🔮 Institutional 13F's, Memecoins, SAB 121, ETH ETFs, Crypto Accounting

Top Stories

900+ Entities Disclose $10.7B in Spot Bitcoin ETF Holdings

Over 900 institutional entities have recently disclosed their holdings in spot Bitcoin exchange-traded funds (ETFs) through 13F filings, revealing a combined investment worth $10.7 billion. This disclosure marks a significant development in the cryptocurrency market, showcasing growing institutional interest in digital assets. Leading the pack in spot Bitcoin ETF ownership are major investment firms like Millennium Management, Susquehanna International Group, and Morgan Stanley. Notably, institutional investors have shown a preference for Grayscale and BlackRock ETFs, with a substantial portion of assets under management (AUM) allocated to these funds. Analysts interpret these filings as an initial step towards larger institutional involvement in Bitcoin ETFs, indicating a positive sentiment towards the cryptocurrency market's future trajectory.

Source: Bloomberg

Is the Market Underestimating Spot ETH ETF Approval Odds and Timing?

The SEC has crucial deadlines on May 23 and 24 to decide on the applications for spot Ethereum ETFs from Blackrock, Fidelity, Bitwise, VanEck and more. Expectations for approval have waned in recent months, with Bloomberg ETF analyst Eric Balchunas giving it "slim to none" odds due to the SEC's reported lack of communication with issuers. While this appears to be the consensus opinion, some believe that the market may be undervaluing the likelihood of an approval. “We think the market may be underestimating the timing and odds of a potential approval,” Coinbase analyst David Han stated in a new report on Thursday. He added that Ethereum could surpirse to the upside in the coming months, as it does not face major supply-side pressures like token unlocks or miner sell-offs. Currently, Polymarket estimates a 16% chance of approval in May, up almost 90% this week. With crypto emerging as an election issue and potential litigation if denials occur, Coinbase believes the approval odds are actually closer to 30-40%.

Source: Polymarket

Lido Proposes Alliance to Boost stETH-Based Restaking

Lido, the leading Ethereum liquid staking protocol, plans to form the Lido Alliance to promote projects and infrastructure centered around its stETH token. This proposal, made by Steakhouse Financial, aims to foster new restaking architecture and support projects providing permissionless restaking architecture, liquid restaking tokens (LRTs), and actively delegated services (AVSs). Governed by LDO tokenholders, the Alliance would assess and endorse Ethereum-aligned projects. This initiative comes as Lido faces competition from LRT protocols like EtherFi and Renzo, which have seen significant inflows, leading to a decrease in Lido's market share. Currently, stETH represents 28.7% of staked ETH, down from 32.5% in September. The proposal aims to maintain stETH as a leading collateral asset within restaking and support Ethereum-aligned validator services to counter these competitive pressures. See similar: MarginFi To Launch Solana LST-Backed Decentralized Stablecoin This Month

Source: Dune

"Roaring Kitty" Revival Sparks Meme Stock Surge Amid Cryptocurrency Resurgence

The resurgence of Keith Gill, known as "Roaring Kitty," has ignited a frenzy in meme stocks within U.S. markets. Gill's reactivation of his @TheRoaringKitty account on X, marked by a cryptic meme post, triggered a more than 100% surge in GameStop's stock on Monday morning, prompting trading halts due to volatility. Gill and the subreddit r/WallStreetBets were central figures in the 2021 meme stock craze, which saw astronomical gains in stocks like GameStop and AMC Entertainment. Memecoins, championed for their ability to engage users, have seen a surge, reflected in indices like the GMCI Meme Index, which rose by 6.4%. Gill's previous activities prompted regulatory scrutiny and a U.S. Congressional hearing, with platforms like Robinhood drawn into the controversy. Settlement cycle issues highlighted during the frenzy have persisted, even as Robinhood's business has increasingly focused on crypto trading, experiencing a 224% year-over-year increase in trading volumes in the first quarter of 2024. Despite efforts to engage with the SEC on crypto trading, Robinhood faces potential legal action for alleged securities violations, underscoring ongoing regulatory challenges in the crypto space.

