Crypto Industry Gears Up for A Spot Bitcoin ETF Approval; Regulatory Outlook for 2024

Will the price of Bitcoin go up or down on an ETF approval in the sure thing down what layer two will take the headlines in 2024 which one on, let's say, scroll. What kind of crypto projects are investors focused on right now? Lots of fun gaming. But I think BRC 20 or Beco Bitcoins ecosystem is very important. Would you personally invest in any of the projects that were pitched on killer whales? Um The ones that I viewed not really what will be the biggest story for Ethereum of in 2024 Duncan outbreak. Some spicy takes there from bit, gets managing director Gracie Chen. Stick around for the full interview in just a few moments. Good afternoon and welcome to the very 1st 1st mover of 2024. I'm your host, Jen Sani. You'll notice that we look a little bit different. Moving into 2024. We're changing up the format we want to make the best show possible. So if you have feedback for us, please let me know by sending me ad M on Twitter. My handle is at Jens Sani. Jen NSA N A SI E. We will take all serious feedback and comments and try to implement it into the show. If you are trolling us or trolling me, I will not respond. That's just how it goes. All right, let's get into this show and take a look at the top news headlines today. The fee wars have begun blackrock fidelity and other spot. Bitcoin ETF applicants have revealed their fees as the crypto industry awaits final approvals from the securities and exchange commission. In final s one filing, Blackrock said its fee will start at 20 basis points for the 1st 12 months until the fund reaches $5 billion and then settles at 30 basis points. Fide listed a 0.39% fee. Arc and Beck both announced fees of 0.25% following the news, Bitcoin ticked above $44,700 as of 9:30 a.m. eastern time today, Bitcoin is above $45,000. Ark Invest sold $20.6 million worth of Coinbase shares on Friday across three of its exchange traded funds. Cathy Woods investment firm offloaded 100 and 33,823 coin shares which closed last week at 100 and $53.98. Arc invests target is to have no individual stock surpass 10% weighting of an ETF S value coin more than doubled in price at the tail end of 2023 causing the investment firm to offload holdings. And the salon of meme coin frenzy is fizzling dog themed Bonk Token whose price rallied more than 1000% in a three month period is down 70% from its December peak that saw the Token listed on prominent exchanges with hat, which gained popularity because of a cute picture of a dog wearing a hat is also dead nearly 80% after early holders got a more than 10,000% return on their capital. Despite this, Solana has become the strongest straw among unchain traders. According to metrics from last week, that show trading volumes and network fees crossing those of Ethereum, you can get all of the most up to date headlines on coindesk.com right now. Let's now turn to our first interview. Our first guest of the New Year has six market catalysts for 2024. And one of those is the spot Bitcoin ETF that is taking over news headlines. Joining us now is Bit Gett managing director Gracie Chen Gracie, welcome to the 1st 1st mover of 2024. So excited. It's a very exciting year to to be in right now in 2024. It definitely is ramping up to be a very exciting year, especially uh for this industry. You have six catalysts that you expect to see in 2020 for one of them is the approval of a spot Bitcoin ETF. So I got to ask you what you make of these filings. We saw this morning, I just mentioned them when I was going through our news headlines, uh we have some asset managers listing their fees, any surprises there. Uh Not really. So when I, when I wrote that catalyst in uh about 2024 it was about uh two weeks ago. Um and at that time, actually a few, even a few months earlier, iiii I said that I think spot ETF because by ETF approval is pretty much not, not about whether or not it's just about when. So right now January 10th is approaching. Uh and I and I still think the approval in the 10th on the 10th is is of a very high possibility. What do you think is going to happen to the price of Bitcoin? I'm gonna say if you say when, if we get a spot Bitcoin approval, well, that that's a bit a bit harder to, to tell uh unless I think in the, in the long run, definitely positive in terms of price because the, the, the Bitcoins by ETF S approval actually means there will be in investor influx from the traditional financial industries such as pension fund, institutional investors, uh high net worth individuals, family offices, et cetera. Uh So that's the first reason and then there will be more familiarity with the the investor vehicle and also uh getting more companies to look into crypto or Blockchain industry in general to see if there is something they can do. So it's definitely a positive for Bitcoin price in the long run. But in the short run, that's a bit tricky. Uh because the Bitcoin price, uh sorry that the Bitcoin for ETF Global is actually a little bit priced in, in the past few months uh since November, like uh the increase of the Bitcoin price. So in the short run, it depends on uh you know, how many uh how many approvals are received. And if there's any, any adjustment uh into those, the, the the