VP Harris will be pro-crypto</a>



Harris comes from a Biden administration that has shown “relative hostility” toward crypto, the 0x executive argued. President Biden <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">vetoed</a> a resolution set to invalidate the SEC’s Staff Accounting Bulletin (SAB) 121 and many believe SEC Chair Gary Gensler has treated the industry unfairly via his agency’s enforcement actions.&nbsp;



An adviser for Kamala Harris’s campaign, when asked about crypto, <a href="https://link.mail.beehiiv.com/ss/c/u001.ZaVO_gulYIDHwTR9OqetU2S1xhiHFIg-m9gXBpy71-1zTtMRRqv_NKdw9uiJaq1WOx4yc7a_84M5E8h0NR3yX6Bf67JMNEV3WMYSuRILAhz5wLi10gP0Fz2VO7nrFDlnjMPy_xhqFvG3L5R1xMC9AKmjGlwmEaoiqjKn6aF6K5bzOhqRxIgyaYyiNQmeyzJnmdfTYu3-Gvi3srnbdy6U2AANx5aeTcxe778cIi9MXpZ8tdDARG3VvS_5LMLHzh0Mraw5sPCPkFe3MPsKEj81aHcjWlVpv0uUdTUTgGG5T5fah79b8v0f2-JGmp22ceIjK7nvhiEU2YvMZNEbTbFjk_okK6fy2Uozp2dc2vlTGhsLlNq6YyxrrRtBNvlZXPWF/495/m9zoh8MYRV-KOxfqJJAmpQ/h17/h001.dWMdUpKLYOtkOB7xunoXfduyKNthcViEs9ur8zgS3MA">told Bloomberg News</a> last week: “She’s going to support policies that ensure that emerging technologies and that sort of industry can continue to grow.”



“I would imagine both candidates will speak more [about crypto]; it just hasn’t happened yet on her side.”&nbsp;



Read more: <a href="https://blockworks.co/news/kamala-harris-crypto-policy-reset-outlook">Is the Kamala Harris crypto ‘reset’ coming? Give it time, exec says</a>



How specific these candidates get on crypto-related policies prior to Nov. 5 could be key to attracting (or repulsing) a key voting bloc. Trump leads Harris by 12 points among likely voters who own crypto (50% to 38%), according to a Friday Fairleigh Dickinson University <a href="https://www.fdu.edu/news/fdu-poll-finds-trumps-embrace-of-crypto-pays-off/">poll</a>.



Trump may not feel the need to offer more concrete crypto policy details unless forced to do so, Ebersole said — given his lead on this issue so far.



Still, he posted a <a href="https://x.com/realDonaldTrump/status/1829141447087648796">video</a> on X on Thursday indicating he would lay out a plan that afternoon to ensure the US is “the crypto capital of the planet.” It <a href="https://www.cnbc.com/2024/08/29/trump-crypto-plan-coming-election-harris.html">did not appear</a> Trump released any such plan Thursday.&nbsp;&nbsp;



“If Vice President Harris were to come out and suddenly make a bunch of blustery statements about crypto and maybe even go a step further and say, ‘On day one I’m going to do X, Y and Z,’ then I think that would require a [fuller] response from the Trump side.”



The first presidential debate between Donald Trump and Kamala Harris is set for Sept. 10.&nbsp;



Industry watchers will be listening for a question about crypto. If not addressed explicitly, remarks about innovation or regulatory agencies more broadly could come up, Ebersole noted.



“We’re in a political campaign, so both sides can say whatever they want,” Ebersole said. “What they actually do if elected is obviously the key thing.”



Keep reading for more excerpts of Blockworks’ interview with Ebersole.



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



Blockworks: As it relates to crypto, what could we see from Harris or Trump if they are elected.&nbsp;&nbsp;



Ebersole: On the legislative side, the White House — under either Harris or Trump&nbsp;— [could] signal to Congress that it’s actively looking to work with them to get legislation passed that would lay down rules for the industry.&nbsp;



On the regulatory side … you could have something where it is White House silence moreover, but they stock the administrative agencies with agency heads … with a more crypto-forward approach.&nbsp;



Or you could see the White House be more full-throated under either candidate and lead their agencies toward a position like.



Blockworks: Senate majority leader Chuck Schumer said earlier this month during a virtual “Crypto4Harris” event that he is confident crypto legislation could pass by the end of the year. Your thoughts?



Ebersole: Talk is cheap and you can say a lot of things. Politicians essentially have a day job of saying a lot of things to a lot of different audiences and crafting their messages.



Actually taking actions is what will be the real catalyst here for a change in policy.



Blockworks: What are the main points regulators and lawmakers need to address to give crypto industry players more clarity?&nbsp;



Ebersole: [The Howey Test] is still largely a judgment call in terms of how those various elements are met. And it’s a judgment call that is extremely difficult for laypeople to make, whether or not they have legal advice.



You have judges who take completely different views on how Howey applies to certain crypto offerings. … I think that signals it’s an area that really can benefit from specific regulation of, ‘OK, we no longer have this subjective test; you are an investment contract if you do X, Y and Z, specific actions.’&nbsp;&nbsp;



In the industry generally, I think there’s a feeling of we tried to do everything right. …Our lawyer has told us they think there’s a defensible case that what we’ve done is the right thing, but is that correct? There’s not a check-the-box approach that you can take.



Financial regulatory agencies have applied regulations and legislation that was enacted for the traditional finance space and tried to shoehorn crypto into it. … That works sometimes, but oftentimes it raises as many questions as it answers.



Blockworks: <a href="https://blockworks.co/news/sec-issues-wells-notice-opensea-nfts">OpenSea received a Wells notice</a> from the SEC related to the NFTs on its platform allegedly being securities, <a href="https://x.com/dfinzer/status/1828791832009953706">according to</a> CEO Devin Finzer. What do you make of this situation?



Ebersole: If this is now basically the fall of 2024 coming to fruition, the investigation and discussions have been going on for months at least, and maybe years. It’s difficult to know if this is a sort of last gasp of the Gensler SEC. Almost certainly there will be a change in the SEC — just generally that turns over when the presidential administration turns over.&nbsp;



They’ve had prior enforcement actions in the NFT space. Where that goes from here is a little bit of an unknown now because the Wells process is not a public one. OpenSea is getting a little more public now … and maybe it’ll be like Coinbase and this will be litigated as much in public as in private and we’ll know more. You could say it’s certainly a reason that while there might be some optimism that we’ll get to an improved regulatory and/or legislative position for the crypto industry in the future, that’s got to be cautious optimism at best with actions like these still being filed.&nbsp;



This interview was edited for brevity and clarity. 



A version of this story was first featured in Blockworks’ On the Margin newsletter. Subscribe <a href="https://blockworks.co/newsletter/onthemargin">here</a> to get news sent straight to your inbox.



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Ex-SEC counsel: More crypto remarks likely coming from Trump, Harris

Felix Jauvin

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/onthemargin" target="_blank" rel="noreferrer noopener">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. Here’s what you’ll find in today’s edition:



<ul>
<li>Many braced for NVIDIA’s Q2 results. Felix breaks down the main takeaways.</li>



<li>A closer look at the situation OpenSea potentially faces after getting a Wells notice from the SEC.</li>



<li>How specific will Harris and Trump get about crypto policy before the election? An industry exec weighs in.     </li>
</ul>



<h2 class="wp-block-heading">NVIDIA &#8211; Priced too perfectly?</h2>



Let’s set the record straight: NVIDIA is an incredible company achieving incredible things.&nbsp;



At the forefront of the emerging AI revolution, NVIDIA has grown its quarterly income at a staggering rate:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1200" height="614" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png" alt="" class="wp-image-91180" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=1200 1200w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=80 80w" sizes="(max-width: 1200px) 100vw, 1200px" /></figure>



As we went into yesterday’s earnings release, the company had huge expectations to live up to. It was priced to perfection.&nbsp;



With that priced-for-perfection story, the outcomes quickly became one of what makes trading markets so difficult — the game between what is expected versus what the actual outcome is. That is what drives markets.



@Alpha_Ex_LLC had a <a href="https://x.com/Alpha_Ex_LLC/status/1828798383848325442/photo/1">fantastic analysis</a> breaking down the implied volatility of the move expected from NVIDIA’s earnings.



For those not as deep in the weeds of options and how they price implied moves, the chart below shows a breakdown of the implied volatility (IV) of the stock right before each earnings release. This recent earnings release had the highest IV of all in recent memory.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="805" height="424" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png" alt="" class="wp-image-91179" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=805 805w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=80 80w" sizes="(max-width: 805px) 100vw, 805px" /></figure>



What this translated to is the options market implied a move of 11% after the earnings report. As of time of writing, the stock is down 3.4%.



Therefore, even if you were directionally right on NVIDIA’s stock movement (a degen that yolo’d buying a call or a put, for example), you likely lost money from the resulting IV crush. This is because the actual move was less than the implied premium that was baked into the price of the option.



Setting aside wonkish options talk, the second leg of this quarter’s NVIDIA story was one of a stock that, as mentioned above, was priced for perfection.



One thing is clear from these excellent charts from regular On the Margin guest Andy Constan: Despite continuous beats in earnings versus consensus expectations, the delta of those surprises is actually heading lower and shines a light on just how much perfection has been baked into the darling of this equity bull market.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="866" height="563" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png" alt="" class="wp-image-91181" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=866 866w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=395 395w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=401 401w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=337 337w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=80 80w" sizes="(max-width: 866px) 100vw, 866px" /></figure>



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="866" height="563" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png" alt="" class="wp-image-91178" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=866 866w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=395 395w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=401 401w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=337 337w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=80 80w" sizes="(max-width: 866px) 100vw, 866px" /></figure>



In terms of what’s next, that’s anyone’s guess. What we do know is as we move through future quarterly results for this AI leader, we will naturally get closer to a slowing growth rate and a corresponding compression in upside surprises as analysts get a better handle on whether the company finds a more sustainable growth rate.



— Felix Jauvin



<h2 class="wp-block-heading">$58.7 million</h2>



The current market cap of EURC, Circle’s Euro-backed stablecoin. It’s nothing compared to its dollar-backed counterpart, USDC; but EURC has been on the rise this summer as MiCAR regulations come into effect.&nbsp;



After its launch on Base, EURC’s issuance rate increased by almost 40%, and its market cap is now up around 70% from a month ago.&nbsp;



<h2 class="wp-block-heading">Another day, another (pending) lawsuit&nbsp;</h2>



NFT marketplace OpenSea yesterday revealed it received a Wells notice from the SEC. If you’ll recall from the several Wells notices we’ve covered, it’s a warning from regulators that there’s a possible lawsuit/enforcement action coming.&nbsp;



It’s not the first time we’ve seen the SEC go after NFTs.&nbsp;



Regulators in September 2023 charged and settled with the project “Stoner Cats 2.” Per the settlement, the NFT issuer agreed to cease and desist from offering the NFTs and pay a $1 million fine. SC2 also agreed to destroy all NFTs in its possession and issue a notice of the order on its website and social media channels, the SEC said.



What’s different about the OpenSea situation is that the SEC wouldn’t be going after issuers this time. It would be going after the platform.&nbsp;



Sound familiar? It should.&nbsp;



Back in 2020 the SEC sued Ripple over its XRP token. Years (and millions of dollars later), a court partially sided with securities regulators, ruling that institutional sales of XRP were considered unregistered securities offerings. Ripple got a partial win too, though, when the judge declared that retail sales on secondary markets (i.e. exchanges) were not securities.&nbsp;



Since the Ripple suit, though, we’ve seen the SEC change its strategy. Lately it’s been going after exchanges. Coinbase, Binance, Kraken — the list goes on. In each suit, the SEC claims the exchange is operating as an unregistered securities broker for listing tokens securities regulators claim are, well, securities.&nbsp;



I’ve posed the question before, and I’ll do it again: Are we going to see more lawsuits against individual issuers, either of tokens or NFTs?&nbsp;



Legal experts, if you have answers/predictions/comments, I’d love to hear them!



– Casey Wagner&nbsp;



<h2 class="wp-block-heading">More crypto talk coming from presidential hopefuls?</h2>



Some expect the election’s potential impact on crypto to be rather binary. Trump and the Republicans are good for crypto; Harris and the Dems would more likely be bad for the industry (or at least not as good).



The Trump-would-be-better-for-crypto narrative has “more substance to support it” at this point, said 0x general counsel Ashley Ebersole.



