The biggest crypto news and ideas of the day |
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Trump Floats America-First Crypto Reserve |
A strategic bitcoin reserve has been a large part of the crypto discussion ahead of Donald Trump's inauguration, but does the incoming 47th president have other tokens on his mind? Solana's SOL, XRP and Hedera's HBAR are among the altcoins outperforming on Thursday, in part thanks to a NYPost report that Trump was "receptive" to the idea of creating an "America-first strategic reserve" of tokens including SOL, XRP and Circle's USDC stablecoin. SOL jumped over 8% to $217 following the report, while XRP continued this week's advance to hit $3.35, just shy of its 2018 record price, per data source CoinGecko. HBAR, the native token of the Hedera Hashgraph network founded by the pseudonymous Texas-based firm, wasn't mentioned in the story, but rallied more than 10% to its strongest price since early December. That's led the CoinDesk 20 Index to a 5% gain over the past 24 hours, sharply outperforming bitcoin's 0.5% rise to just shy of $100,000. Anticipation among crypto investors is building for Trump's inauguration next week, and the potential announcement of first-day executive orders focusing on the digital asset industry. Trump promised during the campaign to position the U.S. as a leader in the crypto space including creating a national stockpile of bitcoin. Senator Cynthia Lummis also introduced the BITCOIN Act in July proposing to acquire the 5% of bitcoin's supply, while some U.S. states are also exploring or have put forward legislation to create a reserve for the asset. While some token holders might be salivating over the idea of the government buying cryptos other than bitcoin, market observers raised concerns. "This is a ridiculous idea and will never happen," Quinn Thompson, founder of hedge fund Lekker Capital, said in an X post. |
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Coinbase Launches Bitcoin-Backed Loans |
Coinbase (COIN) is adding bitcoin-backed loans to its U.S. product lineup, leaning on Morpho, the largest lending platform on its Base network, to drive eyeballs and wallets to its growing on-chain economy. The lending product isn't completely new: those familiar with playing on Base have long been able to borrow USDC against their bitcoin on Morpho or via other DeFi services. What's new here is the easy access: Coinbase is baking Morpho's borrow books into its own widely popular user interface, removing a critical barrier to entry. "This is a moment where we're planting a flag that Coinbase is coming on-chain, and we're bringing millions of users with their billions of dollars," said Max Branzburg, head of Consumer Products at Coinbase. Personal loans in the on-chain world look fundamentally different from the predominant lending deals offered by banks and lenders. Those stalwarts of the regular economy rely on borrowers' credit score in deciding whether to write a loan, and determining its terms, whether or not the loan is secured. But credit scores are not a thing in crypto. Platforms like Morpho don't need to guesstimate how good for the money their borrowers are. Instead, they require their borrowers to post plenty of collateral; far more, in fact, than the sum they seek to borrow. This setup protects the platforms from carrying bad debt from defaulters. Coinbase's setup caps each borrow at $100,000 in USDC. To borrow that much money customers will need to post more than that amount of bitcoin. Morpho will start liquidating the collateral if the loan-to-value ratio flies too close to the sun. "If price swings are reaching any sort of dangerous point, we will share liquidation warnings through the Coinbase app so that you're aware of it and can act," Branzburg said. Borrowing cash sits at the base of all financial services, but it has extra appeal to crypto traders who often sit on troves of tokens they refuse to sell. Those traders often take loans to farm airdrops and fund other risky trades. In Coinbase's view, Morpho-facilitated loans could help borrowers pursue perhaps nobler enterprises, like buying a car, or paying for a house. Under the hood, the new setup feeds Coinbase flywheel at every step. First, the rollout adds a new capacity to Coinbase's frontend. Second, users who post BTC collateral are minting cbBTC (Coinbase's wrapped bitcoin on Base) and borrowing USDC (Coinbase's stablecoin). Third, all of this is happening on Morpho (a Coinbase-funded lending platform) atop Base (Coinbase's Layer 2 network). |
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Litecoin Could Be Next ETF |