issue, the issue of the ETF and also uh how many money or how much money are really coming into the industry, whether it's higher or lower than the market expectation. So in the, in the short run, it could possibly be a decrease of Bitcoin price. So be very cautious about, you know, um the, the, the the the change in the price in the short run, Gracie, I also hosts the Markets Daily podcast on the Coin Desk Podcast Network. We talk about the markets every morning and a few of our guests have said once we see a spot, Bitcoin ETF approval, the attention will change, the focus will change over to the Ethereum ecosystem. One of your market catalysts is the Ethereum Cancun upgrade. Talk to us about what you're expecting for the Ethereum ecosystem as we move into 2024. Yeah, uh I guess the the time shift right now I'm seeing or given the conversation I had with a few industrial leaders and some analysts in the facing the US. Uh The shift of of the focus is probably around February to March. Uh shifting from Bitcoin to the Ethereum um ecosystem because the Cancun or Duncan Duncan Cancun upgrade is scheduled for the first quarter but now in January. Uh and also during this time, the Ethereum and layer two ecosystem will continue to, to grow because of the core upgrade. And it's anticipated that the ZK layer two projects will see a surge in token issuance. Lots of projects are issuing their token in 1st and 2nd quarters of this year. Layer twos, I'm glad you brought up layer twos. They were a big part of the narrative. In 2023 we saw some big layer twos launched. Uh When, when I hear layer two, I immediately think of arbitra optimism Coinbase is layer two base. Uh What are you watching when it comes to layer twos this year? Oh, well, it's a bit biased because only two or three days ago when I was in Hong Kong, I was hiking with the co-founder of scroll. Uh She's based in Hong Kong and uh uh and a few other projects that, that the founders that I know, but you mentioned a few very important layer to changes Abit uh base that definitely uh the major ones issued in the year of 2023 I think in 22 the the the few projects I don't want to go into details in terms of talking about their names, but um grow is one of them uh that is, you know, increasing dramatically in terms of their user and uh projects building on their platform. Um Tao is another one. Both of these are founded by many Asian founders. Uh Well, I guess in general not talking about specific projects. Uh the layer two chains, the the most important kind of value is that they can store and retrieve off chain data on the Theorem magnet in a more cost efficient manner. And uh the transactions are later to a significantly cheaper after the Duncan or, or Duncan Conquin up upgrade. So this will provide benefits for the Ethereum users. But there's another saying or, or kind of market um insights or, or, or analysis in terms of how the layer tools could compete with a the rum ecosystem, which I'm still trying to figure out. That's one of the conversation that 11 of the topics I touched upon while while hiking with the scroll co-founder. But basically they are at different views in terms of whether layer two is really like truly building on Ethereum or it's, it's going to be a new ecosystem by themselves growing um around E theorem. That's really interesting. And I wanna unpack that a little bit more. You know, I talk about layer twos being the narrative of 2023 but that narrative was really and it's going to help solve the Ethereum ecosystems problems. It's going to help expand the Ethereum ecosystem. And now I hear that there are conversations happening that layer twos might create their own ecosystems. What might that look like? Unpack that a little bit more? For me again, I'm not an expert on layer two or in theorem like some of my friends who are building in the, in the space. but basically, um some of the layer two, if you see such as um polygon, like these are some of the uh I mean that that is building our room, but they are not using uh eths gas fee. Exactly. So they issue their own token and they have sort of a stand alone ecosystem by themselves. And that's what we mean by overnight when I hear my friends discussing uh whether they are two can be a new ecosystem. Um Yeah, and also the the ethers main net, it's actually um like for there. So there are only that many projects and project founders and builders and developers, right? So they either build on, on the E theorem directly or they build on layer two. That's also what I mean by um potentially the, the layer two projects can be a new ecosystem. And that kind of challenge the, the so called the, the, the, the, the king of uh uh Blockchain. Uh at least in terms of uh used as a, a gas or a uh uh uh uh an energy level like in terms of the theorem as the a Blockchain for a by default Blockchain for people to use. OK. Gracie, I wanna turn now to some recent news out of Bit Cat. Bit gets venture fund forsake ventures acquired crypto media site. The block, talk to us about the role journalism plays in the development of the industry. Oh OK. So just let me clarify. So Force Adventure is a stand alone uh capital, although Beget is one of their LP S limited partners. Uh The decisions between Beget and Force Adventure is still very