After all, the former president in July <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">made some promises at Bitcoin 2024</a> in Nashville and has said he would <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">support American bitcoin miners</a>.&nbsp;



That said: “Harris is new enough that her policy positions are still being built out in a lot of areas, not just in crypto,” Ebersole told Blockworks.&nbsp;



Harris comes from a Biden administration that has shown “relative hostility” toward crypto, the 0x executive (and former SEC senior counsel) argued. President Biden <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">vetoed</a> a resolution set to invalidate the SEC’s Staff Accounting Bulletin (SAB) 121 and many believe SEC Chair Gary Gensler has treated the industry unfairly via his agency’s enforcement actions.&nbsp;



So it’s her move.&nbsp;



An adviser for Kamala Harris’s campaign, when asked about crypto, did <a href="https://link.mail.beehiiv.com/ss/c/u001.ZaVO_gulYIDHwTR9OqetU2S1xhiHFIg-m9gXBpy71-1zTtMRRqv_NKdw9uiJaq1WOx4yc7a_84M5E8h0NR3yX6Bf67JMNEV3WMYSuRILAhz5wLi10gP0Fz2VO7nrFDlnjMPy_xhqFvG3L5R1xMC9AKmjGlwmEaoiqjKn6aF6K5bzOhqRxIgyaYyiNQmeyzJnmdfTYu3-Gvi3srnbdy6U2AANx5aeTcxe778cIi9MXpZ8tdDARG3VvS_5LMLHzh0Mraw5sPCPkFe3MPsKEj81aHcjWlVpv0uUdTUTgGG5T5fah79b8v0f2-JGmp22ceIjK7nvhiEU2YvMZNEbTbFjk_okK6fy2Uozp2dc2vlTGhsLlNq6YyxrrRtBNvlZXPWF/495/m9zoh8MYRV-KOxfqJJAmpQ/h17/h001.dWMdUpKLYOtkOB7xunoXfduyKNthcViEs9ur8zgS3MA">tell Bloomberg News</a> last week: “She’s going to support policies that ensure that emerging technologies and that sort of industry can continue to grow.”&nbsp;



A burning question remains: How specific will these candidates get on crypto-related policies prior to Nov. 5?&nbsp;



Trump may not feel the need to offer more concrete crypto policy details unless forced to do so.



“If Vice President Harris were to come out and suddenly make a bunch of blustery statements about crypto and maybe even go a step further and say, ‘On day one I’m going to do X, Y and Z,’ then I think that would require a [fuller] response from the Trump side to at least keep things in parity.”



The first presidential debate between Trump and Harris is set for Sept. 10. Crypto industry watchers will be listening for a question about the space. If not addressed explicitly, remarks about innovation or regulatory agencies more broadly could be helpful.&nbsp;&nbsp;&nbsp;



But at the end of the day, “Talk is cheap and you can say a lot of things,” Ebersole said. “Actually taking action is what will be the real catalyst here for a change in policy.”



Those actions — from either candidate, if elected — could take the form of actively working with Congress to pass crypto legislation, the 0x executive noted. Or it could be a more “silent” approach that involves simply stacking agencies with crypto-forward leaders (Trump said he would fire Gensler).   



Because a lot can happen in two months, it seems patience remains the name of the game.



Check out a full version of my interview with Ebersole tomorrow at Blockworks.co.



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul>
<li>Speaking of OpenSea, the platform has facilitated about 58% of the $62.75 billion in total NFT trade volumes since August 2020. Check out Blockworks editor David Canellis’ <a href="https://blockworks.co/news/opensea-nft-volumes-have-given-way-to-solana-and-bitcoin-platforms">story</a> for more details on where NFT activity takes place. </li>



<li>BTC and ETH have each seen a nice bump in the past 24 hours — rising 2.4% and 1.7%, respectively, as of 1:30 pm ET. Bitcoin’s price of roughly $60,500 is below an apparent resistance level of $65,000 displayed last week, according to YouHodler risk manager Georgios Parfenidis. “A strong breakout of this level can indicate a potential uptrend,” he noted.</li>



<li>The US spot ether ETFs saw slight net inflows of roughly $6 million on Wednesday, Farside Investors data shows. This ended a nine-day net outflows streak. The “first catalyst” for more inflows into these funds in the months and years ahead is education, Grayscale’s John Hoffman <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">told Blockworks</a>. </li>
</ul>



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A deeper look at NVIDIA earnings and the baked-in premium

As crypto industry watchers await more clarity on Kamala Harris’s stance on the segment, Exodus Chief Legal Officer Veronica McGregor told Blockworks that patience could be key.



While the crypto executive has downplayed criticism aimed at the vice president for her lack of a crypto agenda thus far, she too seeks a signal that Harris would help put an end to regulation by enforcement.&nbsp;



Advocacy group Crypto4Harris held a virtual event last week, during which Senate majority leader Chuck Schumer said he believes the Senate can pass “sensible” crypto legislation by the end of the year. Other politicians, alongside <a href="https://blockworks.co/tag/anthony-scaramucci">Anthony Scaramucci</a> and billionaire Mark Cuban, also spoke.&nbsp;



The Democratic gathering came as industry watchers await to see whether Harris offers a “reset” of sorts on crypto policy — a move expected to attract a portion of what many deem to be a key voting bloc.&nbsp;



Read more: <a href="https://blockworks.co/news/novogratz-hopeful-vp-harris-will-be-pro-crypto">Galaxy’s Novogratz ‘hopeful’ VP Harris will be pro-crypto</a>



But declarations during the event appeared to ring hollow for some, given that neither VP <a href="https://blockworks.co/tag/kamala-harris">Kamala Harris</a> nor a member of her team spoke.&nbsp;



McGregor said some of the expectations for this group’s “introductory” event may have been a bit “unreasonable.”



While Crypto4Harris has members in contact with people close to Harris, she added, her presidential campaign is young. <a href="https://blockworks.co/news/joe-biden-re-election-decision-potential-bitcoin-effects">Biden dropped out</a> (and endorsed Harris) just 24 days before the gathering.&nbsp;



“Expecting on short notice to be able to get either the vice president or her folks on such a call right now, I think would be a pretty heavy lift,” McGregor told Blockworks.



Still, eyes remain on how the presumed Democratic nominee positions herself on this issue. Nic Carter, a general partner at Castle Island Ventures, said in an X <a href="https://x.com/nic__carter/status/1824115245197021348">post</a> last week — alluding to the Crypto4Harris event — that there is no evidence of a crypto “reset” from Harris.&nbsp;



“For now, lacking any policy agenda…we have to assume she is defaulting to Biden&#8217;s agenda, <a href="https://blockworks.co/news/biden-backing-gary-gensler-resolution">which is hostile to crypto</a>,” he added.&nbsp;



Despite more Democrats showing support for crypto in recent months, Joe Biden <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">vetoed</a> a resolution set to invalidate the Securities and Exchange Commission’s Staff Accounting Bulletin (SAB) 121.



“While people want to saddle her with ownership of everything the <a href="https://blockworks.co/tag/joe-biden">Biden</a> administration has done or not done with crypto, I don’t think that’s fair,” McGregor argued.&nbsp;



On the other side, Trump said he would <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">back the bitcoin mining industry</a> and floated a number of other <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">crypto-related promises</a> at last month’s Bitcoin 2024 conference in Nashville.&nbsp;



“It’s going to be difficult for a sitting vice president to sort of throw grenades the same way her opposition can,” McGregor said. “There are people calling for her to announce she’s going to fire <a href="https://blockworks.co/tag/gary-gensler">Gary Gensler</a>. You can say that as a campaign promise. As a practical matter, it’s a very different thing.”



The Exodus executive has also engaged with the <a href="https://blockworks.co/tag/donald-trump">Trump</a> campaign this summer. She noted her company — whose public listing was delayed by the SEC in May — is willing to throw support behind candidates of either party in favor of “sensible, practical and appropriate regulation” of the industry.



Harris revealed economic plan details during a Friday speech in North Carolina — focusing on the need to cut housing and grocery costs.&nbsp;



The Democratic National Convention began Monday in Chicago. Prior to the event, the party released its <a href="https://democrats.org/where-we-stand/party-platform/">platform</a>, which did not mention digital assets, blockchain or crypto. It repeatedly notes what Biden would do in a “second term,” however, highlighting just how young Harris’s campaign is. As Blockworks senior reporter Casey Wagner <a href="https://blockworks.co/news/on-the-margin-newsletter-bitcoin-miners-post-halving">noted</a> in Monday’s On the Margin <a href="https://blockworks.co/newsletter/onthemargin">newsletter</a>, some <a href="https://x.com/adamscochran/status/1825567589751243122">argue</a> the lack of crypto-related details in the platform could be a sign Democrats are viewing the industry more favorably.&nbsp;



McGregor said she was unsure if crypto would be a “plank in the platform” going forward, but noted she is watching for anything about “fostering innovation and technology in a responsible and appropriate way.”&nbsp;&nbsp;



The executive added: “What would be helpful is if we heard from her campaign that…we are going to recalibrate and not do regulation by enforcement, because that practice is very destructive.”



A modified version of this article first appeared in the daily On the Margin newsletter. Subscribe <a href="https://blockworks.co/newsletter/onthemargin" target="_blank" rel="noreferrer noopener">here</a> so you don’t miss tomorrow’s edition.



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Is the Kamala Harris crypto ‘reset’ coming? Give it time, exec says

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul>
<li>Some mining stocks have surged since the halving; others haven’t. We try to make sense of the leaderboard.</li>



<li>Though the DNC is underway, folks curious about the Harris/Walz crypto stance best be patient.</li>



<li>The economic data and remarks to watch/listen for this week as the interest rate question persists.</li>
</ul>



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



<h2 class="wp-block-heading">Four months after halving, a look at mining stock moves</h2>



We <a href="https://blockworks.co/news/where-bitcoin-miners-stand-after-q2-disclosures">wrote last week</a> about the seeming health of various bitcoin miners — taking into account their Q2 results and what they have in the pipeline.



But today marks exactly four months since the last <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">Bitcoin halving</a>, giving us another chance to evaluate the companies in a bit of a different light.&nbsp;



The big question in April was which mining companies would survive — and thrive — after an event that slashed per-block mining rewards. <a href="https://blockworks.co/news/depressed-miner-stocks-bitcoin-halving">Industry watchers had guessed</a> at least some ailing mining stocks would show post-halving strength, spurring share price rebounds.



So which ones have been good buys so far?&nbsp;



The public bitcoin miner with the biggest stock price gain — from April 19’s market close to Aug. 19’s open — is Core Scientific, at 229%, Yahoo Finance data shows.



Core Scientific <a href="https://blockworks.co/news/core-scientific-rejects-coreweave-buyout-bid-after-big-hpc-deal">expanded its deal with CoreWeave</a> earlier this month to offer an additional 112 megawatts of high-performance computing (HPC) infrastructure (supporting the burgeoning AI category).&nbsp;



“It became clear back in Q1 that those bitcoin miners who bridged the gap needed for AI infrastructure would outperform those who were solely focused on securing the Bitcoin network,” said Dan Weiskopf, co-portfolio manager of the crypto-focused Amplify Transformational Data Sharing ETF (BLOK).&nbsp;



Also seeing significant share price boosts from four months ago are TeraWulf and Iris Energy, at 79% and 63%, respectively. An honorary mention goes to Hut 8 Mining, which has enjoyed a 44% gain.&nbsp;&nbsp;



Others in the green — albeit to a lesser degree — are Bitfarms (23%), Hive Digital Technologies (12%) and Bitdeer (9%).&nbsp;&nbsp;



Those with essentially flat share prices since April 19 are mining giants Marathon Digital and New York-based Cipher Mining.



Two big public miners that have endured share price declines since the halving have been CleanSpark and Riot Platforms, which have lost 31% and 12%, respectively.



Some mining companies have indeed looked to combat declining mining profits by building out their HPC businesses to support AI applications, noted BIT Mining chief economist Youwei Yang.&nbsp;



“Most of the crypto miners [that] chose to transform into AI are still in the pilot phase,” he said. “Some are more successful than others…but this is definitely an area to look out for potential prosperity.&#8221;



While Weiskopf said he is excited about “the AI side of the portfolio,” not every miner can, or wants, to build out that type of capability.



“Those companies that are pursuing the HPC-AI opportunity are building a more steady business,” he told Blockworks. “But if bitcoin explodes to the upside, they may prove to be less correlated to that price action — especially since some of the pure-play miners have leveraged up by adding to their bitcoin treasury.”



CLSK and RIOT offer a more “singular focus” — fitting into the portfolio as “higher beta plays on the price action of bitcoin.” Not to mention Marathon, which now owns more than 25,000 BTC after two <a href="https://blockworks.co/news/marathon-digital-adds-to-bitcoin-stockpile">big buys of the asset </a>in recent weeks.



While CORZ is the biggest <a href="https://amplifyetfs.com/blok-holdings/">holding</a> in the ETF that Weiskopf co-manages (at about 5.7%), the fund has 2%-plus allocations in Hut 8, CleanSpark, Bitfarms and Marathon.&nbsp;



Different miners have different edges, and the post-halving leaderboard is likely to evolve as does the crypto market. Stay tuned.&nbsp;



— Ben Strack&nbsp;



<h3 class="wp-block-heading">$4.5 billion</h3>



The approximate assets under management for crypto fund manager Bitwise following its <a href="https://blockworks.co/news/bitwise-europe-acquisition-crypto-etps">acquisition of London-based ETC Group</a>.



The buy gives the San Francisco firm a broader global footprint, as it will take over ETC Group’s nine European-listed crypto ETPs.



