Big Banks Make Bets on Bitcoin, Despite Mixed Messages

BlackRock has expanded its list of Authorized Participants (APs) for its bitcoin ETF, iShares Bitcoin Trust (IBIT), onboarding financial heavyweights like Goldman Sachs, Citadel, UBS, and Citigroup.

Why it matters: The inclusion of such prominent institutions, despite all the previous skepticism, underscores a growing trend: legacy players can longer ignore crypto… even if they want to. Major financial players are increasingly being forced to align with the sector either by direct involvement or indirect mechanisms like ETFs.

Everyone on the wagon: The newly added banks now join ABN AMRO, JP Morgan, Jane Street, Macquarie Capital, and Virtu on the list of IBIT APs.

Ok, but why does it really matter: Because this isn’t your neighborhood mom and pop bank getting on board. These are banks like Citi, Goldman, and UBS. UBS was founded more than 200 years ago!

Two-Faced: Speaking of Goldman Sachs, they actually paint an interesting addition. Just last week, the firm expressed disinterest in crypto in an interview with WSJ, claiming that they “do not think it is an investment asset class” and that they’re “not believers in crypto.”

Obviously, the firm's actions tell us a different story.

Another Crypto Regulatory Battle For the SEC to Lose

Today, the SEC issued a Wells Notice to Uniswap Labs, signaling an upcoming lawsuit likely over securities violations.

Why Uniswap? The specific nature of the SEC’s allegations against Uniswap remain unknown. But knowing our lovely government, it’s likely more of what we’ve already seen: Another exchange illegally offering unregistered securities, or failing to register as a broker or an exchange.

What makes this upcoming lawsuit unique, however, is the nature of how Uniswap operates. As a leading decentralized exchange (DEX) built on top of the Ethereum network, Uniswap has become a beacon for the entire DeFi sector.

Unlike traditional exchanges, DEXs like Uniswap don’t have a central authority overseeing trades. It’s like a self-driving car. It relies on automated protocols, neutrality, and very limited governance. The protocol itself is open source and used by many other projects in the DeFi world.

Given Uniswap’s massive footprint in the world of crypto – facilitating over $2 trillion of transactions since its inception – the outcome of this case would not only be a watershed moment for the DEX itself, but for all of DeFi.

Let the battle begin: Founder Hayden Adams and Chief Legal Officer Marvin Ammori have both expressed their readiness to fight, asserting that Uniswap’s products comply with U.S. law and each, rightfully so, criticizing the SEC’s approach.

Our Thoughts

We like Uniswap. While we don’t often use it to trade the wide variety of altcoins it hosts on its exchange, Uniswap has proven to be an essential piece of infrastructure for traders and devs alike.

The protocol is 6 years old… the largest use case of Ethereum… has facilitated over $2 trillion in transactions… is home to the most copied open-source smart contract protocol (replicated over 2,000 times)… and has never been hacked.

So we have to give credit where it’s due.

On top of that, Uniswap founders have chosen to operate in broad daylight in Brooklyn, NY rather than offshore.

In other words, Uniswap is an industry leader, through and through. And the recent Wells Notice underscores a common theme with the SEC: Let’s intimidate and try to enforce the good actors, and let the bad ones slip away.

Uniswap has money to fight. They will fight. And given the SECs piss-poor success rate, Uniswap will probably win. And all of crypto will be supporting them along the way.

Galaxy Stock Slides 19% on $125 Million Deal

Fresh off Q4 earnings that reported a huge swing to profitability, Galaxy Digital (TSX:GLXY) is looking to shore up cash…

…but the market isn’t loving it.

Yesterday, Galaxy entered into an agreement with Canaccord Genuity, a financial services firm, to purchase 12,100,000 ordinary shares of Galaxy at a price of C$14.00 (~$10.31).

The deal also grants Canaccord the option to purchase an additional 1,815,000 ordinary shares at the same price in the future.

Before the announcement, Galaxy shares were trading at C$16.05 before falling more than 19% to C$13.00.

Our Thoughts

Galaxy doesn’t necessarily need the cash, as the company had more than $316 million in cash & equivalents and $1.08 billion in digital assets on the balance sheet as of December 31, 2023.

This after the company just announced a $100 million venture fund for early stage crypto as well as a participation in crypto VC firm 1kx’s latest $75 million fund.

So what does Galaxy need the money for?

We’ve previously written about how Galaxy CEO Mike Novogratz may be gearing up for another acquisition, but as of today we just don’t know.

A Tale of Two Companies

Since going public in 2018, we have been promoting Galaxy as a backdoor way to play crypto.

And while in that time you would be up more than 600% on your investment, the road to get there has been volatile with some major swings in price.

Huge venture funds, a failed billion dollar BitGo acquisition, stablecoins, an ETF launch, and who could forget the infamous LUNA tattoo. The company has been busy.

As we have said multiple times in this rag, although Galaxy should be a very smart investment in the long run, in the short run the company has been not only difficult to value for investors, but doesn’t really seem to care to explain itself. Yesterday’s deal with Canaccord is no exception.

Compare that to a company like Coinbase, which is doing everything it can to court investors.

And it shows. While Coinbase is up more than 600% over the past 24 months, Galaxy is up only 245%.

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