SEC Chair Gary Gensler Heads to Washington for Crypto 'Super Bowl'

We’re kicking off what could be a massive week for crypto, as all five SEC commissioners are set to testify in front of the House Financial Services Committee for the first time since 2019.

It’s a pivotal moment for the industry as lawmakers dig into how the SEC has been handling crypto regulation. As always, the ripple effects from these hearings will be closely watched by the markets. Joining us this week to break it all down is Rob Hadick, General Partner at Dragonfly, fresh off a whirlwind trip from Asia’s top crypto conferences where he picked up on bullish optimism.

“In my mind, there’s nothing to be negative about going forward,” he said in our interview above. Let’s dig in…

Bullish Sentiment Grows Despite Mixed Signals

As the markets prepare for what could be a regulatory rollercoaster, Bitcoin continues to stay in the spotlight. With $321 million in inflows into digital asset products last week, most of that into Bitcoin ETFs, institutional interest remains strong.

On the other hand, Ethereum continues to struggle, notching five straight weeks of outflows capped with another $29 million in outflows from last week. Rob shared his perspective on the current state of the market, explaining that while Ethereum has been stuck in a bit of a narrative rut, the broader macroeconomic picture remains positive. With the Fed signaling additional rate cuts and economic indicators like wage growth and jobless claims looking favorable, there’s plenty to be optimistic about.

Options Trading for Bitcoin ETFs: A Game Changer?

A major milestone for Bitcoin ETFs was reached last week, with the SEC giving the green light for options trading around BlackRock’s Bitcoin ETF. Rob noted that this could bring heightened volatility but also increased liquidity, which may lead to more institutional money entering the space. Analysts like Eric Balchunas at Bloomberg have been bullish on this development, suggesting that it is likely to accelerate major institutional adoption.

Rob echoed this sentiment, emphasizing that more participants in the space, whether they’re hedging or speculating, is a positive development for the industry. Options trading officially going live will follow approvals from the CFTC and the OCC, but those could follow shortly.

SEC Hearing: The Main Event

The real fireworks will come from Capitol Hill this week as SEC Chair Gary Gensler and the agency’s other four Commissioners testify. It’s the first time all five Commissioners have appeared before Congress since 2019, and crypto regulation will be a big part of the conversation.

The hearing is likely highlight the growing divide within the SEC, with "Crypto Mom" Hester Peirce expected to push back on Gensler’s aggressive enforcement actions. Expect a showcase of force by pro-crypto Republicans. Last time Chair Gensler appeared before Congress the gloves came off. Rob is hopeful that Congress will hold the SEC accountable for its controversial regulation-by-enforcement approach, which has frustrated many in the crypto industry.

Coinage will take the hearing live on YouTube and X live at 9:30AM EST.

Prison Time for FTX’s Caroline Ellison?

Just as one face of the crypto industry is set to emerge from prison, another will learn if she is set to be heading in. On Tuesday, former Alameda Research CEO Caroline Ellison will be sentenced in Manhattan court.

Her defense team is leaning into her effective testimony that led to SBF’s conviction at trial as reasoning for her to avoid jail time. For what it’s worth, bettors on Polymarket have about a 41% chance that she’ll be able to walk. Bernie Madoff’s former prosecutor previously told Coinage that it’s not unlikely to see another helpful witness avoid jail time.

On the other hand, former Binance CEO “CZ” is set to be released from the halfway house he’s been held in. CZ has served his four-month sentence in California after pleading guilty to violating the Bank Secrecy Act. At an estimated net worth of $25.3 billion, CZ is believed to be the richest person to ever go to prison in the US.

Closing Thoughts: A Bullish End to the Year?

As we approach the end of 2024, Rob Hadick said he’s confident that the crypto markets are on the cusp of something big. With more institutional money flowing in, new blockchain technologies like Firedancer soon launching for Solana, and increasing regulatory clarity on the horizon, the stage is set for a strong finish to the year. Rob left us with a message of optimism: “No matter what happens this week or at the election, it's all moving in the right direction.”

Other Web3 Headlines:

• Ethereum transaction fees surge even as active accounts fall to year-to-date lows

• Crypto and stocks share strongest positive correlation in years after Fed rate cut: Bloomberg

• Could Kamala Harris Be Better for Bitcoin Than Trump? VanEck Thinks So

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