Bitwise’s largest fund is its Bitcoin ETF (BITB), which has grown to roughly $2.3 billion since launching in January. The firm launched a spot ether ETF last month, and its newly acquired offerings include ones focused on other crypto assets such as solana and XRP.&nbsp;&nbsp;



<h2 class="wp-block-heading">Are Harris/Walz talking crypto at the DNC?</h2>



The Democratic National Convention kicked off today in Chicago.&nbsp;



Kamala Harris and <a href="https://blockworks.co/news/on-the-margin-newsletter-market-unwind">running mate Tim Walz</a> are not scheduled to take the stage until later this week, likely after delegates officially nominate them as the party’s pick to take on Donald Trump in November.&nbsp;



Democrats released their party <a href="https://democrats.org/where-we-stand/party-platform/">platform</a> Sunday evening, which was written before President Joe Biden bowed out of the race last month. It’s pretty obvious the authors penned it before Harris stepped in, given they refer to Biden’s “second term” almost 20 times.&nbsp;



Still, it’s expected Harris will adopt many of the same values laid out by party leadership. The platform makes no mention of digital assets, blockchain or crypto, which some say is actually a sign Democrats are viewing the industry more favorably.&nbsp;



Dems aren’t calling for more power to the SEC, for banks to block crypto customers, or even for increased crackdowns on scams, Cinneamhain Ventures partner Adam Cochran <a href="https://x.com/adamscochran/status/1825567589751243122">said</a> on X Monday. While Sen. Elizabeth Warren actively called for “anti-crypto” policy, current party leadership appears to be punting the issue, at least for now.&nbsp;



I’d have to agree that no mention of crypto seems to signal the party is not feeling hostile toward the industry. But I do wonder how long this silence will last, especially if Harris makes it to the White House.&nbsp;



Historically, candidates tend to do better in the polls post-convention, so expect a Harris/Walz spike after Thursday. Another big political event for investors to keep an eye on will be the first presidential debate between Trump and Harris, scheduled for Sept. 10.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">On Our Radar&nbsp;</h2>



We hope you had a good weekend! After last week’s mixed data, markets will be looking for reassurance that interest rate cuts are coming in September and economic growth is not slowing too much. Here’s what’s on tap this week:&nbsp;



<ul>
<li>On Wednesday, we’ll get the minutes from the <a href="https://blockworks.co/news/unpacking-the-latest-fomc-statement">Fed’s July FOMC meeting</a>. Investors will be looking for signals that central bankers are satisfied with recent cooling inflation numbers and positive labor reports. </li>



<li>The flash services PMI report will go out Thursday. It’s the first national data point for August, plus a leading economic indicator — making it a figure to watch. July’s report came in at 55, showing some industry expansion. Investors should be happy with another read in this range; anything too hot or too cold could derail interest rate cut plans. </li>



<li>Fed Chair Jerome Powell is slated to give an address from Jackson Hole Friday at the annual Economic Symposium. The highly anticipated remarks should give investors a sense of whether or not the Fed is seriously considering an interest rate cut at its next meeting. While markets seem confident the first rate cut will come in September, Powell is unlikely to comment on the size of this predicted cut, which is anticipated to be either 25 or 50 basis points. </li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul>
<li>Franklin Templeton <a href="https://www.sec.gov/Archives/edgar/data/2033807/000113743924001282/fcts1082024.htm">filed</a> for an ETF on Friday that would initially hold both BTC and ETH — and would consider allocating to other crypto assets if given the regulatory green light. The application <a href="https://blockworks.co/news/hashdex-proposes-etf-holding-btc-and-eth">resembles a similar planned ETF</a> submitted by Brazil-based asset manager Hashdex in June.</li>



<li>Net flows into US spot bitcoin ETFs were minimal last week ($32 million), mimicking the relatively stable price action of the underlying asset over that span. US spot ether ETFs meanwhile saw slight outflows from Aug. 12 to Aug. 16, amounting to $14 million. ETH’s price was up 1.6% from a week ago on Monday afternoon.</li>



<li>The November election is likely what will break bitcoin’s holding pattern, Stocklytics analyst Neil Roarty said in a Monday email. He added: “Until we know the name of the next US president, it looks like bitcoin bulls and bears will need to play the waiting game.”</li>
</ul>



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Post-halving leaderboard: Bitcoin miners’ stock moves

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/onthemargin" target="_blank" rel="noreferrer noopener">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul>
<li>What’s the deal with prediction markets? Casey breaks down the latest developments for Polymarket and competitors. </li>



<li>Ben chatted with an industry legal chief who (more patiently than some) awaits Kamala Harris’s crypto stance.</li>



<li>Another look at this week’s mixed big of economic data.</li>
</ul>



<h2 class="wp-block-heading">You can’t ban what’s already banned!</h2>



Ah, Polymarket.&nbsp;



The betting app — or “prediction market,” as the company describes itself — is all the rage these days. Total crypto assets on Polymarket have tripled this year, according to DeFiLlama data.



Users have wagered $606.6 million on the US presidential election outcome alone. Bets start at just $0.44. It’s a remarkably low barrier to entry — that is, if you’re not a US citizen.&nbsp;



That’s right. Polymarket, in theory, blocks US residents and citizens from using the platform, as stipulated by a 2022 <a href="https://www.cftc.gov/PressRoom/PressReleases/8478-22">settlement</a> with the CFTC. Per the agreement, Polymarket paid $1.4 million in civil penalties for allegedly running an unregistered platform for trading options contracts. Polymarket did not confirm or deny the allegations, but they agreed to ban US users.&nbsp;



According to the CFTC, the bets that Polymarket facilitates —&nbsp; such as “How many times will Trump tweet this week?” or “Is the Bieber baby a boy or girl?” — are derivatives and thus under the agency’s purview.&nbsp;



“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space,” CFTC acting director of enforcement Vincent McGonagle said in 2022.&nbsp;



Of course, we know there are Americans using Polymarket, just as we know US residents found workarounds to use other “banned” platforms like FTX and Binance. Polymarket’s terms of service prohibit the use of VPNs, but you don’t have to look hard to find <a href="https://medium.com/@joearvis7/how-to-use-polymarket-in-the-united-states-8a891dde1a91">step-by-step</a> instructions on how to circumvent the rules.&nbsp;



American statistician and journalist Nate Silver joined Polymarket as an adviser earlier this year. Other investors include Peter Thiel and Vitalik Buterin.&nbsp;



&#8220;Probabilities really matter when you&#8217;re trying to make plans,&#8221; Silver told <a href="https://www.axios.com/2024/07/16/nate-silver-polymarket">Axios</a> last month.&nbsp;



Now, more than two years after the CFTC’s settlement, lawmakers and regulators are showing renewed interest in cracking down on election gambling. In May, the agency issued a <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/behnamstatement051024">proposed rule</a> to ban all derivatives trading related to US elections.&nbsp;



Eight Democratic senators and representatives cosigned a <a href="https://www.merkley.senate.gov/merkley-leads-senate-house-colleagues-to-call-for-no-gambling-on-u-s-elections/">letter</a> earlier this month urging the CFTC to ban political betting markets, which they argued “could influence and interfere with election” results.&nbsp;



To be clear, the CFTC has not charged Polymarket with violating its 2022 settlement.&nbsp;



The rule, if passed, would likely have a greater impact on Polymarket competitors Kalshi and PredictIt, neither of which accept crypto payments. Kalshi is registered with the CFTC but is currently suing the agency for denying contracts for election betting.&nbsp;



PredictIt also sued the CFTC back in 2022 after regulators attempted to shut down the platform. The company was granted a temporary injunction the following year, allowing it to continue operating in the US. For now, PredictIt still offers election contracts.&nbsp;



The pushback from industry heavyweights appears to focus on how the proposed CFTC rule would impact Polymarket, despite the fact that the 2022 settlement essentially already enforces (at least in theory) these regulations.&nbsp;



Gemini founders Tyler and Cameron Winklevoss penned a <a href="https://x.com/tyler/status/1822121660335440180">letter</a> to CFTC secretary Christopher Kirkpatrick earlier this month, expressing outrage that the agency is trying to deny Americans access to prediction markets like Polymarket.&nbsp;



I guess the Winklevii never got the memo re: the 2022 settlement? I’d take that bet.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">$85 million</h2>



The combined value of National Pension Service’s shares of Coinbase ($51 million) and MicroStrategy ($34 million) as of the second quarter, according to a recent <a href="https://www.sec.gov/Archives/edgar/data/1608046/000160804624000005/xslForm13F_X02/20242q.xml?utm_source=substack&amp;utm_medium=email">filing</a>.&nbsp;



The South Korean public pension fund (the world’s third-largest) had also held COIN shares in Q1, but it decreased that position by roughly 24,000 shares quarter over quarter. The allocation to MSTR was new.



Despite the fund opting to allocate to these crypto stocks, the disclosure indicates it did not hold any <a href="https://blockworks.co/news/tradfi-firms-disclose-positions-in-blackrock-bitcoin-etf">bitcoin ETFs</a> as of June 30.



<h2 class="wp-block-heading">Crypto4Harris (aka Patience4Harris)</h2>



Casey <a href="https://blockworks.co/news/one-month-out-from-fomc-expected-rate-cut">wrote yesterday</a> about Sen. Chuck Schumer’s Wednesday night appearance, and pledge, at a virtual “Crypto4Harris” event.



The likes of Mark Cuban and Anthony Scaramucci also showed face.



But declarations during the event <a href="https://x.com/nic__carter/status/1824115245197021348">appeared</a> to ring hollow for some given that neither VP Kamala Harris, nor a member of her team, spoke.&nbsp;



The gathering of Democrats came as industry watchers await to see whether Harris offers a “reset” of sorts on crypto policy — a move expected to attract a portion of what many deem to be a key voting bloc in November.&nbsp;



Veronica McGregor, chief legal officer at crypto wallet Exodus, said some of the expectations for Crypto4Harris’s “introductory” event may have been a bit “unreasonable.”



While the group has members in contact with people close to Harris, she added, the VP’s presidential campaign is young. <a href="https://blockworks.co/news/joe-biden-re-election-decision-potential-bitcoin-effects">Biden dropped out</a> (and endorsed Harris) just 26 days ago.&nbsp;



“Expecting on short notice to be able to get either the vice president, or her folks, on such a call right now I think would be a pretty heavy lift,” McGregor told Blockworks.



Still, eyes remain on how the presumed Democratic nominee positions herself on this issue. Despite more Democrats showing support for crypto in recent months, Joe Biden <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">vetoed</a> a resolution set to ax the SEC’s SAB 121.



“While people want to saddle her with ownership of everything the Biden administration has done or not done with crypto, I don’t think that’s fair,” McGregor argued.&nbsp;



On the other side, Trump said he would <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">back the bitcoin mining industry</a> and floated a number of other <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">crypto-related promises</a> at last month’s Bitcoin 2024 conference in Nashville.&nbsp;



“It’s going to be difficult for a sitting vice president to sort of throw grenades the same way her opposition can,” McGregor said. “There are people calling for her to announce she’s going to fire Gary Gensler. You can say that as a campaign promise; as a practical matter it’s a very different thing.”



The Exodus executive said she may speak at a future Crypto4Harris event. McGregor had also been in contact with the Trump campaign this summer. She noted her company — whose public listing was delayed by the SEC in May — is willing to back candidates of either party in favor of “sensible, practical and appropriate” crypto regulation.



Harris was expected to reveal economic plan details during a Friday speech in North Carolina around the time this newsletter was being published. McGregor said she was unsure if crypto would be a “plank in the platform,” but noted she was watching for something about “fostering innovation and technology in a responsible and appropriate way.”&nbsp;&nbsp;



The bottom line, McGregor added: “What would be helpful is if we heard from [Harris’s] campaign that … we are going to recalibrate and not do regulation by enforcement, because that practice is very destructive.”



