We begin our latest crypto wrap with a giant step. That’s how CK Zheng, co-founder of digital hedge fund ZX Squared, described the decision by traditional wall Street giant Morgan Stanley to start offering wealthy clients advice on bitcoin ETFs this week.
As of Wednesday, Morgan Stanley clients with net wealth in excess of $1.5 million were offered the IBIT and the Fidelity Wise Origin Bitcoin Fund. Apparently there has been strong demand from clients.
Chang said the involvement of a traditional name was a pivotal moment, telling Blockworks the move would be “extremely impactful to truly make the digital asset class a part of a long-term investment portfolio instead of a short-term trading or speculation. This is the only way to systemically make bitcoin as a part of a well-diversified portfolio possible.”
Market volatility
The development came in a week that saw major inflows and outflows in crypto ETFs against a backdrop of global volatility on stock markets. Spot bitcoin ETFs in the US saw $148.5m flow out, while spot Ethereum ETFs reported $98.3m in total daily inflows.
It was Fidelity’s FBTC that reported the largest outflow, $64.48m, while Blackrock’s ETHA logged $109.89m.
That came as the Dow plunged 2.6%, the S&P 500 by 3% and the Nasdaq Composite by 3.43 – the worst figures in almost two years. Pav Hundal, lead market analyst at crypto exchange Swyftx, told Decrypt: “The market had an epic temper tantrum yesterday and we saw pockets of indiscriminate selling that resulted in huge liquidation events. Meanwhile, you have ETF investors with long-term strategies calmly buying ethereum.”
And, just to emphasise crypto’s march into the mainstream, The Nasdaq International Securities Exchange has filed with the SEC to list and trade options on a trust managed by BlackRock – iShares Ethereum Trust. The Trust will be made up of Ethereum, held by Coinbase, and cash, held by The Bank of New York Mellon.
Laying down the law
Meanwhile, the legal wrangling between the SEC and Coinbase continued, with the regulator asking a New York court to resist what it called Coinbase’s “breathtakingly broad” subpoena requests to access Gary Gensler’s emails.
In papers filed this week, the SEC also labelled the request for all Gensler’s personal communications for his entire term of office, plus four years before he was appointed, as a “blatant impropriety”.
Coinbase’s move is part of its efforts to defend itself against civil charges filed by the SEC that accuse it of acting as an unregistered securities exchange, broker and clearing agency.
In other legal moves, Ripple was ordered by a Manhattan court to pay the SEC $125m in penalties over charges relating to the improper selling of cryptocurrency XRP. The SEC, however, was seeking fines and penalties totalling $2 billion.
And FTX and trading firm Alameda Research – remember them? – were ordered to pay $12.7 billion to creditors by a New York judge. That figure does not include civil penalties, but does ban the firms from trading digital assets and acting as intermediaries.
The rest is politics
Finally, Democrat presidential hopeful Kamala Harris has made two appointments to her campaign team that may be an attempt to build bridges with a crypto community that seemed to be leaning heavily towards Republican Donald Trump.
David Plouffe, a former member of the Binance Global advisory Board, has been appointed senior advisor for strategy – although it’s his previous role as President Barack Obama’s communications director that is likely to have been a greater consideration. Joining him on the team is Brian Nelson, a former undersecretary for terrorism and financial intelligence at the U.S. Treasury Department.
Nelson was involved in Treasury actions against Binance for money-laundering, but nonetheless is seen as having a open mind on innovation while taking a hard line on illicit activity.