Oct 29, 2023

Crypto Briefs for the Week

Bitcoin Macro

Bite-sized roundups, from exchanges to blockchains, projects to bankruptcies. Let's dive in!


Trading pairs

Lately there have been some interesting trends related to Binance and its trading pairs. First, Binance has faced issues with its EUR and GBP fiat providers and banking partners, as it has struggled with regulators. Similarly, its BUSD stablecoin, issued by Paxos, was deemed a security by the SEC. Therefore, over the last few weeks Binance has removed some illiquid pairs like ETH, BNB, BUSD, BIDR, EUR and GBP, and added FDUSD, TUSD and TRY pairs instead. FDUSD and TUSD are stablecoins potentially affiliated with Binance, though the relationship is unclear. TRY is the Turkish lira, whose volume on Binance has boomed as the lira has been rapidly depreciating, yet it has attractive interest rates and Turkey's massive crypto holder base. Another trend is the addition of USDT perpetual swaps for various small altcoins that have pumped seemingly without reason. Our explanation is that with markets so stagnant and these coins accumulated for so long at depressed prices, once they start rallying, momentum builds rapidly with very little selling. These perpetual swaps make it easier for traders to safely go long and short, benefiting Binance through tremendous volume, sometimes greater than Bitcoin's or Ethereum's.

Despite Bitcoin's resurgence, many coins, tokens and several pairs are being delisted from many exchanges like Coinbase and Binance, as many of these tokens either don’t meet the exchange standards for what constitutes a legitimate active project, as well as their liquidity standards. The delistings come amid plunging trading volumes and liquidity across the crypto market, especially as liquidity has been spread thin across more and more crypto projects which have high inflation schedules, something that really affects the total liquidity share that each project can have. After all the craziness of 2020-2021 and the crash of 2022, in 2023 exchanges are consolidating liquidity among more popular trading pairs and removing tokens deemed securities by regulators, and are preparing for a healthy bull market with a focus on better projects.

Binance Euro

Binance has signed agreements with new fiat partners to offer EUR services like deposits, withdrawals, buying/selling crypto, and EUR trading pairs to users in Europe. This expands crypto access and adoption by providing easy "on-ramps" and "off-ramps" between fiat and crypto. This shows that yet again, despite all the issues Binance has been facing and many of its partners or regulators turning against them, they find solutions for their clients.

Binance Card

Binance has now announced it is halting service of its Visa debit card in the European Economic Area as of December 20. The card had allowed European consumers to easily spend cryptocurrencies at merchants. This development is unsurprising as Binance faces ongoing regulatory challenges. Meanwhile, traditional financial firms like Visa and PayPal are entering the crypto market, potentially leveraging their regulatory connections to compete with Binance for market share. However, more crypto companies are working to expand their offerings and obtain licenses globally, as well as provide products like debit cards. For instance, at the Future Blockchain Summit in Dubai, Bitget Managing Director Gracy Chen discussed the crypto exchange's plans to launch a high-limit Visa credit card enabling seamless crypto payments worldwide.

Binance DoJ

Recent revelations from Sam Bankman-Fried's trial indicate he may have provided key evidence to the DoJ to build a case against Binance. With SBF's credibility now destroyed due to the FTX collapse and allegations of fraud, any evidence or testimony he gave is likely tainted and unusable in court. This major blow to the prosecution's case helps explain why anticipated legal action against Binance has stalled. Though the DoJ investigation still looms, Binance seems safer from immediate indictment as the DoJ scrambles to find untainted sources to solidify their case. SBF's reported maneuvers to undermine rivals have backfired spectacularly, buying Binance valuable time.

Binance HK

Binance seems to have secretly set up a new Hong Kong-based cryptocurrency exchange called HKVAEX in order to apply for a local crypto trading license. Though Binance has not publicly shown interest in obtaining a Hong Kong license yet amid its global regulatory issues, this move suggests it is still keen to get officially approved to operate in Hong Kong. HKVAEX was established in December 2022, shares resources with Binance, and claims to be preparing its license application as an independent entity.


Binance.US has halted direct dollar withdrawals from user wallets according to an email sent on October 24th, 2023. Users can still withdraw funds by first converting dollars to stablecoins or other cryptocurrencies. This change comes after Binance.US suspended dollar deposits in June due to banks' reluctance to work with crypto firms amid aggressive SEC tactics. The update also notes that dollar funds in Binance.US wallets are no longer FDIC-insured. These new policies reflect the ongoing challenges crypto exchanges face in providing stable fiat onramps and liquidity.