It seems we all agree we want to know more.&nbsp;



— Ben Strack



<h2 class="wp-block-heading">Did You Notice</h2>



Happy Friday! It was a relatively quiet week, which I’m sure was welcome after last week’s market turmoil. Still, economic data was a bit of a mixed bag, putting markets in a precarious position ahead of next month’s FOMC meeting. Here’s a recap:&nbsp;



<ul>
<li>The Consumer Price Index fueled recessionary fears Wednesday when it showed cooling inflation — a drop some fear may be due to an economic slowdown. The market response was therefore muted as investors fretted over whether the Fed can achieve a soft landing. </li>



<li>On the other hand, initial jobless claims decreased for a second straight week, coming in at 227,000 for the week ended Aug. 10. This was below expectations of 235,000, helping to bolster hopes that the labor market is not running too cool. Monthly job additions are still positive, and continuing unemployment claims are on the decline, adding to signs that the jobs market remains healthy. </li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul>
<li>Recent one-week realized volatility for both BTC and ETH spiked to 90-100% above the two-month trailing measure, according to a Thursday Gemini <a href="https://www.gemini.com/institutions/insights">report</a>. The last time bitcoin reached such an extreme was during the FTX collapse in November 2022, the company notes. ETH last saw similar spikes in the one-week to two-month volatility ratio in August 2023.</li>



<li>Bitcoin had surged 3% over the past 24 hours, reaching $59,270 as of 2 pm ET Friday. At a price of roughly $2,610, ether’s gain over that span was 1.5%.</li>



<li>We mentioned earlier this week that Coinbase had re-entered Hawaii. In case you missed it, <a href="https://blockworks.co/news/coinbase-returns-to-hawaii">read up</a> on what changed in the state, and which jurisdictions the crypto exchange is focused on entering now.</li>



<li>Have a great weekend, all. And as always, thanks for reading!</li>
</ul>



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Unpacking a potential Polymarket ‘ban’

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/onthemargin" target="_blank" rel="noreferrer noopener">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. Here’s what you’ll find in today’s edition:



<ul>
<li>With the next FOMC meeting a month away, Felix breaks down the potential size of the anticipated rate cut. </li>



<li>Democrats hoping to appeal to the crypto industry say they can get legislation passed by the end of the year. </li>



<li>There’s a new risky investment vehicle. Ben has all the details. </li>
</ul>



<h2 class="wp-block-heading">Growth scare over?</h2>



Last week, the financial world was very different. You had people on TV yelling about how the Fed needed to do an intermeeting rate cut and that a recession was all but guaranteed if they didn’t cut right here, right now.



Fed funds futures on Aug. 8 were pricing in a higher probability of a cut of 50 basis points versus a 25 bps cut.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="701" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png" alt="" class="wp-image-90565" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-20.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /></figure>



We are now in better balance — with a 73% chance of a 25 bps cut and a 26% chance of a 50 bps cut. So what exactly happened between then and now, and where does that leave us?



As discussed in the <a href="https://blockworks.co/news/on-the-margin-newsletter-market-unwind">Aug. 6 newsletter</a>, we saw the third-highest VIX print of all time and a ton of idiosyncratic market structure events unfold.&nbsp;



The big story, however, was that very little of this had any contagion into the market components the Fed really cares about (credit spreads, Treasury market liquidity, money markets). And so, just as quickly as VIX spiked to 65, we were back down below 20 again.&nbsp;



During that time, the Fed did nothing, and FOMC members hardly mentioned the volatility crash in their press appearances. Further, we saw no uptake in the Fed-Bank of Japan swap lines, which implies there wasn’t a dash for cash during the yen carry trade unwind:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="859" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png" alt="" class="wp-image-90567" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-22.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /></figure>



This entire excursion that markets went through in the past week is increasingly looking like the climax of what was a growth scare, but not a recession. And certainly nothing that warranted a 65 VIX handle. As we continue to receive new economic data, it’s becoming even more evident that this growth scare could be over.&nbsp;&nbsp;



We registered a 1% month-over-month increase in US retail sales today — the highest print since January 2023 and significantly above the forecasted 0.3% increase:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="765" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png" alt="" class="wp-image-90566" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-21.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /></figure>



Further, we have seen two weeks in a row of lower-than-expected initial jobless claims, which hints a lot of the labor market loosening this past month was both seasonal and temporary due to Hurricane Beryl:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1422" height="230" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png" alt="" class="wp-image-90564" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=1422 1422w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-19.png?w=80 80w" sizes="(max-width: 1422px) 100vw, 1422px" /></figure>



What these data points tell me is that the consumer is still spending and the labor market is in an equilibrium state — but not exactly weak.



This data sets the stage for a tight-lipped 25 bps cut in September, as opposed to the panicky and recessionary 50 bps cut that was the base case priced in last week.



To be clear, I see a 25 bps cut as a normalization cut that the market would take as bullish. But a 50 bps+ cut could be interpreted as bearish due to the implied panic baked into the move. As discussed in the <a href="https://blockworks.co/news/on-the-margin-newsletter-are-rate-cuts-bearish">July 9 newsletter</a>, knowing what type of cut we are seeing is key to understanding how markets will react to them.



— Felix Jauvin



<h2 class="wp-block-heading">$63 million&nbsp;</h2>



The amount of collateral euro-pegged stablecoin issuer Anchored Coins should have. At least some of these reserves were held at the now-bankrupt Swiss bank FlowBank, Anchored Coins said in a <a href="https://www.anchoredcoins.com/en/landing">statement</a>. That could pose a problem for holders looking to redeem their tokens.&nbsp;



“A risk remains that in case of a shortfall, the 1:1 redeemability cannot be upheld, which would lead to a respective loss for the holders of AEUR tokens,” Anchored Coins noted.&nbsp;



Any losses would be “applied proportionately” across all token holders, the company added, per Swiss regulatory guidelines.&nbsp;



<h2 class="wp-block-heading">Crypto4Harris has the ‘crypto,’ not the ‘Harris’&nbsp;</h2>



Republicans aren’t the only ones who can get sensible crypto policy passed, Senate Majority Leader Chuck Schumer said Wednesday evening during the inaugural event for the grassroots “Crypto4Harris” group.&nbsp;&nbsp;



In fact, Schumer is confident he can get “something passed out of the Senate” by the end of the year. While he didn’t specify which bill he thinks can make it through a floor vote, insiders say he’s talking about a bill from Sen. Debbie Stabenow, who also joined Wednesday’s call.&nbsp;



Stabenow in July teased a new crypto bill during a Senate Agriculture Committee meeting. (I know, why is Ag talking about crypto? They actually handle a lot of financial issues.) The Michigan Democrat unveiled the <a href="https://www.congress.gov/bill/117th-congress/senate-bill/4760/all-actions">Digital Commodities Consumer Protection Act</a> (DCCPA) last session, though that never made it to a vote.&nbsp;



The DCCPA focused on giving the CFTC more power over the digital asset industry, an effort largely supported by crypto folks. Members of the DeFi community however criticized the bill, given it would require decentralized protocols to follow the same guidelines as centralized intermediaries.&nbsp;&nbsp;



Stabenow has not yet introduced a new version of the DCCPA, but I’m hearing she’s working on it. Remember, she’s retiring at the end of the year — so if she wants this to move, she better act fast. Her office did not immediately respond to our request for comment.&nbsp;



Stabenow’s original bill did have some bipartisan support, with Republican Senators John Boozman, John Thune and Joni Ernst signing on as co-sponsors. Republican Rep. Patrick McHenry expressed <a href="https://x.com/PatrickMcHenry/status/1824085572228370540">interest</a> in helping Schumer get crypto policy over the finish line; but McHenry’s term ends in 2025, and he is not seeking reelection.&nbsp;



Harris’s team has no public involvement in the Crypto4Harris group, and no one from her campaign participated in Wednesday’s call.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">MSTR exposure, in a leveraged ETF…&nbsp;</h2>



We talk plenty about crypto market volatility (just look at <a href="https://blockworks.co/news/on-the-margin-newsletter-price-predictions">last week</a>). We also regularly write about the segment’s growing ETF universe.&nbsp;



Speaking of volatility and ETFs, investors can now own a fund giving them leveraged exposure to the largest corporate holder of bitcoin: MicroStrategy.



As a reminder, <a href="https://blockworks.co/news/bitcoin-salesmen-michael-saylor-larry-fink">Michael Saylor</a>-founded MicroStrategy is that company with a software business that also buys and holds a ton of bitcoin (currently 226,500 BTC). A number of investors have historically used MSTR as a bitcoin proxy, particularly before spot bitcoin ETFs hit the US market in January.&nbsp;



Now, Defiance ETFs’ Daily Target 1.75X Long MSTR ETF seeks daily leveraged investment results of 175% the daily percentage change in MicroStrategy’s share price.&nbsp;



“The fund is not suitable for all investors,” Defiance warns in a disclosure.



No kidding.&nbsp;



Who is it for then? Most likely arbitrageurs and crypto day traders, according to Bryan Armour, a director of passive strategies research at Morningstar.&nbsp;



MSTR shares were up 95% year to date, as of 2 pm ET — <a href="https://blockworks.co/news/microstrategy-mstr-stock-btc-performance">better than</a> BTC’s 32% gain over that span. Saylor has touted the <a href="https://blockworks.co/news/microstrategy-q3-earnings-results">benefits</a> MSTR shares have over spot bitcoin ETFs, notably its lack of a fee and “intelligent leverage.”



So now we’re talking leverage on leverage.



Almost all investors should avoid this ETF because of its high fee (1.29%) and difficulty valuing the strategy, Armour argued.



“Volatility decay eats away at long-term returns such that even a sideways market for MSTR could result in substantial losses for the ETF over the long term,” he told Blockworks.



The fund comes seven months after BlackRock, Fidelity and a slew of other issues debuted spot bitcoin ETFs in the US. That category’s funds have so far tallied $17.3 billion of net inflows.



A <a href="https://blockworks.co/news/leveraged-bitcoin-futures-etf-launch-set">leveraged bitcoin ETF</a> by Volatility Shares, which holds BTC futures contracts, has $1.4 billion in assets under management — proving some demand for amplified bitcoin exposure.



“Crypto traders seem to love volatility and upside,” Armour said. “I just wonder why bitcoin investors would prefer this [MSTR fund] to buying unleveraged bitcoin exposure either directly or via ETFs.”



— Ben Strack



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul>
<li>Morgan Stanley revealed in a Wednesday filing that it owned 5.5 million shares of BlackRock’s iShares Bitcoin Trust (worth roughly $187 million) in Q2. Among institutions that reported bitcoin ETF holdings in Q1 via 13F filings, 44% upped their positions, Bitwise’s Matt Hougan said in an X <a href="https://x.com/Matt_Hougan/status/1823862825577844953">post</a>. As for the others, 22% held steady, 21% decreased and 13% ceased the allocations, he added. For more on what to make of the 13Fs, <a href="https://blockworks.co/news/small-cap-summer-bull-market-final-form">read</a> what Blockworks’ Katherine Ross had to say.   </li>



<li>While Vice President <a href="https://blockworks.co/news/kamala-harris-campaign-advisors-crypto-stance">Kamala Harris</a> has not yet shared many details about her platform, she is set to outline some of her economic agenda during a Friday speech in North Carolina, the New York Times <a href="https://www.nytimes.com/2024/08/14/us/politics/kamala-harris-economy-north-carolina.html">reported</a> Thursday. With the Democratic National Convention starting Monday, Harris is the party’s presumed nominee to face off against Donald Trump in November.</li>
</ul>



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One month out from FOMC: Zooming in on the expected rate cut

Vice President Kamala Harris has been fairly tight-lipped on the specifics of her platform since entering the presidential race three weeks ago. But with the Democratic National Convention looming, Harris has promised to release more information about her economic policy plans in the coming days.



While the presumed Democratic nominee has yet to say much about how she would approach cryptocurrency, we might make some inferences based on her advisory team’s past work in blockchain and Web3 regulation.



Brian Nelson, an attorney and former undersecretary at the Treasury’s Office of Terrorism and Financial Intelligence, left his federal agency job last month to join Harris’s team.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-harris-team-crypto">Team Harris members show mixed track record when it comes to crypto</a>



It was during Nelson’s tenure that the Treasury’s Financial Crimes Enforcement Network (<a href="https://blockworks.co/tag/fincen">FinCEN</a>) issued a proposal to treat crypto mixing services as a “primary money laundering concern.”&nbsp;



When many crypto industry members expressed concerns with the designation, Nelson addressed critics head-on. He defended his policies on stage at the <a href="https://www.coindesk.com/opinion/2024/06/12/in-conversation-with-brian-nelson/">Consensus</a> conference in June, acknowledging use cases for mixing services while maintaining that mixing services remain a tool used by illicit actors to conceal the origin of funds.&nbsp;



Read more: <a href="https://blockworks.co/news/ny-fed-tornado-cash-report">Tornado Cash sanction cooperation was “mixed,” NY Fed finds&nbsp;</a>



“From our perspective, we believe that there is a difference between sort of obfuscation and anonymity enhancing services and those that support privacy,” Nelson said at Consensus. “And we, of course, totally recognize that, in the context of public blockchains, which provides information about financial transactions, that there would be a desire to have a certain degree of privacy around those financial transactions.”



The proposed rule around cryptocurrency mixers and reporting requirements has not yet been finalized. Nelson added the agency is “committed” to furthering “stakeholder engagement.”&nbsp;



In February, Nelson pushed back on the idea that cryptocurrencies are a main tool for financing terrorist operations. He told the House Financial Services Committee that he believed <a href="https://blockworks.co/news/wsj-elliptic-crypto-fundraising">claims that Hamas had raised “millions”</a> in crypto were vastly inflated.&nbsp;



“We also assess that terrorists still prefer, frankly, to use traditional products and services, but this is something that we’re obviously monitoring very closely,” he said during the February <a href="https://blockworks.co/news/fincen-hearing-crypto-illegal-financing">hearing</a>.&nbsp;&nbsp;



The <a href="https://blockworks.co/tag/kamala-harris">Harris</a> campaign has also brought on other past Biden administration officials. Brian Deese, former National Economic Council director, and former deputy director Bharat Ramamurti recently became Harris advisors, according to <a href="https://www.bloomberg.com/news/articles/2024-08-13/kamala-harris-4-0-liberal-moderate-or-something-else">reports</a>.&nbsp;



Deese in January 2023 co-authored a White House <a href="https://www.whitehouse.gov/nec/briefing-room/2023/01/27/the-administrations-roadmap-to-mitigate-cryptocurrencies-risks/">blog post</a> addressing the administration’s plans to “mitigate crypto risks.”&nbsp;



While the post acknowledged digital assets could “offer ways to make payments faster, cheaper and safer,” companies in the space tend to “ignore applicable financial regulations and basic risk controls.” 



