The Crypto Roundup: 10 June 2024

Latest price and news from the crypto space

Latest price from our hand picked list of digital assets

The estate of bankrupt cryptocurrency exchange FTX has offloaded the bulk of its holdings in the Grayscale Bitcoin Trust (GBTC) exchange-traded fund. Within just three days of trading Marex Capital Markets, acting on behalf of FTX, sold over two-thirds of FTX's 22.28 million GBTC shares.

Since the launch of spot Bitcoin exchange-traded funds in the United States, leading Bitcoin futures-based fund ProShares Bitcoin Strategy ETF (BITO) has experienced a significant slowdown in activity.

Leading cryptocurrency exchange Binance has faced the U.S. Securities and Exchange Commission (SEC) in court, seeking dismissal of a lawsuit filed by the regulator. The key issue debated was whether certain cryptocurrencies, including BNB and BUSD, traded on Binance are securities under SEC regulations.

Top stories in the Crypto Roundup today:

FTX’s Estate Sells $600 Million Worth of GBTC Shares
Futures-Based Bitcoin ETF Struggles After Launch of Spot ETFs
Binance Fights SEC Lawsuit Over Crypto Securities in Court
PayPal's PYUSD Climbs to Top 10 Stablecoins by Market Cap

FTX’s Estate Sells $600 Million Worth of GBTC Shares

With GBTC shares averaging around $38.19 since its debut as an ETF, the sale likely exceeded $600 million. GBTC has seen over $2.9 billion in outflows since it transitioned from a trust to an ETF, and it currently remains the largest crypto investment vehicle with around $23.5 billion in assets.

FTX, which declared bankruptcy in November 2022, held stakes in five Grayscale trusts and a statutory trust managed by Bitwise Investment Advisors. These were housed in brokerage accounts with ED&F Man Capital Markets (recently acquired by Marex) and in an account Deltec Bank and Trust Limited.

The sale of FTX's holdings is part of the effort to repay its creditors after the cryptocurrency exchange collapsed.

Futures-Based Bitcoin ETF Struggles After Launch of Spot ETFs

BITO’s trading volumes last Thursday, January 18, were just over $500 million, a sharp 75% decrease from the $2 billion record seen back on January 11, with the fund also seeing net outflows of more than $270 million over the same period.

In stark contrast, the 11 spot Bitcoin ETFs approved by the SEC have seen a cumulative trading volume of $14 billion in their first week, surpassing all other 2023 ETF launches.

Despite these challenges, some experts believe futures-based ETFs will remain relevant. This belief stems from the two main methods of ETF creation and redemption: in-kind and cash creation. In the in-kind process, authorized participants (APs) acquire the underlying assets to create new ETF shares.

Conversely, in cash creation, APs provide cash, and the issuer then buys the asset. The cash creation method exposes APs to Bitcoin price fluctuations between receiving buy orders and the issuer’s asset purchase.

To mitigate this risk, APs may turn to regulated products like BITO and CME futures for hedging, which could ensure the continued relevance of futures-based ETFs.

Binance Fights SEC Lawsuit Over Crypto Securities in Court

Leading cryptocurrency exchange Binance has faced the SEC in court, seeking dismissal of a lawsuit filed by the regulator. The key issue debated was whether certain cryptocurrencies, including BNB and BUSD, traded on Binance are securities under SEC regulations.

U.S. District Court Judge Amy Berman Jackson questioned both parties regarding the application of the Howey test, a criterion used to determine if an asset qualifies as a security.

The SEC's lawsuit, filed in June, accuses Binance Holdings and its former CEO Changpeng Zhao of various violations, including misleading customers, allowing U.S. investors to use Binance.com, misusing capital, and operating as an unregistered exchange. It identifies 12 tokens as securities, including BNB and BUSD.

A central debate in the hearing was whether token sales in secondary markets should be treated the same as primary sales. Binance argued that secondary market sales on its platform don't meet the Howey test's criteria, particularly regarding the pooling of funds in a common enterprise.

The SEC, however, contended that tokens retain their security characteristics in all sales and that creating a secondary market can drive their value. The regulator also argued Binance’s BUSD should be considered a security, citing its bundled sale with yield-earning services.

Binance invoked the major questions doctrine, arguing for clearer congressional authorization in defining the SEC's regulatory scope. However, Judge Jackson expressed skepticism about applying this doctrine to the cryptocurrency industry, given its narrowly defined criteria.

PayPal's PYUSD Climbs to Top 10 Stablecoins by Market Cap

In January, PayPalUSD (PYUSD) achieved a record market capitalization of $264 million, marking a 12.9% increase and momentarily surpassing TerraUSD as the tenth-largest stablecoin by market cap.

PYUSD's trading volume saw a significant rise, with December figures jumping 175% from November to reach $190 million. The stablecoin's trading activity in January has already exceeded its previous peak, hitting $230 million by January 15th.

This surge in trading volume was largely driven by Bullish, which contributed to nearly 75% of the volume following the introduction of BTC-PYUSD and PYUSD-USDC trading pairs in November.

Dig deeper into the stablecoin sector through CCData’s latest Stablecoins & CBDCs report.

State of the Crypto by Top Tier Exchange Volume

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