With U.S. President-elect Donald Trump only four days away from inauguration and new leadership coming to the Securities and Exchange Commission (SEC), additional cryptocurrencies may soon join bitcoin (BTC) and ether (ETH) and receive their own spot exchange-traded funds (ETFs). Of these, litecoin (LTC) is likely to be the first to receive the nod, according to Eric Balchunas and James Seyffart, two ETF analysts at Bloomberg Intelligence. “Canary Funds just filed an amended S-1 for their litecoin ETF filing. No guarantees — but this might be indicative of SEC engagement on the filing,” Seyffart posted on X. “We had heard chatter that the litecoin S-1 had gotten comments back from the SEC,” Balchunas wrote, adding that the amended filing “bodes well for our prediction that litecoin is most likely to be the next coin approved.” Furthermore, the Nasdaq stock exchange filed a 19b-4 form for Canary Funds' litecoin ETF on Thursday, meaning that the SEC will now be forced to approve or reject the ETF in the coming year. LTC is up 18% in the last 24 hours. Why litecoin? With a market capitalization of $8.8 billion, litecoin is only the 11th largest cryptocurrency in the CoinDesk 20 (an index of the top 20 cryptocurrencies excluding stablecoins, memecoins and exchange coins) and 24th biggest coin overall. But litecoin is a bitcoin fork, meaning that its protocol follows the same basic rules as Bitcoin; it uses a Proof-of-Work consensus mechanism, for example. Importantly, the SEC has never called litecoin a security, contrary to larger cryptocurrencies such as solana (SOL) and ripple (XRP). “We expect a wave of cryptocurrency ETFs next year, albeit not all at once,” Balchunas wrote in December. “First out is likely the bitcoin and ether combo ETFs, then probably litecoin (because it’s a fork of bitcoin = commodity), then HBAR (because not labeled security) and then XRP/Solana (which have been labeled securities in pending lawsuits).” Yet the SEC under Paul Atkins is likely to approach the crypto industry in a different way than it has under Gary Gensler, which Balchunas noted was a “huge variable.” |
Crypto-Friendly eToro to IPO |
EToro, a stocks and crypto trading platform targeting retail investors, is looking to sell shares to the public on the New York Stock Exchange, the Financial Times reported, citing a confidential filing with the U.S. Securities and Exchange Commission.
The sale, which could come as early as the second quarter, could value the company at more than $5 billion, the FT said. Goldman Sachs, Jefferies and UBS are advising the company. If successful, eToro would join Coinbase (COIN) and Robinhood (HOOD) as one of the few publicly listed companies offering crypto trading in the U.S. It would be much smaller than either: Coinbase has a $69 billion market cap and Robinhood $40 billion. The valuation would also be less than half the level it sought in 2021, when it planned to go public through a $10.4 billion deal with a special purpose acquisition company (SPAC). The attempt was abandoned late in 2022 as a result of unfavorable market conditions. In 2023, eToro secured $250 million in funding at a $3.5 billion valuation from investors including SoftBank as its valuation plunged, according to the FT. The valuation has since risen amid an equity and cryptocurrency market rally, and after the company agreed to pay $1.5 million to settle SEC charges it operated as an unregistered broker and unregistered clearing agency and facilitated trading in some crypto assets as securities. While eToro's cryptocurrency trading volume isn’t known, Finance Magnates reported last year that it surged more than 500% in the year ended November. The company, founded in Israel in 2007, reportedly manages $11.3 billion for over 3 million customers. These assets include not only cryptocurrencies, but also stocks and exchange-traded funds. Last year, as a result of its settlement with the SEC, it agreed to drop trading for multiple cryptocurrencies in the United States, limiting its users in the country to trade bitcoin (BTC), bitcoin cash (BCH), and ether (ETH). |
The Takeaway: How to Make US Crypto Great |
By Ivo Entchev, Olta Andoni, Stephen Rutenberg, and Donna Redel Dear President-Elect Trump, In your keynote address at the Bitcoin conference in Nashville last year, you pledged to make the United States the crypto capital of the world if re-elected for a second term. As you return to the presidential office this Monday, we write to you as practicing members of the crypto law bar to recommend regulatory policies that will help you to achieve that goal. The United States, which rests on the same foundation of personal liberty as crypto, is naturally positioned to lead the world in its development. Unfortunately, U.S. regulators have until now refused to adapt existing laws to digital assets and the blockchains that underpin them (or even to explain why not), and created an unfavorable business environment that has driven many entrepreneurs and developers abroad. To unleash American ingenuity and remedy this neglect of the blockchain industry, we propose that you pursue the below forward-looking policies across three areas: supporting U.S. companies; promoting crypto values such as privacy, disintermediation, and decentralization; and cultivating a favorable business environment domestically. Supporting U.S.