Ramamurti — also a former Sen. Elizabeth Warren, D-Mass., aide — <a href="https://finance.yahoo.com/news/white-house-top-crypto-critic-141129953.html">reportedly</a> played a role in the White House’s effort to block stablecoin legislation in the summer of 2023. The bill was able to <a href="https://blockworks.co/news/stablecoin-bill-bipartisan-support">advance through the House Financial Services Committee</a> with bipartisan support in July 2023, but later stalled and never made it to a full floor vote.



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Harris campaign advisors have mixed history with crypto industry 

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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



Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul>
<li>Kamala Harris is quietly assembling her advisory team. We break down the members’ complicated histories with crypto. </li>



<li>Outflows from Grayscale’s ETHE finally paused. Here’s what that means (or doesn’t).</li>



<li>The crypto industry has more cash to dole out. Ben covers the latest endorsements from super PACs.</li>
</ul>



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



<h2 class="wp-block-heading">Team Harris has some crypto frenemies&nbsp;</h2>



As Vice President Kamala Harris prepares to accept the Democratic nomination next week at the DNC, she has cautiously started to unveil her platform.&nbsp;



We now have a better sense of where Harris stands on some economic and social issues, and we know who is helping her craft these views. But crypto, unsurprisingly, is a topic the campaign has yet to touch, at least publicly.&nbsp;



Here’s what we know about Harris’s platform:&nbsp;



<ul>
<li>She wants to increase abortion access. </li>



<li>She wants to ban assault-style weapons. </li>



<li>She thinks tips should be exempt from federal tax (as does Donald Trump), but only for lower- and middle-income earners. </li>



<li>She’s backing away from some of the more left-leaning promises she made in 2020 when she ran for president (such as decriminalizing illegal border crossing and banning fracking). </li>
</ul>



Right now, that’s really all we know. A broad idea of “bringing up the middle class” has also been a strong undertone in most of Harris’s speeches since she entered the race three weeks ago, but we don’t have specifics just yet.&nbsp;



She’s also focused on sharing personal details with voters, as is her VP pick Tim Walz — mostly in the form of memes. (Her Gen Z social media team hopes they can ride the meme wave all the way to the White House, but that’s a topic for another newsletter.)&nbsp;



While we know little about Harris’s plans for the crypto industry, we do know who she’s added to her advisory team.&nbsp;



<h3 class="wp-block-heading">Brian Nelson&nbsp;</h3>



Nelson, former undersecretary at the Treasury’s Office of Terrorism and Financial Intelligence, left his federal agency job last month to join Team Harris. Under Nelson, the Treasury department created a proposal to label crypto mixers as a “primary money laundering concern.”&nbsp;



While the designation spooked the industry, Nelson, to his credit, has never shied away from his critics. He defended his policies on stage <a href="https://www.coindesk.com/opinion/2024/06/12/in-conversation-with-brian-nelson/">at the Consensus conference in June</a>, adding the agency is “committed” to furthering “stakeholder engagement.”&nbsp;



“From our perspective, we believe that there is a difference between sort of obfuscation and anonymity enhancing services and those that support privacy,” Nelson said at Consensus. “And we, of course, totally recognize that, in the context of public blockchains, which provides information about financial transactions, that there would be a desire to have a certain degree of privacy around those financial transactions.”



Nelson in February also said he believed claims that Hamas had <a href="https://blockworks.co/news/wsj-elliptic-crypto-fundraising">raised “millions” in crypto were vastly inflated</a>.&nbsp;



“We also assess that terrorists still prefer, frankly, to use traditional products and services, but this is something that we’re obviously monitoring very closely,” he said <a href="https://blockworks.co/news/fincen-hearing-crypto-illegal-financing">at a Congressional hearing</a>.&nbsp;&nbsp;



<h3 class="wp-block-heading">Brian Deese&nbsp;</h3>



Team Harris’s second Brian, according to <a href="https://www.cnbc.com/2024/08/12/harris-economic-policy-plan-trump-election.html">NBC</a>, is decidedly more skeptical about crypto. Deese, a former director of President Biden’s National Economic Council, penned the infamous (among crypto circles, at least) White House <a href="https://www.whitehouse.gov/nec/briefing-room/2023/01/27/the-administrations-roadmap-to-mitigate-cryptocurrencies-risks/">blog post</a> in January 2023 addressing the administration’s plans to “mitigate crypto risks.”&nbsp;



While the post acknowledged digital assets could “offer ways to make payments faster, cheaper and safer,” companies in the space tend to “ignore applicable financial regulations and basic risk controls.”&nbsp;



There is <a href="https://x.com/intangiblecoins/status/1823338614618550382">speculation</a> that Deese played a role in the so-called Operation Choke Point 2.0 effort to block crypto companies from the banking system. But it appears Deese has not made any statements about crypto banking directly.&nbsp;



Harris’s team says more policy updates are coming soon, so keep your eyes peeled.&nbsp;



— Casey Wagner



<h3 class="wp-block-heading">$61,550</h3>



The price level BTC <a href="https://www.tradingview.com/symbols/BTCUSD/?exchange=COINBASE">reached</a> Tuesday afternoon, just after 1:30 pm ET. This marked a roughly 3.7% jump from 24 hours prior.



Overall, the asset was up about 14% over the past seven days, as of that time. If you recall, BTC’s price dipped below $50,000 last week.&nbsp;



Predictions as to where we go from here vary (<a href="https://blockworks.co/news/on-the-margin-newsletter-price-predictions">as mentioned in yesterday’s newsletter</a>). Ultimately though, US monetary policy and the election are poised to be key medium-term price drivers.



<h2 class="wp-block-heading">Grayscale’s ETHE outflows halt…for now&nbsp;</h2>



Grayscale’s higher-priced ETH ETF saw a notable net flow figure on Monday: zero.&nbsp;



The crypto asset manager’s Grayscale Ethereum Trust (ETHE) had bled assets during its first 14 days on the market, according to Farside Investors <a href="https://farside.co.uk/ethereum-etf-flow-all-data/">data</a> — with net outflows over that span totaling nearly $2.3 billion.



The run of cash exiting the vehicle was expected given the much lower price points of competing offerings, including Grayscale’s <a href="https://blockworks.co/news/grayscale-changes-proposed-eth-etf-fee">own Ethereum Mini Trust spin-off</a>.



But zero ETHE outflows (even for just a day) are a bit of a surprise, as the Grayscale Bitcoin Trust (GBTC) had 78 straight trading days of <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">net outflows</a> after converting to an ETF.&nbsp;



About $900 million of investor capital has entered BlackRock’s spot ether ETF, while ETH products by Fidelity and Bitwise have each eclipsed the $300 million net inflow mark. Still, ETHE’s heavy outflows have kept the US spot ether ETF category net flow total in the red, at roughly $400 million.&nbsp;



Point being that ETHE outflows abating would change the segment’s collective net flow trajectory.



But Neena Mishra, director of ETF research at Zacks Investment Research, said she’s not reading too much into ETHE’s single day of zero flows.&nbsp; &nbsp;



“Last week was extraordinarily volatile for cryptocurrencies, with ether at one point experiencing its steepest plunge since 2021 before rebounding,” she told Blockworks. “It&#8217;s likely that some investors are simply waiting for more market stability before making their moves.”



So it’s quite possible these outflows will continue as they have, largely mirroring those of GBTC over the longer-term, Mishra explained.



That said, ETHE simply doesn’t have as much capital to bleed. While GBTC net outflows stand at nearly $19.5 billion to date, there’s only about $5 billion of investor capital left in Grayscale’s ether trust.



— Ben Strack&nbsp;



<h2 class="wp-block-heading">More money for the pro-crypto</h2>



There’s a lot of money in politics, we know. Less than three months ahead of the US presidential election, and a bunch keeps flowing toward candidates deemed to be pro-crypto.



Crypto-focused Super PAC Fairshake said Tuesday its affiliate political action committees — Defend American Jobs and Protect Progress — were securing TV airtime for three candidates.&nbsp;



The biggest beneficiary? Bernie Moreno, who in March won the Republican US Senate primary for Ohio. Defend American Jobs has reserved $12 million worth of spots for the Trump-backed candidate, who is set to face off against incumbent Sen. Sherrod Brown, a vocal crypto critic.&nbsp;



While 12 Democrats in May joined GOP members to <a href="https://blockworks.co/news/senate-passes-resolution-to-overturn-sab121">vote for Joint Resolution 109</a> — a bill to overturn the SEC’s SAB 121 — Brown was not one of them. Though the Senate passed the resolution, Biden <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2024/05/31/a-message-to-the-house-of-representatives-on-the-presidents-veto-of-h-j-res-109/">vetoed</a> it.



On the flip side, Moreno said in a July X <a href="https://x.com/berniemoreno/status/1807051099272007686">post</a> that he would “lead the fight to defend crypto in the US Senate.”



Others getting financial backing include Reps. Ruben Gallego, D-Ariz., and Elisa Slotkin, D-Mich. Protect Progress has secured $3 million of ad time for each of them.



The flow of cash toward these political hopefuls comes after Fairshake labeled nine Dems and nine Republicans it would support (also via TV ads) in their quest for seats in the House of Reps. That financial support collectively totaled $25 million.



Fairshake previously spent $2 million campaigning against Rep. Jamaal Bowman, D-N.Y., and another $10 million in opposition of California Democrat Katie Porter. Both lost their primaries.



While forces beyond crypto super PAC backing of course come into play in these races, the track record suggests this financial support is worth paying attention to.



— Ben Strack



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul>
<li>Coinbase’s services are now available to Hawaii residents, the crypto exchange <a href="https://www.coinbase.com/en-fr/blog/Aloha-Hawaii-Coinbase-is-here">said</a> Tuesday. This expansion comes after regulatory changes made by the Hawaii Department of Commerce and Consumer Affairs Division of Financial Institutions, the company added. COIN shares were up nearly 4% on the day, as of 2 pm ET. </li>



<li>While bitcoin’s price had risen from 24 hours ago (as of writing), ETH’s price declined slightly over that span — sitting at roughly $2,715 at 2 pm ET. </li>



<li>Today marks the 50th edition of the On the Margin newsletter. We look forward to bringing many more to you. Thanks for reading!  </li>
</ul>



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Team Harris members show mixed track record when it comes to crypto

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Casey Wagner and Felix Jauvin. Here’s what you’ll find in today’s edition:



<ul>
<li>Betting markets say the Fed is headed toward an emergency rate cut, we say otherwise.&nbsp;</li>



<li>Crypto stocks are back in the green. Here’s what’s fueling the rebound.&nbsp;</li>



<li>VP Harris has a VP pick. We break down his crypto track record.&nbsp;</li>
</ul>



We’re looking for feedback from our On the Margin listeners and readers. Share your thoughts <a href="https://on-the-margin.beehiiv.com/forms/5c7fc920-a57a-496b-9708-1d137bd3014b">here</a>.&nbsp;



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



<h2 class="wp-block-heading">Surprise! No surprise rate cut yet&nbsp;</h2>



This week, panic hit markets to such a degree we saw the third-highest print of the VIX index ever:<img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXduJv60olh8NtFGZXs1Ud0NxVX7uwzGK5cyLmHl3dcHllA37zxK9avSZBYd0RMMaempsej4TcnzOnldBi-6GZgUbiwBBhmliW_bJvPPG3f1kuOZzm7QVYztC5Ipze_Yake8mJPef9qvrgZBmTb3LuAQY3b5?key=5Mlh4p8skjLz8N16IC-p2A" width="624" height="365">



Though odds have waned, traders began to price in a 60% probability of an inter-meeting FOMC cut within the next week.&nbsp;



Much of the discourse has been sifting through whether this downturn in markets has been caused by market structure dynamics — such as position unwinds — or a fundamental shift of the macroeconomic landscape.&nbsp;



Discerning which dynamic is driving markets is key to understanding whether the Fed is concerned about this market unwind or not — it doesn’t care if your 401k is down 20%; it does care if funding markets seize up and credit spreads blow out. Here’s a few charts I like to look at for a better handle on the core components of the market the Fed actually cares about:



The chart below contrasts the VIX, a measure of volatility within equities, and MOVE, a measure of volatility in credit markets.&nbsp;