Regulation

House Passes SAB 121 Repeal Amidst Veto Threat; Crypto Policies Spotlighted

The House passed a resolution to repeal SAB 121, but the White House has announced it would veto the bill if it passes the Senate. Rep. Sean Casten (D-IL) introduced a bill targeting financial institutions that transact with funds processed through mixers, pausing such transactions for two years while the Treasury studies privacy-enhancing technologies and reports to Congress. During a House Financial Services subcommittee hearing, Democrats backed the SEC's enforcement actions against crypto, whereas Republicans emphasized broader issues like capital markets, due process, and innovation. On the campaign trail, President Trump differentiated his crypto stance from the Biden Administration, advocating for U.S. innovation and urging crypto supporters to vote for him. (Read: Regulatory Rift: Clash Over Crypto Accounting Procedures for more)

Ethereum ETFs Awaiting SEC Approval

Several major investment firms have filed applications with the SEC for spot Ethereum ETFs, hoping to offer investors exposure to Ethereum without directly holding the cryptocurrency. Key players include BlackRock, Grayscale, Ark Invest/21Shares, Fidelity, VanEck, Hashdex, Franklin Templeton, Invesco/Galaxy Digital, and Bitwise. The SEC’s decision deadlines for these proposals range from late May to early August. Approval of these ETFs would follow the historic approval of Bitcoin ETFs earlier this year, signaling a significant integration of Ethereum into traditional finance.

U.S. Financial Titans Collaborate on Blockchain Settlement Platform

Leading U.S. financial institutions, including Citi, Visa, Mastercard, JPMorgan, and Wells Fargo, are teaming up to explore shared ledger technology for settlements. The Regulated Settlement Network (RSN) aims to streamline transactions by tokenizing various assets on a single platform, enhancing efficiency and interoperability. This proof of concept (PoC) builds on previous cross-border initiatives and focuses on delivery versus payment transactions. Key stakeholders, such as BNY Mellon and regulatory bodies, will assess its compliance with U.S. laws. Similar initiatives globally, like the Regulated Liability Network PoC in the UK and Project Promissa, highlight the widespread drive to modernize settlement systems through innovative blockchain solutions.

Regulatory Rift: Clash Over Crypto Accounting Procedures

The U.S. financial landscape is embroiled in a battle over the appropriate accounting procedures for financial institutions holding clients' cryptocurrency, with the U.S. Securities and Exchange Commission (SEC), House of Representatives, and White House at odds. The focal point is SEC Staff Accounting Bulletin (SAB) No. 121, issued in March 2022, which outlines how institutions should account for crypto holdings on their balance sheets. Despite initially being published as staff guidance, it has faced significant opposition from banks and industry groups due to its impact on capital reserves amid market volatility. The Government Accountability Office has contested the bulletin's status, labeling it a rule under the Congressional Review Act (CRA), potentially leading to broader ramifications. However, the resolution's overturning would affect various aspects of crypto custody, raising concerns about consumer protection. President Joe Biden has signaled his intention to veto the resolution, citing potential disruptions to SEC efforts to safeguard consumers.

S&P Global Urges Asset Managers to Embrace Tokenization for Efficiency Gains

S&P Global Ratings advocates for asset managers to embrace tokenization of real-world assets, citing significant efficiency benefits over traditional financial systems. The agency highlights the rise of tokenized U.S. treasury funds, led by BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), which surpassed $1 billion in value within a week of launch. Tokenization allows for round-the-clock liquidity access, mitigating risks like bank runs, and facilitates new use cases such as liquid collateral and peer-to-peer transfers. While acknowledging regulatory and interoperability challenges, S&P sees public blockchains offering superior liquidity advantages compared to private networks. Tokenized real-world assets present opportunities for on-chain businesses to access traditional assets and yields without off-chain transfers, driving efficiency and liquidity in the sector.

Source: RWA.XYZ

Other Domestic Regulation Updates

• Robinhood Receives Wells Notice From SEC
• Bitcoin Self-Custody Enshrined As a Right In Oklahoma
• ARK, 21Shares Drop Staking From ETH ETF Applications

Other International Regulation Updates

• Tornado Cash Dev Alexey Pertsev Found Guilty by Dutch Court
• Harvest Global to Make Hong Kong-Listed ETFs Available in Singapore
• Circle to Relocate Legal Domicile from Ireland to U.S.
• U.S. Orders Chinese-Backed Miner to Sell Land Near Military Base 
  

Pain & Gain

Pain

• Blast Community Split Over Latest Jackpot Distribution
• Solana Meme Coin Devs Fight on Livestream to Pump Price—Until One Loses a Tooth
• GameStop Trading Paused Nine Times as Roaring Kitty Return Drives Meme Rally
• Bitcoin hacker who took $72m returns funds in exchange for $7.2m as ‘bounty’
• Mango Markets insiders hit back at accusations they’re raiding the DAO’s $37m treasury
• Degen Chain Back Online After 50-Hour Outage 
• Sonne Finance Suffers $20 Million Exploit
  

Gain

• Pump.Fun Surpasses Uniswap in Weekly Revenue
• Pudgy Penguins Puts Toys In Target Stores
• Friend.tech Price Bounces Back 23% After Chaotic V2 Launch

• Jupiter Enables Trading for Non-Native Solana Tokens Including DOGE and BNB
• EigenLayer Airdrop Claims Go Live