Not all exchanges are experiencing difficulties, as several, including Bitget and Bitfinex, are navigating the bear market successfully. The parent company of Bitfinex, a Hong Kong-based cryptocurrency exchange, iFinex, has proposed a buyback of $150 million of its shares at $10 apiece, as revealed in a company document reported by Bloomberg. While Bitfinex may not be as profitable as it was in years past, it maintains a strong position, ranking third in bitcoin deposits. It boasts considerable regulatory stability, has the same ownership as Tether, and might recover approximately 94,000 BTC from the 2016 hack, potentially to be distributed among shareholders and LEO token holders. The proposed share repurchase could suggest an expectation that the U.S. government will soon return the coins retrieved from the hackers in the foreseeable future.


The Securities and Exchange Commission has dropped its lawsuit against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen over allegations they were involved in illegal securities sales of XRP tokens. While charges remain against Ripple itself, the SEC's surrender represents a major victory for the company in its legal battle with the regulator that began in 2020. Ripple claims vindication after the SEC capitulated on going after its executives personally.


Coinbase has asked a New York judge to dismiss a case brought by the SEC charging the crypto exchange with failing to register as a securities exchange, broker, and clearing agency. Coinbase argues the SEC lacks authority over simple asset trades that don't involve ongoing contractual obligations related to a business enterprise. It says the SEC is overreaching in its interpretation of investment contracts and the Howey Test. Furthermore, Coinbase insists that the major questions doctrine is pertinent, given the SEC's efforts to considerably broaden its reach absent explicit Congressional consent. While the SEC enjoys backing from state regulators, the judge recently ruled in favor of Uniswap, showing reluctance to overextend securities legislation. Considering we perceive the SEC’s case against Coinbase to be even weaker than its unsuccessful cases against Ripple and Grayscale, a victory for Coinbase appears highly likely. Such an outcome could profoundly energize the broader cryptocurrency market beyond just Bitcoin.


An important development is unfolding in the Ethereum staking sector across North America. In Canada, 3iQ Corp. has launched the world’s first Ethereum staking ETF, the 3iQ Ether Staking ETF (TSX: ETHQ, ETHQ.U). This enables investors to gain exposure to both ETH and staking rewards through a simple, secure ETF vehicle. To celebrate this milestone, 3iQ is offering a 0% management fee on the ETF until March 31, 2024 and has updated its name from the 3iQ Ether ETF. With current staking yields around 4%, 3iQ utilizes top-tier staking providers and custody solutions to aim to maximize rewards. This pioneering Canadian ETF represents a major shift in digital asset investment strategies and could pave the way for similar offerings in the US market in the future.

Meanwhile, CoinList is launching a new fund in the US that will allow accredited investors to earn staking returns without having to own the assets. The fund will initially support Ethereum and Near staking, with plans to add other protocols like Flow, Sui, and Mina. By pooling capital and staking on investors' behalf, it provides an alternative way to earn passive income from rewards in each protocol's native token.

The simultaneous emergence of these offerings signals growing momentum around staking and earning yield from digital assets. While still early stage, this trend could greatly expand access and participation for investors seeking crypto passive income. As regulatory clarity unfolds in North America, more integrated and simplified staking products at scale will likely become available.


The Japan Crypto Asset Business Association (JCBA) submitted a proposal to the Japan Virtual and Crypto assets Exchange Association (JVCEA) advocating for a review of the leverage ratio restrictions for crypto asset margin trading. JCBA argues that the current 2x leverage limit is excessively stringent compared to other markets and proposes calculating leverage based on historical volatility as is done for corporate entities. They note that reduced volatility and increased mainstream recognition of crypto assets warrants revising regulations to support market growth. JCBA aims to attract users back to domestic exchanges from overseas platforms with higher leverage, citing declining trading volumes since the 2019 legal amendments. They emphasize that proper organization of the derivative market is needed after development of the spot market for full, legitimate asset class recognition.



Crypto market maker Wintermute has partnered with stablecoin issuer Mountain Protocol to provide liquidity and strengthen access to USDM, a yield-bearing stablecoin backed by U.S. Treasuries for non-U.S. users. The partnership allows users to instantly redeem USDM for USDC via Wintermute while giving Mountain Protocol up to 4 days to access TradFi liquidity and repurchase the USDM. Mountain Protocol raised undisclosed seed funding led by Nic Carter's Castle Island Ventures in September 2022 and is licensed by the Bermuda Monetary Authority as a digital asset issuer.