There was a huge move up in the VIX, but the MOVE index remained range-bound and unbothered. Part of this is due to the flight-to-safety bid to long-end Treasurys during market crashes. If Treasury markets were to seize up, we would still see outsized volatility in the MOVE figure.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXclEz5gjbBv9h5D66nzH5DD2HZnHKWE9Vp4EGfa0HkrKvJSyWNZq7dmY3PX7oAKf293ubdmId0ShnxQ8OPgCxsV-Nfd8LHbllRo79-H0kxCiWIYbi09DMtCvOSyJ10g_An0-8IbbP7K0nO0KHvAvx4KvQk?key=5Mlh4p8skjLz8N16IC-p2A" alt=""/></figure>



HYG is an ETF that tracks high-yield corporate bonds, whereas HYGH is a rate-hedged version that isolates credit stress specifically. As a quick reminder, bonds can lose value in two ways: an increase in interest rates, or an increase in the probability of default.&nbsp;



In the chart below, we see that the downturn was isolated to credit risk concerns as HYGH fell much lower than HYG. Although it’s bouncing today, this does signify that the equity unwind we’ve been seeing has started to percolate into credit markets.&nbsp;



Although still quite far from any meaningful level that would require Fed intervention, it is something to keep an eye on.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfXDFDn9oIRWSqz3pbCogCoUY7RLFJXnZEnLtPwNLCsaPxKbc7ynRj4XD0Ijh3DaUxSir5PC8KoE1qS0qzlt83ixyVge6Zjv-c5Q5Zv-ghoYrJOj7jHSZHscM9dN0FVx6hVxWVe63f-GtIhECWL5LCDv_IF?key=5Mlh4p8skjLz8N16IC-p2A" alt=""/></figure>



Let’s look at the spread between high-yield (HY) and investment grade (IG) debt. Typically, this spread widens when credit spreads increase due to increasing concerns of default. Since HY has a greater composition of credit spread to its yield compared to IG, it widens during recessions. As noted in the chart below, spreads did widen, but not to any substantially concerning level yet. We will need to keep an eye on this spread for any continuation.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcxOT8SQ7l9P4Oi0uIGUode0Ooly7iqbqqLiUWHyyCMX4d3K-WgMrfbbETKJ1Ip2z6Nuszg725WYM6Grs0lyKPYnuny-c5b5Wku9KRDE1dyLPt2WS2mdn65ovNtY2oVlYPn0S70WJrV86jmfyLuXmiL2RQ?key=5Mlh4p8skjLz8N16IC-p2A" alt=""/></figure>



Overall, there’s been a lot of turmoil in markets this week that has justifiably increased the odds of the Fed cutting over the next few meetings. However, when we look at the core markets that the Fed cares most about (such as credit), something such as an inter-meeting cut is getting a bit dramatic for my taste.



— Felix Jauvin



<h2 class="wp-block-heading">$49 million&nbsp;</h2>



The amount of new inflows that poured into US spot ether ETFs on Monday, even as ether itself lost as much as 20%.&nbsp;



The figure comes as spot bitcoin ETFs lost $168 million amid <a href="https://blockworks.co/news/crypto-stocks-btc-lower-economic-data">yesterday’s broader market turmoil</a>. Bitcoin and ether spot prices were both on the rebound Tuesday, up around 4% and 1%, respectively, over 24 hours as of 2 pm ET.&nbsp;



<h2 class="wp-block-heading">The stocks that cried wolf…&nbsp;</h2>



After just 21 stocks in the S&amp;P 500 closed higher yesterday, things are looking up.&nbsp;



The S&amp;P 500 was up 1.6% two hours into the trading session while the tech-heavy Nasdaq moved 1% higher.&nbsp;



Crypto-related equities were riding the recovery wave Tuesday, too. Coinbase, which lost as much as 20% Monday, was trading 3% higher at 2 pm ET today.&nbsp;



MicroStrategy, after sliding as much as 25% Monday, was also back in the green today, up 5% at 2 pm ET.&nbsp;



Core Scientific moved a whopping 16% higher Tuesday. While the general stock market rebound doesn’t hurt, this move was likely fueled by an <a href="https://www.businesswire.com/news/home/20240805137412/en/Core-Scientific-Announces-July-2024-Production-and-Operations-Updates">announcement</a> that the bitcoin miner would supply additional power to host CoreWeave’s NVIDIA GPUs.&nbsp;



The Japanese yen and VIX pulled back this morning, helping to ease recessionary concerns and calm markets after Monday’s global selloff.&nbsp;



As Felix mentioned above, the VIX spiked to 55 yesterday, the highest level since March 2020. The volatility index pulled back around 30% to 27 Tuesday morning, but is still up 66% over the past five trading days.&nbsp;



The yen eased against the US dollar for the first time since the start of August. The greenback has now fallen around 6% against the yen over the past five trading days.&nbsp;



Markets are still calling for a September rate cut though, although traders are less certain than they were yesterday. Fed fund futures <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">showed</a> a 67% chance of a 25 basis point cut next month Tuesday, down from 85% Monday but up from 11% a week ago.&nbsp;



The unfortunate news for most investors is that while they may think the sky is falling, the Fed does not. It’s going to take more than one <a href="https://blockworks.co/news/july-disappointing-jobs-report">lackluster jobs report</a> to convince them that a rate cut is necessary.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">VP gets a VP&nbsp;</h2>



Vice President and presumed Democratic nominee Kamala Harris has tapped Minnesota Governor Tim Walz as her running mate.&nbsp;



Walz’s crypto policy is…not well-documented. He has not made any public policy statements regarding the industry, but did recently sign a new <a href="https://legiscan.com/MN/text/HF4717/id/2953688">bill</a> into law that seeks to protect crypto ATM customers.&nbsp;



The legislation, signed in May, went into effect this month and requires crypto kiosk and ATM operators to display warnings to customers. New customers are also limited to transactions under $2,000 per day and have 14 days to file a report in the event of fraud, which can result in a refund of losses.&nbsp;



The Minnesota bill received serious backing from the <a href="https://www.aarp.org/politics-society/advocacy/info-2024/states-crack-down-crypto-atm.html">AARP</a>, which also advocated for similar legislation in Vermont and Rhode Island.&nbsp;



The effort is yet another example of states taking <a href="https://blockworks.co/news/states-crypto-regulation-2024">crypto regulation into their own hands</a> while federal legislators struggle to get on the same page.&nbsp;



I’ve heard the Harris camp is making the rounds to crypto lobbyists and advocacy groups. I’ve also heard her people weren’t too happy with Bitcoin Magazine CEO David Bailey after he <a href="https://x.com/DavidFBailey/status/1816114440569323713">claimed</a> Harris declined an invitation to <a href="https://blockworks.co/news/bitcoin-2024-nashville-recap">speak at Bitcoin 2024</a> after being “in talks” with event organizers.&nbsp;



(Blockworks reached out to the Harris team to confirm these claims and has not heard back.)&nbsp;



Still, I think we are a ways from a comprehensive crypto policy plan from Harris/Walz (remember, Trump also has yet to release a written platform), if we get one at all.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul>
<li>It looks like former Phoenix Vice Mayor Yassamin Ansari is slated to win the Democratic nomination in Arizona’s third Congressional district after a <a href="https://www.azcentral.com/story/news/politics/elections/2024/08/05/yassamin-ansari-leads-raquel-tern-by-42-votes-as-race-goes-to-recount/74638536007/">close race</a> triggered a recount Monday night. Ansari last month co-signed a letter to the DNC demanding more favorable crypto policies from the party.&nbsp;</li>



<li>CoinShares, listed on the Nasdaq Stockholm, announced Q2 earnings today. The company said it doubled its revenue year-over-year and sold its FTX claim for a recovery rate of 116%.&nbsp;</li>



<li>Household debt is on the rise, a new <a href="https://www.newyorkfed.org/microeconomics/hhdc">report</a> from the Federal Reserve Bank of New York shows. Total household debt rose by $109 billion during the second quarter, bringing the national total to $17.8 trillion. Mortgage balances were the biggest contributor, which rose $77 billion.&nbsp;</li>
</ul>



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Is the Fed concerned about this market unwind?

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<a href="https://blockworks.co/newsletter/onthemargin" target="_blank" rel="noreferrer noopener">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. Here’s what you’ll find in today’s edition:



<ul>
<li>We read between the lines of yesterday’s Fed meeting.&nbsp;&nbsp;&nbsp;</li>



<li>As crypto gets political, an industry CEO expects Democrats to soon appeal to the industry.&nbsp;</li>



<li>SEC Commissioner Mark Uyeda doubles down on his pro-crypto stance.&nbsp;</li>
</ul>



<h2 class="wp-block-heading">The biggest FOMC takeaways&nbsp;</h2>



What’s become a regular sequence occurred again yesterday during the FOMC meeting.&nbsp;



First we get the FOMC statement, which has very little new information. Some on-the-margin changes to the statement are below, but generally it was within expectations and offered no hint of forward guidance:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="877" height="767" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg" alt="" class="wp-image-89970" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg?w=877 877w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg?w=294 294w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg?w=298 298w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg?w=250 250w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image.jpeg?w=80 80w" sizes="(max-width: 877px) 100vw, 877px" /></figure>



Many were looking for some guidance from Powell on whether the market’s pricing of a cut at the September meeting was warranted or not. When asked about that, Powell leaned on prepared remarks that could be summarized like this: As long as nothing weird happens between now and September, we will most likely cut.



This is, of course, paraphrasing and removes all the esoteric open-ended Fed talk we’re accustomed to. But when you boil it down, that’s the core of the idea: September is on, barring anything crazy.&nbsp;



Aside from guiding a September cut, we received a few other interesting insights:



<ul>
<li>Powell compared today&#8217;s labor market to that of 2019. This is something I’ve been thinking about too as we approach what I’d call a “normalization cut” in September. This is similar to messaging Powell used in 2019 to cut around it being a “mid-cycle adjustment.”</li>



<li>The Fed chair characterized the economy as neither slowing, nor overheating. Rather, he viewed it as in a somewhat solid equilibrium state.&nbsp;</li>



<li>Powell made it clear the Fed board agrees we are confidently in restrictive territory and have been for a while. This is important in understanding what drives the Fed reaction function as many argue the neutral rate — a baseline for deriving restrictiveness — is secularly higher now.</li>



<li>Finally, there was a stern emphasis on the dual mandate of the Fed being in much more solid balance. Responding to a question from the WSJ’s Nick Timiraos, Powell admitted he would be willing to ease to ensure the labor market doesn’t further loosen — even if it meant sacrificing a few basis points of inflation.&nbsp;</li>
</ul>



Overall, this was a somewhat neutral FOMC statement and a dovish press conference. The fact that Powell had prepared remarks ready to go to guide the market towards a September rate cut really says it all.&nbsp;



— Felix Jauvin



<h2 class="wp-block-heading">$18 million</h2>



The net inflows for the Grayscale Bitcoin Mini Trust (BTC) during its first day of trading Wednesday.&nbsp;



The cheapest-in-category <a href="https://blockworks.co/news/grayscale-takes-page-from-blackrock-playbook">spin-off of GBTC</a> — with a 0.15% fee — launched yesterday with roughly $1.8 billion in assets.&nbsp;



Though a modest flow figure (considering $17.7 billion has entered US spot BTC funds since January), the Grayscale Bitcoin Mini Trust was one of just two such ETFs to notch inflows on the day. The other was BlackRock’s iShares Bitcoin Trust (IBIT), which reeled in $21 million.&nbsp;&nbsp;&nbsp;&nbsp;



Check out Blockworks’ <a href="https://blockworks.co/news/grayscales-spin-off-etf-launches-crypto-outlook">Q&amp;A with Grayscale managing director John Hoffman</a>.



<h2 class="wp-block-heading">Galaxy’s Novogratz ‘hopeful’ VP Harris will be pro-crypto</h2>



We know where Trump seems to stand on crypto. At least publicly, and for now.&nbsp;



Though Kamala Harris — set to be his challenger in the November election — has not explicitly shared a stance on the topic, Galaxy Digital CEO Mike Novogratz expects she will soon.



“I am fairly certain, and hopeful, that nominee Harris … is going to soon make comments that show she’s from San Francisco — the land of innovation — and that she wants to be a pro-innovation, pro-crypto president,” Novogratz said during his company’s Thursday earnings call.&nbsp;



Republican politicians have historically been more outspoken than Democrats in supporting the crypto industry, especially this election cycle. There has been some bipartisan progress, though, with a number of Dems joining colleagues across the aisle in voting to approve a resolution to <a href="https://blockworks.co/news/biden-backing-gary-gensler-resolution">invalidate the SEC’s Staff Accounting Bulletin 121</a>, as well as <a href="https://blockworks.co/news/house-passes-act-fit21-with-bipartisan-support">the FIT21 Act</a>.



“If we get the Democrats to go where I think they’re going … now we’ve got both sides, and we can be less worried about Washington and more worried about prosecuting our business,” Novogratz said.



Outside of politics, the macro backdrop appears set to help BTC and crypto more broadly, the executive argued.&nbsp;



The Federal Reserve opted to <a href="https://blockworks.co/news/fed-holds-interest-rates-crypto-green">hold interest rates steady</a> on Wednesday, though the overwhelming expectation is for it to cut rates in September. Lower interest rates have generally been good for “risk-on” assets like BTC.&nbsp;



There’s also the whole national debt situation. Despite it recently surpassing $35 trillion, Novogratz pointed out the lack of talk by Harris or Trump to reduce spending and cut the deficit.



