Crypto exchanges in the crosshairs as Gemini sues DCG, BlackRock resubmits bitcoin ETF application | weekly summary
Crypto.news โ This week, Gemini made headlines by filing a lawsuit against Digital Currency Group (DCG), accusing them of fraud. This unexpected action has added to the ongoing tension between the two entities. Regulatory issues remain a global concern, despite a week of relative calm. Additionally, BlackRock (NYSE:) has filed a renewed application for a bitcoin (BTC) ETF, underscoring the growing institutional acceptance of cryptocurrencies.
Gemini sues DCG
The Gemini and DCG saga took a new turn this week. Gemini was serious about recovering lost funds for its Earn clients.
On July 4, Gemini co-founder Cameron Winklevoss issued a final ultimatum to Digital Currency Group (DCG) and its CEO, Barry Silbert, regarding paying off debts owed to users of the collapsed Gemini Earn program.
In an open letter posted on Twitter, Winklevoss demanded that DCG make a $275 million forbearance payment by July 21. In addition, he outlined other debt tranches of $355 million two years from now and $835 million five years from now. Failure to comply with these payment terms may result in a lawsuit against DCG.
Shortly after issuing the ultimatum, Gemini sued DCG and Barry Silbert in New York for fraud. Cameron Winklevoss accused Silbert of being involved in fraudulent schemes by DCG and Genesis against creditors.
Cameron claims that Silbert tried to convince Gemini to keep the Earn program, which was discontinued due to Genesis's financial problems. Gemini accused DCG and Genesis of producing falsified financial statements, including a fake 10-year promissory note and a rigged balance sheet.
Winklevoss also criticized the United States Securities and Exchange Commission (SEC) for rejecting a bitcoin point ETF filed by Gemini.
According to Winklevoss, the SEC's decision negatively affected US investors and highlights the organization's shortcomings. He further said that the SEC has been guiding investors toward risky investments like Grayscale Trust (GBTC), which is currently trading at a discount, due to market conditions, for the past ten years.
BlackRock Goes Ahead, Institutional Adoption Increases
Gemini's spot BTC ETF application was one of many rejected by the US SEC. Despite BlackRock's prominence, the company's recent BTC ETF application triggered a wave of bullish sentiment and hit a snag with the SEC.
However, BlackRock submitted a new proposal for the ETF this week. This renewed effort came after the SEC pointed out problems with the initial filing. If approved, this ETF would be the first to receive regulatory clearance.
The filing also reveals that BlackRock and Coinbase (NASDAQ:) have joined forces in a strategic partnership. Coinbase will be responsible for custody services and will provide spot market data for the ETF as part of the collaboration. BlackRock expects to take advantage of Coinbase's specialized knowledge and infrastructure to provide strong security measures and reliable market information for investors.
JPMorgan (NYSE:): Bitcoin Spot ETF Approval Won't Raise Prices
Meanwhile, JPMorgan, the largest bank in the United States by total assets, put forth the view that SEC approval of physically-backed bitcoin ETFs is unlikely to spark transformative change in crypto markets.
JPMorgan strategists have prepared a report explaining why they are skeptical about the approval of a spot bitcoin ETF. It emphasizes the subdued market response to similar ETFs in other regions.
Furthermore, the report highlights that gold and bitcoin have different dynamics as investment assets. JPMorgan's assessment suggests that while the approval of a spot bitcoin ETF may be significant, its overall impact on the crypto market may not be as significant as some have anticipated.
Institutional interest
Despite this sentiment, institutional interest in cryptocurrencies, particularly bitcoin, has been high. In its June 2023 monthly report, asset manager Ark Invest provided insightful findings on institutional interest in bitcoin.
This comes after the news that there has been a significant increase in bitcoin holdings on over-the-counter (OTC) trading desks. This indicates a growing interest among institutional investors. Furthermore, the report reveals that there has been a remarkable 50% increase in bitcoin transactions over the past year, pointing to a growing demand from individual and institutional investors. The fact that institutions are adopting bitcoin is a major milestone for the digital asset.
Singapore wants exchanges to segregate funds
After relative silence, global regulatory efforts took center stage this week, with Singapore, South Africa, Korea and Taiwan making headlines.
To bolster consumer protection and address risks associated with trading digital assets, the Monetary Authority of Singapore (MAS) has devised a plan that requires cryptocurrency exchanges and other market participants in the region to segregate customer funds. of his capital.
New regulations have been proposed that require customer funds to be held in trust for further protection in the digital asset sector. This measure will be put in place at the end of the year, following the collapse of FTX the previous year. To increase security measures, MAS has decided to prevent retail investors from participating in crypto lending and staking activities.
South Africa Creates Licensing Framework for Cryptocurrency Exchanges
To better oversee the cryptocurrency industry in South Africa, the Financial Sector Conduct Authority (FSCA) has issued a mandate requiring all cryptocurrency exchanges to obtain licenses by the end of November. The FSCA has received 20 applications and expects to receive more before the deadline.
FSCA Commissioner Unathi Kamlana stressed that companies that do not comply will face legal consequences, including possible closure or fines.
Kamlana emphasized the potential dangers of crypto products for financial consumers and highlighted the importance of regulating these assets to reduce risks. The FSCA plans to closely monitor the effects of its regulations and work with industry to make any necessary changes. This move makes South Africa the first country in Africa to require a license for crypto exchanges.
Korea advances with regulation
On July 5, reports revealed that the South Korean financial authorities are launching a research project to improve cryptocurrency regulations and ensure the protection of users in the cryptocurrency market.
The โVirtual Asset Protection Lawโ, recently passed by the South Korean parliament, created a framework for comprehensive crypto regulations. The next phase of the legislation will focus on the financing and issuance of virtual assets.
On July 3, the Financial Services Commission (FSC) met to discuss the second phase of crypto legislation. The regulator plans to start the investigation for this phase in the current month, and it is expected to be completed in August.
