Financial Institutions Add Bitcoin ETFs, Crypto Product Integrations Continue
By Robert A. Musiala Jr.
According to recent reports, two major U.S. financial institutions have begun offering spot bitcoin exchange-traded funds (ETFs) to their clients by adding the ETFs to their brokerage platforms. Reports indicate that another major U.S. financial institution is currently considering offering its clients the option to invest in bitcoin ETFs.
In other news, two crypto firms recently announced payment integrations. According to reports, SafePal, a cryptocurrency hardware wallet provider, recently announced the launch of a “banking gateway” enabling wallet users to make payments using digital assets and transfer funds to bank accounts through the SafePal wallet application. In a similar development, fintech firm Revolut recently published a press release announcing Revolut Ramp, a new product integration that will allow customers to use Revolut account funds to purchase cryptocurrencies “directly within MetaMask’s mobile app, browser extension, or on MetaMask Portfolio” … “using their Revolut account … credit or debit bank card.”
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Music Festival to Integrate NFTs for Ticketing, VIP Experiences, Merchandise
By Christopher Lamb
According to recent reports, Coachella has revealed a new partnership with OpenSea to turn NFTs into “real-life VIP experiences, exclusive merchandise, and digital collectibles.” Coachella is reportedly one of the world’s largest music festivals, with upward of 645,000 people attending. Reports indicate that the NFT collections through this partnership will be hosted on the Avalanche blockchain network and released over three subsequent drops that pair collectible Coachella intellectual property with perks. The first drop will reportedly be available only to holders of VIP passes.
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Royal Canadian Mint Announces DLT Solution for Gold Provenance
By Robert A. Musiala Jr.
The Royal Canadian Mint recently published a press release announcing that it has “implemented a Distributed Ledger Technology (DLT) solution that now makes it possible to perform end-to-end tracing and certify the provenance of gold deposited and processed at its refinery.” According to the press release, “This integration of DLT allows investors, financial institutions, dealers and distributors of Mint bullion products, as well as fabricators, to access secure, standardized and digitalized information about the provenance, and integrity of the production standards related to their products.” The press release notes that the Royal Canadian Mint collaborated with aXedras, a Swiss-based software company, on the solution. According to the press release, among other features the solution “will log the transfer and ownership of a gold bullion bar” and enable a DLT-based record such that “whomever has custody/ownership of the gold bar will have the ability to see the bar’s custody history (e.g., Mint, financial institution, armoured car carrier, or London Vault)” and other information related to “historical custody and ownership change.”
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District Court Upholds Challenge to EIA Cryptocurrency Miner Survey
By Keith R. Murphy
The Texas Blockchain Council and a cryptocurrency mining platform’s challenge to the U.S. Department of Energy’s survey requiring cryptocurrency miners to report their electricity usage was upheld by a Texas district court, according to recent reports. The challengers to the emergency survey argued that the government agencies involved had circumvented established procedures, including a notice period, when granting the emergency request for the survey. A basis for the survey was that the rising price of bitcoin, along with sudden cold temperatures, could stress electrical grids, to which the crypto firm challengers responded that miners are often the first to cut their electrical usage in times of grid stress, according to the report. Following the district court’s decision to temporarily bar the government from moving forward with the survey, the two sides reached an agreement to settle the case. In connection with the settlement, the Energy Information Association (EIA) will publish a notice regarding its proposed miner survey and will take comments for 60 days; the EIA noted, “We’re hopeful we can work with companies in the cryptocurrency mining industry to provide the American public with a clear understanding of energy use from cryptocurrency mining operations in the United States, much in the same way we do with other industries,” according to the reports.
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SEC Charges Crypto Exchange, Commissioners Peirce and Uyeda Dissent
By Keith R. Murphy
According to a recent press release, the U.S. Securities and Exchange Commission (SEC) charged a Swiss cryptocurrency exchange formerly based in Colorado with operating as an unregistered dealer in connection with its former cryptocurrency asset trading platform. The SEC alleged that during the period 2014 to 2021, the platform operated as a “market maker” for at least 79 crypto assets, serving as the counterparty for its customers’ transactions and marketing itself as a “crypto vending machine.” According to the release, the crypto assets exchanged by the platform “included crypto assets that were offered and sold as securities as defined in Section 3(a)(10) of the Securities Exchange Act of 1934.” In 2021, the platform wound down its corporate structure following its announcement that it would no longer operate as a counterparty to customer transactions, nor would customers be able to exchange crypto assets directly on the platform. In connection with the SEC’s action, the platform entered into a consent order finding that it violated section 15(a) of the Securities Exchange Act of 1934, and it agreed to a cease-and-desist order along with the payment of a $275,000 penalty, according to the release.
In a related development, two SEC Commissioners issued a statement commenting on the SEC’s enforcement action against the Swiss cryptocurrency exchange. Commissioners Hester M. Peirce and Mark T. Uyeda criticized the action, calling it part of the SEC’s “poorly conceived crypto policy” and noting that “[t]he Commission’s Order … fails to identify which crypto assets were investment contracts and provides no explanation for its conclusion.” In the statement, Commissioners Peirce and Uyeda also said, “Notably, the Commission does not allege any harm—[the platform] and its customers voluntarily transacted and the Order nowhere alleges that [the platform] defrauded its customers.” The statement includes an amusing hypothetical conversation between the SEC and an exchange platform seeking guidance on whether certain assets qualify as investment contracts, resulting in no guidance for the platform. Commissioners Peirce and Uyeda conclude the statement by arguing that “[t]he environment we have created for the crypto asset markets, especially as it relates to secondary trading, is untenable. It exposes well-meaning entrepreneurs to a regulatory sword of Damocles. Cases like this do not protect investors; they intimidate innovators and entrepreneurs. We respectfully dissent.”
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