“Until that paradigm shifts — and it’s hard to see it shifting — bitcoin as a store of value and bitcoin as digital gold is going to have an amazing appeal to investors around the world,” Novogratz said.



— Ben Strack



<h2 class="wp-block-heading">SEC’s Uyeda says US needs to step it up&nbsp;</h2>



SEC Commissioner Mark Uyeda doubled down on his crypto stance this week, telling the crowd at a Capitol Account event in DC: “We are far, far behind the curve on crypto.”&nbsp;



The current approach is too disjointed to allow for industry participants to succeed, Uyeda said. Even if token issuers were able to “come in and register” as securities, he added, they would face roadblocks. That’s because non-brokers, which most crypto exchanges are classified as today, cannot facilitate trading.&nbsp;



The comments shouldn’t come as a surprise, as Uyeda has consistently dissented from his colleagues and their approach to regulating the industry. Last month, he expressed frustration with President Joe Biden’s veto of Joint Resolution 109, which sought to <a href="https://blockworks.co/news/house-committee-resolution-against-sab121">overturn</a> the SEC’s SAB 121 guidance.&nbsp;



&#8220;Issuing SAB 121 by regulatory edict rather than rulemaking under the Administrative Procedure Act effectively avoids judicial review, which undercuts our system of checks and balances against an overreaching administrative state,” Uyeda said. “The veto of H.J. Res. 109 was unfortunate. SAB 121 ought to be withdrawn.”



Uyeda and fellow crypto-friendly Commissioner Hester Peirce find themselves in an interesting position ahead of the 2024 presidential election.&nbsp;



Former President Donald Trump has promised, if elected, to “fire” SEC Chair Gary Gensler “on day one.” That is a vow current laws would likely <a href="https://blockworks.co/news/trump-gary-gensler-sec-post-election-outlook">prohibit him from fulfilling</a>. What Trump could do, according to legal experts, is replace Gensler with a current commissioner — leaving him in the agency but stripping him of his leadership role.



But, knowing Trump, I wouldn’t be surprised if he tries to test the limits of his executive power should he win and fire Gensler outright. Of course, this is all hypothetical for now.



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">Bulletin Board</h2>



<ul>
<li>After managing to stay in the green for a few hours after yesterday’s <a href="https://blockworks.co/news/fed-holds-interest-rates-crypto-green">FOMC meeting</a>, bitcoin dipped overnight to below $65,000. The crypto asset was trading at roughly $62,275 at 2 pm ET — down close to 5% from 24 hours prior.</li>



<li>Prediction markets are all the rage, according to Binance’s new H1 <a href="https://www.binance.com/en/research/analysis/top-h1-charts">report</a>. Total value locked on prediction market platforms is up more than 200% year to date, the research shows.</li>



<li>The On the Margin team sends our well wishes to WSJ reporter Evan Gershkovich and his family. Evan, who has been imprisoned in Russia for over a year, was <a href="https://www.wsj.com/livecoverage/evan-gershkovich-free-russia-hostage-exchange">freed</a> Thursday as part of an elaborate East-West prisoner swap. Welcome home, Evan!</li>
</ul>



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What to make of the latest FOMC statement

While Donald Trump has already declared support for the crypto industry, Galaxy CEO Mike Novogratz said the former president’s opponent could soon do the same.



Vice President Kamala Harris — set to be the Democratic nominee to challenge Trump in the November election — has not talked much about crypto to date.



Harris’ campaign has not returned a number of Blockworks’ requests for comment about her stance on the issue.&nbsp;



Trump, meanwhile, perhaps most notably <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-crypto-promises">spoke at Bitcoin 2024</a> last week. He stated he would, if elected, fire SEC Chair Gary Gensler and promised to “keep 100% of all bitcoin the US government currently holds or acquires.”



His running mate, JD Vance, is also largely <a href="https://blockworks.co/news/donald-trump-selects-vp-2024-election">viewed as crypto-friendly</a>.



But Novogratz noted during his company’s Thursday earnings call that two-party support for crypto as a technology will be critical for the industry, and is something he is banking on.&nbsp;



With Trump’s recent crypto-related declarations, it’s Harris’ move.



“I am fairly certain, and hopeful, that nominee Harris … is going to soon make comments that show that she’s from San Francisco — the land of innovation — and that she wants to be a pro-innovation, pro-crypto president.”&nbsp;



Read more: <a href="https://blockworks.co/news/kamala-harris-vp-short-list-crypto-issues">Harris VP short list shows mixed support for crypto issues</a>&nbsp;



Republican politicians have historically been more outspoken than Democrats in supporting the crypto industry. Still, there has been progress, with a number of Democrats joining colleagues across the aisle in voting to approve a resolution to <a href="https://blockworks.co/news/biden-backing-gary-gensler-resolution">invalidate the SEC’s Staff Accounting Bulletin 121</a>, as well as <a href="https://blockworks.co/news/house-passes-act-fit21-with-bipartisan-support">the FIT21 Act</a>.



“I am working really hard on the Democratic side now mostly because we don’t want to be a one-party industry; we’re a technology and a movement and it should be bipartisan,” Novogratz said.&nbsp;



He added: “If we get the Democrats to go where I think they’re going … now we’ve got both sides, and we can be less worried about Washington and more worried about prosecuting our business.”&nbsp;



Outside of politics, the macro backdrop appears set to help BTC and crypto more broadly, Novogratz argued.&nbsp;



The Federal Reserve opted to <a href="https://blockworks.co/news/fed-holds-interest-rates-crypto-green">hold interest rates steady</a> on Wednesday, though the overwhelming expectation is for it to cut rates in September. Lowering rates “adds to the narrative of crypto,” Novogratz said.&nbsp;



He added that neither Harris nor Trump have talked much about cutting the deficit by reducing spending — despite the national debt recently surpassing $35 trillion.&nbsp;&nbsp;



“Until that paradigm shifts — and it’s hard to see it shifting — bitcoin as a store of value and bitcoin as digital gold is going to have an amazing appeal to investors around the world,” Novogratz said.



Read more: <a href="https://blockworks.co/news/mike-novogratz-crypto-us-election">Bitcoin may stay in a ‘consolidation phase’ until US election: Novogratz</a>



Bitcoin’s price was roughly $63,780 at 11 am ET on Thursday — down about 2.5% from a week ago, but slightly up 1.5% over the past month.



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Galaxy’s Novogratz ‘hopeful’ VP Harris will be pro-crypto

David Canellis

Crypto isn’t just macro now. It’s political.



If you need any proof, look to the memecoin market. An unofficial Kamala Harris parody memecoin on Solana (KAMA) has exploded by 10,000% over the past three months.



That’s $0.0003216 to $0.0319. And okay — it’s easy for micro-cap memecoins to go ballistic. KAMA’s market cap was under $100,000 in its earliest days of trading in late March. Any relatively small amount of buying pressure was destined to drive its prices upward.



But KAMA has done so well that it’s only another 15% away from flipping doland tremp, another Solana parody coin launched one month earlier.&nbsp;



Read more: <a href="https://blockworks.co/news/politifi-memecoins-us-election">PolitiFi parodies are half-way to the US election — but it’s uphill from here</a>



TREMP was worth as much as $150 million in the first week of June — now it’s $43 million to KAMA’s $38 million, at time of writing. Boden has meanwhile crashed from an April high of over $650 million to $11.1 million right now — a 98% collapse.



<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/18847853/embed#?secret=sRCzMo7e22" data-secret="sRCzMo7e22" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Tap the “log&#8221; view to better compare performance</figcaption></figure>



It’s not exactly that crypto really loves <a href="https://blockworks.co/tag/kamala-harris">Kamala Harris</a>, which would lead traders to buy a silly <a href="https://blockworks.co/tag/meme-coins">memecoin</a> in a show of solidarity of some sort.&nbsp;



It’s more likely that Kamala Harris running against <a href="https://blockworks.co/tag/donald-trump">Donald Trump</a> made for one of the more attractive bets on the US election season so far.&nbsp;



That KAMA has rallied even harder in the few days since her presidential campaign started shows that certainty begets the pump.&nbsp;



The “brat energy” narrative pushed by parts of the <a href="https://usatoday.com/story/opinion/columnist/2024/07/24/kamala-harris-brat-summer-charli-xcx-gen-z-voters/74515681007/">media</a> wouldn’t be hurting, either.



<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/18847306/embed#?secret=1hyD0Fz9GU" data-secret="1hyD0Fz9GU" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">KAMA is in orange, in the bottom right</figcaption></figure>



In any case, KAMA is still far below the $300 million market cap of MAGA, the <a href="https://blockworks.co/news/donald-trump-crypto-influencer-effect-on-maga">Trump-themed token launched on Ethereum</a> last year. KAMA would have to rally another 70% to match that, if MAGA were to trade sideways here on out.&nbsp;



Memecoins aside, Polygon-powered betting venue <a href="https://blockworks.co/tag/polymarket">Polymarket</a> has turned out to be incredibly useful in gauging political sentiment — leading to <a href="https://blockworks.co/news/polymarket-july-all-time-high-trading-volumes">all-time high volumes</a>.



Polymarket betters, now with $370 million on the line, say Trump has 62% odds of winning in November to Harris’ 28.9%, with the latter trending upwards.



Before he dropped out, Biden was at 18% to Trump’s 70%, which may indicate that Harris has a much better shot than Biden, but not yet enough to take the cake.



Updated Jul. 26, 2024 at 5:25 am ET: Corrected Polymarket&#8217;s native blockchain.



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Brat energy: Kamala Harris memecoin goes 100x in 3 months as pump intensifies

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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



Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Felix Jauvin and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul>
<li>A pulse check on short-term interest rates and where we stand now.&nbsp;</li>



<li>Ether ETFs hit the market today. Find out what we’re watching for.</li>



<li>Kamala Harris is close to securing the official Democratic nomination. Where do her top VP picks stand on crypto?&nbsp;</li>
</ul>



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



<h2 class="wp-block-heading">Monetary plumbing deep dive</h2>



The monetary plumbing network, often referred to as short-term interest rates (STIR), is the esoteric world governed most directly by the Fed. For the most part, daily transactions in this part of the markets go unnoticed by the news media — that is, until something breaks.&nbsp;



The last time this happened was in September 2019, when the overnight repo market broke and repo rates skyrocketed, as shown below in the spread between Fed funds rate and interest on reserve balances:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXdWKmMo0ZaahsIi0OzkWSFm5U5ZpkE3-maKyIuBbKXGFWgsYwZvZ2XegGtRiv31diKaR08hncB1V4WQOTrox8UYUUlrOQTZVxNhTX-8uqR4ZJTfXIoIEk-VeEDKObKQ2zdj8QlEsyBLyWpywlap4EQhwoM?key=1bUJGWhhHIZMw2v4Kgob_g" alt=""/></figure>



The reasons this occurred are exotic and complex, but here’s a simple distillation: Because of ongoing quantitative tightening from the Fed, the amount of available collateral (Treasurys) got low enough so that there was too much cash in repo market chasing too few collateral, leading to a major demand spike that only the Fed could alleviate.



Quickly, the Fed opened up its standing repo facility to allow repo dealers to exchange their cash for collateral (Treasurys) in unlimited amounts. This was also the signal for the Fed to end its QT campaign and also marked the shift toward the eventual rate-cutting cycle.