Currently about $100 billion of capital that has been deposited into stablecoins has been used to buy and hold short duration US Treasuries. As we have reported before, there are several protocols which have recently launched that are now providing yields to holders who are willing to give their cash to these companies in return for yield-bearing stablecoins. Currently, USDT, the largest stablecoin, is not sharing its yield with its customers, and neither are most other stablecoins. USDC is providing yield to holders only if held at Coinbase. We expect to see more and more people depositing USD to receive yield-bearing stablecoins, something that will substantially reduce the profitability of those companies, but will increase the number of people holding these stablecoins, as it will be the easiest and most liquid way to earn yields with minimal risk. This has the potential to drive major growth in crypto.


The decentralized derivatives exchange dYdX is transitioning to version 4 of its platform, which will run on a new Layer 1 blockchain called the dYdX Chain. This mainnet recently launched in alpha and is currently being tested by validators. A key part of this transition is the expanded utility and role of the DYDX governance token.

The token will be used to stake to validators on the dYdX Chain, who will receive protocol fees collected in USDC as incentives. This fee-based reward model aims to bolster network security in a sustainable way without inflation.

Additionally, dYdX Trading has converted to a public benefit corporation and pledged to not earn trading fees on the v4 platform. The day after rival Uniswap announced it would introduce fees, this move shows dYdX's commitment to decentralization and democratizing finance beyond profit motives. Despite giving up a revenue stream, dYdX remains financially stable for over 6 years.

Overall, the launch of the dYdX Chain and the expanded utility of the DYDX token represent important steps towards a fully decentralized and community-governed version 4 platform. This aligns with dYdX's new legal structure as a public benefit corporation not driven solely by shareholder returns.



The bankrupt crypto exchange FTX owns around $417 million of Grayscale's Bitcoin Trust (GBTC) according to a court filing. Current FTX management plans to return funds to creditors in fiat rather than crypto and trade assets carefully to avoid crashing prices. Though GBTC wasn't explicitly mentioned, this is good news for those hoping its discount to net asset value won't be negatively affected by an FTX fire sale. Much depends on whether the SEC approves GBTC's conversion to a spot ETF before FTX finalizes its bankruptcy plan in 2024 - if so, FTX selling shouldn't widen the discount, but if not, it likely would put downward pressure on it.

Some over-the-counter trades of FTX creditor claims are valuing the claims at over $0.50 on the dollar, signaling expectations of a significant recovery. This enthusiasm has grown since Anthropic, a company FTX invested heavily in, recently announced large new funding and it recently got another 2B from Google. Creditors hope the sale of the Anthropic stake and other FTX Debtor estate asset sales will return a substantial portion of lost funds, with a full recovery possible. Initially, creditors expected only a 25% recovery. However, given the uptrend in cryptocurrency values, the narrowing GBTC discount, more assets being reclaimed by legal teams, and the potential for substantial recoveries through clawbacks, the prospect of FTX creditors receiving $0.70 to $1 appears feasible.

Lawyers continue working to determine the next steps for FTX nearly one year after the crypto exchange filed for bankruptcy. FTX's investment banker testified that a stalking horse bid will likely be announced in mid-December, noting they are evaluating multiple proposals including acquiring the exchange's assets or partnering to relaunch it. A relaunch, coupled with trading incentives for creditors on the renewed platform, could augment the restitution creditors receive.


Crypto lending platform BlockFi has officially emerged from bankruptcy after filing last year amid the FTX collapse. BlockFi can now begin repaying creditors through a planned wind-down, starting with distributing assets back to clients. It will also attempt to recover funds from FTX and other failed firms. The initial customer payouts will be followed by additional distributions, though the total amounts remain uncertain pending BlockFi's treatment in the FTX bankruptcy case.


Cryptocurrency exchange Gemini has filed a lawsuit against its former business partner Genesis Global over 60 million shares of the Grayscale Bitcoin Trust (GBTC) worth $1.6 billion that were pledged as collateral for Gemini's Earn product. Gemini is seeking control of the shares to repay Earn customers who had their funds locked up when Genesis froze withdrawals last year. The lawsuit alleges Genesis has repeatedly harmed Earn users and delayed their ability to recover assets. It comes amid Genesis' bankruptcy and just after Genesis dropped a proposed settlement with parent company Digital Currency Group in favor of suing DCG.

Though it's improbable that DCG and Genesis will liquidate their GBTC holdings prior to the approval of the ETF, any significant offloading of shares by FTX and DCG, whether preceding or succeeding the ETF's inauguration, could profoundly influence the BTC’s or GBTC’s price. Regrettably, the repercussions of the turmoil in 2021 and the subsequent disturbances in 2022 are likely to persist into 2024.

Bitcoin Macro

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