Following a tough week in which Grayscale’s GBTC saw an outflow of $643m, bitcoin ETFs have picked up, registering a $418m inflow on Tuesday. Fidelity’s FBTC alone saw inflows of $279m, according to Cointelegraph.

The reversal coincided with a renewed price increase in bitcoin, as speculators eagerly anticipate the halving on April 19.

The outflow from GBTC was reportedly due to Grayscale’s higher fees, which sit around 1.5% compared with an average of 0.3% offered by competitors.

Fund fees are expected to reduce over time. But research released by the Financial Times says reducing fees does not necessarily increase the chances of attracting investors. The research says only half of funds that reduce fees see increased inflow.

CFTC files against KuCoin

Crypto exchange KuCoin reportedly offered and executed leveraged, margined, or financed commodity transactions to US customers between July 2019 and June 2023, without implementing proper KYC procedures.

The CFTC has filed a civil enforcement action again KuCoin, claiming it:

• dealt in off-exchange commodity futures transactions and leveraged, margined, or financed retail commodity transactions;
• solicited and accepted orders for commodity futures, swaps, and leveraged, margined, or financed retail commodity transactions without registering with the CFTC as a futures commission merchant (FCM);
• failed to diligently supervise its FCM activities;
• operated a facility for the trading or processing of swaps without registering with the CFTC as a swap execution facility (SEF) or designated contract market (DCM);
• and failed to implement an effective customer identification program (CIP). 

“For too long, some offshore crypto exchanges have followed a now-familiar playbook by offering derivative products and falsely claiming people in the United States cannot use their platforms, when in reality, anyone in the US with commonly used technology can trade without providing basic customer identifying information”, said Ian McGinley, the CFTC’s Director of Enforcement.

“As made clear by the CFTC’s action today and its previous enforcement actions, the CFTC’s playbook should also now be familiar – the CFTC will charge such entities with failing to register with the CFTC and failing to comply with the agency’s rules that protect US customers and prevent and detect terrorist financing and money laundering.”

KuCoin saw $783m net outflow in 24 hours on Wednesday.

More noise about ethereum ETF

There continue to be conflicting views about the potential for an ethereum ETF in the near future, following on the coattails of the success of bitcoin ETFs.

Speaking on behalf of Bloomberg, ETF analyst Eric Balchunas said there is currently just a 25% chance of approval.

But Grayscale chief legal officer Craig Salm said the SEC scould give its approval as soon as May this year. Grayscale reportedly met with the SEC last year

“The crypto community is locked in as speculation around the approval of a spot ethereum ETF continues amid ongoing discussions about ETH’s regulatory classification,” said Jeff Owens, co-founder, Haven1. “The focus of the conversation should shift from the speculative anticipation of an ETF to the tangible, transformative use of ethereum in institutional finance. [There is] a groundbreaking development which could be poised to catalyze mass blockchain adoption: the BlackRock USD Institutional Digital Liquidity Fund, ‘BUIDL’.

“As the first-ever tokenized fund on a public blockchain, BlackRock’s decision to utilize the Ethereum network demonstrates the feasibility of traditional financial assets like US Treasury bills and cash moving onto the blockchain. Not just that, it also signals the immense potential for blockchain technologies to manage and grow the $26 trillion US Treasury market.”

Launched last week, the tokenized fund will likely become the largest.

IMF recommends CBDCs for Pacific Islands

The IMF said this week digital money, carefully managed, could aid Pacific Island growth and equality.

These remote and isolated economies could benefit from new payment systems that would boost financial inclusion and mitigate a loss of banking relationships. The countries are also highly dependent on remittance flows, which makes them disproportionately affected by banking relationships, the IMF says.

An earlier paper titled Rise of Digital Money: Implications for Pacific Island Countries looks in depth at the fast-evolving landscape of digital money in a diverse region of extremes in size, remoteness and dispersion, highlighting its significant macroeconomic and financial consequences.