This vignette shows just how important it is to pay attention to this part of the market, especially if you want to understand when the Fed’s monetary operations may inflect. With that in mind, let’s take a look at where we stand today.&nbsp;



Note: All charts are pulled from <a href="https://www.macrodispatch.com/stir/">this</a> excellent free dashboard so you can keep tracking it yourself!&nbsp;&nbsp;



Compared to September 2019, the current FFR-IORB spread is completely benign with no signs of collateral stress whatsoever. Essentially, we are very far away from anything breaking:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXcg_5DOYYBXIBNVBAzX7D4EvMtdUqct_btC7W2GU-rN7KOsV0yqpBNhdKSARxgBwc8i9xo19hJnkhRh4G5IUXEiZdyNhJ795SlEmi7Scn0Sb-M9YEabTS7OlfOV1xbY1XG_nMBiCT1t1HvCbAns42q5KIE?key=1bUJGWhhHIZMw2v4Kgob_g" alt=""/></figure>



One of the key drivers of monetary stress is bank reserve levels. One of the most steady removers of bank reserves from the system has been QT that has led to an unwind of the Fed’s balance sheet:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXeRh7OPfhGWkMzJEhoJcuu8vM5UJ5JyJV1f0ECdRxRl8Ey1rAhws4oEiR9d9t5LvAn4B_Zh_jPfM-3W59_kCsyFq2YQqTywYUvmfb2xZanHs3zKOIoX2fdT8Zhkd0o-Yb2OWCTEfrORhN9NTAAYOSLTtwLz?key=1bUJGWhhHIZMw2v4Kgob_g" alt=""/></figure>



However, as seen in the chart below, the vast majority of this unwind has been offset by money flowing out of the RRP and into the system, which has led to a muted decrease in reserve levels:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXcHpyRR8DxOlc9uFyG2bR_OWMv0GwIU2tEf1sHkK21YLiTpCCOXHuph3R3ChoIh3iJ-Y8JY5qtD8K4KhcdoerOA31d0fp3Gzbtt0laq7X3brI6AUTAL6N3SR7HUMxi0tE7tt4gmBKWfCsEMCZ-spm_egqma?key=1bUJGWhhHIZMw2v4Kgob_g" alt=""/></figure>



Here’s the TL;DR from the surface-level look at the STIR market:&nbsp;



<ol>
<li>Despite quantitative tightening happening for nearly two years now, there is no evidence of a shortage of bank reserves in the system.</li>



<li>Reserves have yet to reach the “ample reserves” threshold the Fed is targeting as a signal to end QT.</li>



<li>Due to the Fed’s heavy-handed approach to the STIR market and its whack-a-mole approach to patching up any sort of funding market issues, there is much less volatility and fragility in the system than the previous QT cycle in 2018-19.</li>
</ol>



— Felix Jauvin



<h2 class="wp-block-heading">$345&nbsp;</h2>



This is Citibank’s new price target for Coinbase stock. The updated figure is 33% higher than the institution’s previous figure.&nbsp;



&#8220;Shifts in the US election landscape and the Supreme Court’s overturning of the <a href="https://blockworks.co/news/on-the-margin-newsletter-crypto-etf-filing-frenzy">long-standing Chevron precedent</a> has changed our view on Coinbase’s regulatory risks,” Citi research analysts wrote in a Monday note.&nbsp;



<h2 class="wp-block-heading">ETH ETF volumes (unsurprisingly) lag BTC debut</h2>



Nine spot ether ETFs are <a href="https://blockworks.co/news/nine-us-spot-eth-etfs-live-post-approval">now trading on US exchanges</a>. The milestone launches come half a year after the debut of US spot BTC funds.&nbsp;



The ETH products’ trading volumes are not at the level of the bitcoin ETFs’. But to be clear, nobody we spoke to thought they (<a href="https://blockworks.co/news/sizing-up-demand-for-us-eth-etfs">or the funds’ inflows</a>) would be.&nbsp;&nbsp;&nbsp;



The US bitcoin products saw roughly $4.5 billion of <a href="https://blockworks.co/news/day-1-bitcoin-etf-trading-volume">trading volumes on their first day</a> (Jan. 11). The ether ETFs were trailing that pace considerably as of 1 pm ET, combining for nearly $600 million.



Bloomberg Intelligence analyst Eric Balchunas pointed to the data in an X post. If the pace keeps up, the $1 billion-plus in ETH ETF trading volumes would represent between 20% and 25% of those of the BTC funds launched in January.&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">HALFTIME: Nearly $600m so far, putting them on pace to hit $1b and change by EOD which would be about exactly 20% of the $4.6b that bitcoin ETFs did on Day One, which would nail our prediction. Re flows: that data comes tonight and tmrw night, but if we assume <a href="https://twitter.com/search?q=%24ETHE&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETHE</a> volume is… <a href="https://t.co/6DhQ1ylDhl">pic.twitter.com/6DhQ1ylDhl</a>&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1815794272496672990?ref_src=twsrc%5Etfw">July 23, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Grayscale’s more expensive Ethereum Trust ETF (ETHE) — carrying a 2.5% fee — was seeing the highest volumes, with about $250 million. The crypto asset manager also has a “Mini” version of the trust priced at 0.15%, which is the <a href="https://blockworks.co/news/grayscale-changes-proposed-eth-etf-fee">cheapest of its kind</a>.



BlackRock’s iShares Ethereum Trust (ETHA) had notched $127 million in volumes by 1 pm ET, second only to ETHE. For comparison, the asset management giant’s bitcoin fund saw about $1 billion in trading volumes on its first day.&nbsp;&nbsp;



While volumes indicate the buying and selling of ETF shares, they do not yet give us a sense of net flows for these funds.



Grayscale research head Zach Pandl described the launch of ETH spot products as “low key” compared to the “splashy” debut of their BTC counterparts. While investors may be “under-appreciating” the importance of such products, Pandl added he expects “significant” net inflows into the ETFs in the coming months.&nbsp;&nbsp;



“These spot Ethereum ETPs are coming to the US market in tandem with a shift in US politics around crypto and as major financial institutions embrace tokenization,” the executive noted.



Analysts and executives have indicated the initial volumes and flows won’t tell the whole story about investor reception of these ETH funds.&nbsp;



But they tell the beginning of the story, and so we watch as history unfolds.



— Ben Strack



<h2 class="wp-block-heading">Harris’ VP short list&nbsp;</h2>



After her first full day on the campaign trail, Vice President Kamala Harris has apparently secured enough delegates to become the Democratic nominee, according to a survey from the Associated Press.&nbsp;



While Harris has kept her crypto opinions fairly under wraps, several of her potential picks for vice president have taken more direct stances:



Roy Cooper&nbsp;



Cooper, who is finishing up his second term as governor, in July vetoed a bill that sought to <a href="https://blockworks.co/news/north-carolina-cbdc-bill">ban CBDCs in North Carolina</a>. The state general assembly had passed the measure with broad bipartisan support. The vote came out to a 109-4 majority in the House and a 39-5 majority in the Senate.&nbsp;



Josh Shapiro&nbsp;



Earlier this year, grassroots environmental organization Save Carbon County sued Shapiro and <a href="https://blockworks.co/news/stronghold-digital-mining-raises-74m-plans-to-buy-second-power-plant">Stronghold Digital Mining</a> for alleged pollution and tax credit abuse. The environmentalists claim that under Shapiro, Stronghold and their subsidiary, Panther Creek Electric Generating Facility, received more than $20 million in renewable energy tax credits from Pennsylvania.&nbsp;&nbsp;



Mark Kelly&nbsp;



Kelly was one of the 12 Democratic Senators to vote <a href="https://blockworks.co/news/senate-passes-resolution-to-overturn-sab121">in favor of Joint Resolution 109</a>, the legislation that sought to overturn the SEC’s <a href="https://blockworks.co/news/sec-staff-call-for-crypto-entities-to-show-liability-on-balance-sheet">staff accounting bill 212</a>. President Biden later vetoed the bill and the House earlier this month <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">opted to uphold the decision</a>.&nbsp;



Andy Beshear&nbsp;



In 2021, Beshear approved two Kentucky laws that provided tax incentives to cryptocurrency miners. The legislative effort sought to bring more mining operations to the state. It has been successful, though not without <a href="https://www.lex18.com/news/lex-18-investigates/theyre-taking-advantage-crypto-mines-not-only-causing-concerns-in-kentucky">controversy</a>.&nbsp;



Pete Buttigieg&nbsp;



Buttigieg, who made a run for the White House himself in 2020, said years ago that bitcoin should be “treated as a commodity.” The opinion at the time may have been revolutionary, but today even SEC Chair Gary Gensler has taken the <a href="https://blockworks.co/news/jay-clayton-ether-sec-security">same view on bitcoin</a>.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul>
<li>Decentralized exchange dYdX is in talks to sell its derivatives platform, according to a <a href="https://www.bloomberg.com/news/articles/2024-07-23/defi-exchange-dydx-said-to-be-in-talks-to-sell-derivatives-trading-platform">report</a> from Bloomberg.&nbsp;</li>



<li><a href="https://blockworks.co/news/vanguard-opposes-platforming-eth-etfs">As expected</a>, Vanguard does not allow customers to purchase the <a href="https://blockworks.co/news/ether-etfs-approved-for-us-exchange-july-23">newly-launched ether ETFs</a> on its platform. The announcement comes after the company said in January that it would <a href="https://blockworks.co/news/vanguard-disallows-bitcoin-etf-trading">not offer bitcoin ETFs either</a>, citing volatility concerns.&nbsp;</li>



<li>Coinbase CEO Brian Armstrong is no longer listed on the Giving Pledge, a global group founded by Bill Gates, Melinda Gates and Warren Buffet with a commitment to giving away their wealth. Armstrong originally joined the pledge in 2018.</li>
</ul>



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Pulse check on the STIR market

After her first full day on the campaign trail, Vice President Kamala Harris has apparently secured enough delegates to become the Democratic nominee, according to a survey from the Associated Press.&nbsp;



While the pledged support is not official until delegates cast their votes next month, Harris said in a statement that she “look[s] forward to formally accepting the nomination soon.”&nbsp;



The focus is now on who Harris will select as a running mate. The short list is <a href="https://www.cnn.com/2024/07/22/politics/vp-shortlist-kamala-harris/index.html">reportedly</a> made up of North Carolina Gov. Roy Cooper, Pennsylvania Gov. Josh Shapiro, Kentucky Gov. Andy Beshear and Arizona Sen. Mark Kelly. Transportation Secretary Pete Buttigieg and retired Navy Admiral William McRaven are also being vetted, according to a <a href="https://www.nbcnews.com/politics/2024-election/kamala-harris-running-mates-democratic-presidential-ticket-rcna162848">report</a> from NBC.&nbsp;



While Harris has kept her crypto opinions fairly under wraps, several of her potential vice presidents have taken more direct stances.&nbsp;



<h2 class="wp-block-heading">Roy Cooper&nbsp;</h2>



Cooper, who is finishing up his second term as governor, in July vetoed a bill that sought to <a href="https://blockworks.co/news/north-carolina-cbdc-bill">ban CBDCs in North Carolina</a>. The state general assembly had passed the measure with broad bipartisan support. The vote came out to a 109-4 majority in the House and a 39-5 majority in the Senate.&nbsp;



“This legislation is premature, vague and reactionary, and proposes an end result on important monetary decisions that haven’t even been made yet,” Cooper said in a statement following his veto.



The bill is similar to the Republican-driven effort in the House with the CBDC Anti-Surveillance State Act, which <a href="https://blockworks.co/news/house-passes-cbdc-anti-surveillance-act">passed the House in May</a> in a 216-192 vote.&nbsp;



<h2 class="wp-block-heading">Josh Shapiro&nbsp;</h2>



Under Shapiro’s leadership, the Pennsylvania Department of Banking Securities quietly reversed guidance issued in 2019. The regulator now interprets the term “money” to include virtual currencies, meaning crypto exchanges and other related businesses must become licensed as money transmitters effective this fall.&nbsp;



Also earlier this year, grassroots environmental organization Save Carbon County sued Shapiro and <a href="https://blockworks.co/news/stronghold-digital-mining-raises-74m-plans-to-buy-second-power-plant">Stronghold Digital Mining</a> for alleged pollution and tax credit abuse. The environmentalists claim that under Shapiro, Stronghold and their subsidiary, Panther Creek Electric Generating Facility, received more than $20 million in renewable energy tax credits from Pennsylvania.&nbsp;&nbsp;



<h2 class="wp-block-heading">Mark Kelly&nbsp;</h2>



Kelly was one of the 12 Democratic Senators to vote <a href="https://blockworks.co/news/senate-passes-resolution-to-overturn-sab121">in favor of Joint Resolution 109</a>, the legislation that sought to overturn the Securities and Exchange Commission’s staff accounting&nbsp; bill 121. President Biden later vetoed the bill and the House earlier this month <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">opted to uphold the decision</a>.&nbsp;



<h2 class="wp-block-heading">Andy Beshear&nbsp;</h2>



Beshear in 2021 greenlit a pair of Kentucky laws that offered tax breaks to cryptocurrency miners. The legislation duo was an effort to bring more <a href="https://blockworks.co/tag/mining">mining</a> operations to the state, which has succeeded with some controversy.&nbsp;



Residents have complained about <a href="https://www.lex18.com/news/lex-18-investigates/theyre-taking-advantage-crypto-mines-not-only-causing-concerns-in-kentucky">noisy</a> facilities, increased <a href="https://earthjustice.org/feature/cryptocurrency-mining-kentucky">pollution</a> and higher energy prices. Utility regulators in 2023 rejected a proposal from Kentucky Power that sought to extend miners’ benefits, including <a href="https://psc.ky.gov/pscscf/2022%20Cases/2022-00387/20230828_PSC_ORDER.pdf">discounted</a> power prices.&nbsp;



<h2 class="wp-block-heading">Pete Buttigieg&nbsp;</h2>



Buttigieg, who made a run for the White House himself in 2020, said years ago that bitcoin should be “treated as a commodity.” The opinion at the time may have been revolutionary, but today even SEC Chair Gary Gensler has <a href="https://blockworks.co/news/jay-clayton-ether-sec-security">taken the same view on bitcoin</a>.&nbsp;



Buttigieg did take a more centrist view on tech policy in 2020, opting to avoid the radical statements his former competitors made, like Sens. Elizabeth Warren and Bernie Sanders who said they would “break up Facebook” should they make it to the Oval Office. (It’s worth noting that Buttigieg and Facebook founder Mark Zuckerberg are old Harvard pals.)



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