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Ben Strack and Casey Wagner are pleased to welcome you to the On the Margin Newsletter. What’s in the latest edition?
- TradFi CEO reminds us: The banks and brokerages are going to go “headfirst into bitcoin.”
- NVIDIA’s troubles seem to have brought the entire market down. Things may be improving.
- There’s a brand new politician in town who has set his sights on Elizabeth Warren’s position.
Banks ready to go ‘headfirst’ into BTC
Bitcoin’s value is fluctuating. It traded below $20,000 as early as 2023 and then hit an all-time price high of $73,000 last march. BTC was just north $58,000 by midday Wednesday.
“But ultimately over the next five years, as it gets invited into this party, up we go,” Howard Lutnick is the CEO at financial firm Cantor.
What is the party to which he refers? This festival is a sort of celebration where some of the biggest companies in the world reverse bitcoin’s historical role as “an outsider to the TradFi community.”
“Banks still can’t clear [bitcoin]. Banks still can’t transact in it. Banks still can’t [custody] it…and they won’t finance it,” Lutnick is added.
He added, “He paused before adding.” “Yet.”
Lutnick said that there’s a misconception that TradFi users don’t wish to transact with bitcoin.
“If the regulatory environment was good, you [would] see all the traditional financial service companies — the big banks, the big brokerage companies — they’re all going to go headfirst into bitcoin,” He noted.
Vanguard may be an exception as they have repeatedly said. Some people still believe that they will change their minds.
Lutnick said that in order for banks to keep bitcoins of a customer, “they would have to set aside their own money equal to that amount in sort of like a jail.” Staff Accounting Bulletin SAB 121 of the SEC is to thank for this.
In a letter sent to Gary Gensler, SEC chair in February, financial institutions said that SAB 121 was a good thing. “has curbed the ability of the Associations’ members to develop and bring to market at scale certain digital asset products and services.”
Joe Biden, the president of the United States, vetoed a resolution passed by lawmakers in May that invalidated SAB 121.
The rule has “effectively precluded” The letter warned against banks safeguarding cryptocurrency. Coinbase (rather then big TradFi bank like State Street), is custodian for the BTC of spot bitcoin ETFs from BlackRock, and others.
State Street, speaking of the financial giant, last month it teamed with crypto infrastructure provider Taurus in order to expand its tokenization and digital custodial offerings. Taurus was also enlisted by Deutsche Bank to help it establish tokenization and crypto custody services.
A recent OKX report projects that the market will see a growth rate of 23% annually until 2028. This is because institutional traders are seeking to mitigate counterparty risks by finding trusted custodians.
We’ve previously discussed the tokenized money-market funds of asset management giants BlackRock, and Franklin Templeton. JPMorgan, Goldman Sachs, and others are exploring blockchain technology use cases.
Blockworks spoke with Lennix Lai, OKX’s chief commercial officer. “a point made forcefully” The consensus among financial executives who attended the roundtable for the second quarter of the crypto exchange was that more regulatory clarity could be a major catalyst for growth. The EU’s Markets in Crypto Assets Regulation, and UAE regulatory progress were lauded by the financial executives at the crypto exchange’s second quarter roundtable.
Although we are aware that TradFi has shown an interest in cryptocurrency in recent months and years, Lutnick’s blunt statement that “basically all of them” want in is a welcome reminder at a time when crypto could be considered to be a bizarre period.
And to realize the upcoming presidential election could help spur more crypto policy discussion — and maybe that coveted regulatory clarity — perhaps makes the possible wait time feel more manageable.
— Ben Strack
$175,000
The amount Uniswap will pay to settle the allegations brought by the CFTC.
Uniswap according to a CFTC announcement on Wednesday. “illegally offered leveraged or margined retail commodity transactions in digital assets via a decentralized digital asset trading protocol.”
Uniswap has not responded to Blockworks’ initial request for comment.
In a dissenting statement, CFTC Commissioner Summer Mersinger said: “Wielding the hammer of enforcement against these DeFi protocols may result in some short-term ‘wins,’ but in the long-term, without more, it will only create problems.”
NVIDI-Oh No
NVIDIA’s had a rough couple of weeks.
Despite beating earnings expectations last week, shares of NVDA lost as much as 7% in pre-market trading and 2% at the open on Aug. 29 — the day after its record-setting report dropped.
Stocks had barely recovered from yesterday’s ISM data when it sent them lower. Bloomberg reported just before the market closed that the Justice Department has sent subpoenas for NVIDIA as part an investigation into antitrust violations.
