(Black)Rock my world

Is a spot Bitcoin ETF finally happening?

Welcome back. We’ve been covering Ordinals (and the controversy surrounding it) a lot in recent weeks, but there’s so much more to the protocol than meets the eye. Like what? Gemmy covers the full story in a new video over on the Coinsider YouTube channel. But before you check it out, I’ll catch you up on crypto’s biggest news stories.

Today: What the Hinman documents mean for Ripple, whether BlackRock’s Bitcoin ETF stands a chance, and how Hong Kong is doubling down on crypto…in a good way. Let’s go.


The Hinman Documents: Expectations vs. Reality

In an exciting twist in the high-profile legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), the long-awaited Hinman documents were unsealed last Tuesday.

  • A quick refresher: The SEC sued Ripple back in 2020 for selling its XRP token as an unregistered security.

  • Ripple contested these allegations, maintaining that XRP should be classified as a digital currency rather than a security.

What are the Hinman documents? Mostly email exchanges between former SEC members. The documents give valuable insight into the agency’s internal communications regarding a speech given by ex-SEC Director William Hinman in 2018 in which Hinman claimed that Bitcoin and Ethereum do not classify as securities.

Why the documents matter: Ripple fought hard for 18+ months to unseal the Hinman documents, hoping that they could tip the legal battle in Ripple’s favor.

But turns out? The documents appear to be more of a legal nothingburger.

  • Lawyers for both Ripple and the SEC are on the same page about Hinman’s statements not being legally relevant to the lawsuit, agreeing that an ex-official’s past remarks shouldn’t govern current policy.

  • Observers on Twitter argued that the documents are only a win in the court of public opinion by way of building public support for changes in how the U.S. regulates crypto.

Zoom out: The crypto industry’s stakes in the Ripple vs. SEC case are high—its outcome will set a critical legal precedent for future U.S. crypto regulation. If the court rules that XRP really is a security, it implies that almost all other tokens are as well.

The judge overseeing the case is expected to reach a final decision before the end of September. It’s a story we’ll be watching.

Bitcoin ETF Incoming

TradFi whales aren’t usually the ones to rock the crypto world—but BlackRock did just that. The world’s largest investment manager filed an application with the SEC to launch its own Bitcoin spot exchange-traded fund (ETF) last Thursday. If approved, the ETF might have bullish implications for the entire crypto ecosystem.

The TL;DR:

  • BlackRock’s proposed iShares Bitcoin Trust plans to own BTC that is held in custody by Coinbase (which BlackRock has partnered with before). The trust product is functionally the same as an ETF.

  • As the regulatory body overseeing ETFs in the U.S., the SEC has blocked any efforts to launch a spot Bitcoin ETF in the past. The agency insists that spot Bitcoin isn’t safe enough for retail investors, citing fears of market manipulation. But it does allow Bitcoin futures ETFs.

But this investment product actually stands a chance. Two reasons why:

  1. BlackRock is…well, BlackRock. As one of TradFi’s biggest and most trusted names, BlackRock's record of getting ETFs approved by the SEC is 575-1.

  2. The ETF proposal includes a surveillance-sharing agreement that could soothe the SEC’s concerns about Bitcoin market manipulation.

Big picture: The ETF would allow easy access for investors to get exposure to BTC without actually going into crypto itself. BlackRock’s commitment also suggests that big TradFi players are positioning themselves in preparation for the next crypto bull run.

The Good Kind of Pressure

Hong Kong is serious about becoming the world’s new crypto hub.

The Hong Kong Monetary Authority (HKMA), the region’s central bank and regulator, is reportedly pressuring major banks to sign crypto clients. According to the Financial Times, the HKMA asked Standard Chartered, HSBC, and the Bank of China last month why they were not working together with crypto exchanges and encouraged them to not be afraid.

Some context: Hong Kong has taken large steps to open its regulatory embrace in recent weeks…

  • In April, the HKMA issued a document requiring banks to help crypto firms gain access to banking services.

  • Hong Kong’s securities regulator opened the door for retail crypto trading on June 1.

  • This month, a lawmaker also invited Coinbase to register in Hong Kong amid the regulatory crackdown in the U.S.

In other news:

  • Binance is under investigation in France for aggravated money laundering.

  • Apple is making life hard for Lightning wallets.

  • A U.S. judge refused to freeze Binance.US assets as the SEC requested.

  • Polygon unveiled its 2.0 roadmap, introducing new utility for MATIC.

  • Binance teamed up with The Weeknd to launch a metaverse experience for the musician’s world tour.

Crypto Job Board

And that’s what you need on your radar today in crypto. Does BlackRock’s new bitcoin ETF stand a chance against the SEC? Reply and let me know what you think. Catch you back here next week!