-Based Businesses The crypto industry has produced a range of established and emerging use-cases, including digital gold, stablecoins, permissionless payments, decentralized finance, real world assets, decentralized physical infrastructure (DePIN), and many more. Many of them are being responsibly advanced in the United States by businesses such as Coinbase, Circle and Consensys, and by developers contributing to crypto’s open-source, decentralized infrastructure. To continue competing against their international rivals, these parties need clear rules of the road and proper regulatory guidance. General Rules of the Road Token issuance and secondary sales, which lie at the heart of the crypto economy, are subject to confusing and overlapping regulatory authority from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Market structure legislation should clearly delineate the scope of jurisdiction among primary regulators and lay out when assets enter and exit that jurisdiction. Here, Congress should resist giving the U.S. securities laws an overbroad application, as the SEC has done. Tokens powered by open-source software and consensus mechanisms that are otherwise minimally dependent on centralized actors are not securities because there is no legal relationship between token owners and an “issuer,” as understood by the securities laws. Similarly, crypto assets such as art NFTs (which are simply digital artwork) and non-investment activities, like staking and lending bitcoin, fall outside the securities laws. Congress should be bold. That means not feeling bound by prior legislative efforts like FIT21 that were forged in an earlier political environment that have unintended consequences. It also means leveraging the regulatory experience of other nations, such as the European Union with its MiCA framework, while avoiding their pitfalls and charting a unique and dauntless path forward for the United States. Specific Sectors Besides advocating for general rules, your administration should urge Congress and the relevant agencies to address specific sectors due to their strategic importance to the crypto industry and the nation. Stablecoins. Stablecoins, with a current market cap in excess of $200 billion, are the lifeblood of the digital asset ecosystem. Increasingly recognized under frameworks like the Stablecoin Standard and by state regulators, they warrant comprehensive legislation for their issuance and management, ensuring that they are transparently backed and do not threaten financial stability. Aside from benefitting consumers, regulatory support of stablecoins furthers national interests. Similar to Eurodollars, stablecoins, which are usually denominated in U.S. dollars, reinforce the dollar’s status as the global reserve currency and increase demand for U.S. treasuries, which issuers hold in reserve. TradFi Integration. The unprecedented success unprecedented success of Bitcoin and Ethereum ETFs demonstrates that crypto has begun integrating with traditional finance. Regulatory policy should ensure a safe and orderly integration by giving consumers access to trusted custody services. This requires amending or rescinding prejudicial SEC accounting guidelines (for instance, SAB 121) and custody rules. But it should not stop there. Pro-innovation policy in this area should also promote the tokenization of securities representing traditional financial assets like stocks, bonds, or real estate as blockchain-based tokens. The resulting benefits, which include improved liquidity, fractional ownership, and faster settlement, would strengthen U.S. capital markets, ensuring they remain the most developed and innovative in the world. DeFi. Decentralized finance has the potential to modernize the global financial system and to return value to ordinary Americans by removing costly financial intermediaries. You should not allow entrenched interests and alarmism to stop the United States from becoming the world’s leader in DeFi. In this regard, regulations aimed at centralized actors, such as exchanges and issuers, must be crafted in ways that avoid inadvertently capturing and paralyzing the still-nascent DeFi ecosystem. Read the full open letter here. |
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