NVIDIA, the US company, lost $279 billion of its value on Tuesday. It was the biggest loss of market value in a single day for the US-based company in 2024.
But it looks like there are some dip-buyers out there. NVDA’s shares were up by 0.7% at 2 pm ET. The stock has been down about 15% in the past five days of trading, but it is still up around 9% on the month (and 126% for the year).
The Philadelphia Stock Exchange semiconductor market index fell to its lowest level in March 2020 on Monday, but pared losses on Wednesday, trading 0.9% higher by 2 pm ET.
Things could still be worse. The VIX reached 22.6 this morning. This is a five day high, but it’s a long way from the levels of a few months ago when the VIX was approaching 40.
Analysts predict that NVDA’s key level will be $100. Shares were trading at $109 around 2 pm ET. Investors should be aware that the last time that shares fell below triple-digits they recovered more than 30% within two weeks.
A quick note: you may have seen on social media reports that US Rep. Nancy Pelosi had sold her NVIDIA stock just before the DOJ subpoenaed them. These claims are fabricated. There are no documents that show Pelosi shares aren’t as low as everyone else’s. You’re in luck if you bought NVDA today.
— Casey Wagner
It’s Warren v. Deaton
John Deaton, a crypto advocate and lawyer, will face Elizabeth Warren for her seat in November’s US Senate election. Deaton won the Republican nomination last night with a majority of close to 65% (as of today, 95% of the votes were counted).
“Tomorrow, we begin the next phase of the campaign — an effort that will hold Elizabeth Warren accountable for her failures on the border, the unaffordable cost of supporting a family, a broken healthcare system, abandoning our ally Israel and restoring faith in our politics,” Deaton stated in a Tuesday evening statement.
Deaton’s success is likely due in large part to his funding. As of mid-August his campaign had raised $1.7 million — $1 million of which was a loan from Deaton himself. FEC documents show that he has not paid himself anything.
Industrial engineer Robert Antonellis — Deaton’s runner-up in the primary with 26% of votes — had raised $46,449 for his campaign as of mid-August, per FEC filings. Antonellis lent himself about half of this total.
Warren’s record against Republican candidates is impressive. In 2012 she won with 53% of the votes against Republican incumbent Scott Brown. In 2018, she defeated Republican Geoff Diehl by 60% to 36%.
The crypto-remarks of Donald Trump and Kamalah Harris, presidential candidates, have been overwhelmingly one-sided. Warren vs. Deaton is now confirmed. I’m expecting the race to be more crypto-centric.
Here is a review on Warren’s crypto-track record:
- She wrote a letter last year accusing crypto exchanges and lobbying organizations of undermining the bipartisan efforts made to regulate the industry through hiring former government officials.
- In January, she stated that the SEC should not have approved bitcoin spot ETFs. She claimed that regulators weren’t up to date. “wrong on the law and wrong on the policy.”
- In May, she reiterated her position that crypto firms need to have much stronger anti-money-laundering policies.
Meanwhile, Deaton has emerged as a pro-crypto candidate — despite not having a formal digital assets platform on his website. He became the leader of what is known as “XRP army” He fought on behalf of token holders throughout the SEC’s long lawsuit in 2021. His campaign accepted crypto donations from March.
Deaton expressed an interest in facing Warren, but nothing has yet been scheduled. I’m willing to wager that if the two faced off, they would win. “bitcoin” Golf handicaps aren’t mentioned.
— Casey Wagner
Bulletin Board
- Bitcoin was trading at about $57,900 just after 2 pm ET Wednesday — up 0.8% in the last 24 hours but a 2.5% drop from seven days ago. ETH has seen a slight rise in the last 24 hours.
- Tuesday, net capital outflows from US spot Bitcoin ETFs reached $288 Million. Farside Investors’ data shows that this is the biggest single day for outflows in the category since May 1.
- Speaking of crypto ETFs, Tuesday marked the ninth time in the last 11 trading days that the largest spot ether ETF — BlackRock’s iShares Ethereum Trust (ETHA) — saw zero flows. Net outflows in the segment total $525million since the US spot-ether funds launched on July 23.
- Bitfarms responded to Riot Platforms, which yesterday criticised Bitfarms for its proposed acquisition of Stronghold Digital Mining. Riot, the company’s largest shareholder made comments that Bitfarms took exception to. “misleading,” Riot can be added to your vocabulary by adding “Additional Terms”. “attempting to acquire Bitfarms at a discounted price.”
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