independent by themselves. Um Yes, I had the honor to meet some of the um founders or the leaders, the blog um coin desk, coin telegraph. I met your CEO as well. He's uh um based, he's a Harvard Business School graduate. So um by having this conversation with many top crypto leaders, uh I think a few, a few things that that is happening. Very importantly. Number one journalism or media has always been a very important ecosystem player in the crypto and Blockchain industry by being the information provider by uh also, you know, challenging the some of the bad players or Black Force. Um But basically this stand alone um role of promoting as well as monitoring. The space is very important. You were biased when it came to layer twos, I'm biased when it comes to the media. I agree with you. I think that, you know, crypto media has shown how important uh it is to holding the powerful people in this industry accountable. We saw that happen with Sam B and freed. Of course, last year we gotta wrap it up, Gracie. I could talk to you all day. But I have to ask you before we go. When does killer Whales air? What is happening? I've seen so many trailers with you on there. When do we get to watch that? Well, I wish I, I have an exact date. I I heard that it's going to be launched and aired in the first quarter of on a few important channels. They mentioned that they had conversations with some major channels um such as Netflix, uh Amazon Prime or even Apple TV. Uh But they haven't decided on the channel. I think so. Don't, don't quote me on this because I'm, I'm just one of the judges, Gracie. We are gonna have to wrap it there. Thanks so much for joining the very 1st 1st mover episode of 2024. It was a pleasure having you. Thank you for having me. That was bit get managing director, Gracie Chen. The chart of the day is presented by crypto.com, the leading crypto platform trusted by over 80 million users worldwide. It's now time to take a look at the chart of the day. According to TRM labs, North Korean hackers stole $600 million worth of crypto in 2023. This number could have been even higher at $700 million if additional hacks that took place in the final days of 2023 are confirmed to have been committed by North Korea. This chart right here shows the total amount of funds stolen decreasing by 30% from 2022 to 2023. After dramatically increasing from 21 to 2022 the research firm says the Democratic People's Republic of Korea was responsible for almost a third of all funds stolen in crypto attacks. Last year. North Korean Attackers usually compromise private keys and seed phrases to transfer stolen funds to wallet addresses controlled by North Korean operatives. TRM lab says the funds are then swapped mostly for us DT or Tron and converted to fiat currency using high volume OTC brokers. We're gonna keep the convo on crypto crime going near the end of 2023. The industry watched closely as Sam Bateman freed faced multiple charges related to fraud in a New York court. Sam was found guilty on all charges and is awaiting sentencing. Recently, we learned that he won't face a second trial that was scheduled for this year on charges related to conspiracy to bribe foreign officials. Joining us. Now to discuss what this all means is Brian Cave, Leighton Paisner L LP partner Renato Marotti Renato. Happy New Year. It's such a pleasure to see you on the screen again. Great to see you. All right, let's talk about this SPF news. Everyone was talking about it at the end of last year. Now we hear that that second trial, he was scheduled to be a part of prosecutors won't be moving forward. What's happening here? All this happening is that prosecutors won so handily that they don't need a second trial. So in the United States and Federal court, if prosecutors get a conviction on any felony count, they can present all evidence to the judge of all crimes, whether charged, convicted, acquitted, dismissed. And then the judge can consider all of that when crafting the sentence, it may sound unfair. But even though SPF was not convicted of those additional crimes, the judge can consider all of that evidence anyway. And so realistically, the sentence is exactly the same as it would be if they went to a second trial. So, uh essentially the government won. So handily that they're, uh, that they don't even need the second trial to get the sentence that they want. Renato before we dig deeper into this. I know you've given us, um, a prediction on how many years you think Sam Bakeman Fried will spend behind bars. But it's the beginning of the year we got to re up that conversation. Uh, Sam's facing sentencing in March, I believe. How many years do you think? Do you think he's gonna get, I wouldn't be surprised if the, if the digits start in two like a 20 plus years, 20 to 25 years. I think that's a, that would be a very hefty sentence for anyone. Uh And, but I think it's a, it's a reasonable sentence given the extent of the fraud. So definitely, um they will not be taking it easy on Sam Baker. Freed. The judge was not happy with his shenanigans while he was out on, you know, we talk about crypto crime so often on the show, a bunch of very high profile uh trials that are coming up this year. But I want to broaden uh the conversation out a little bit and talk about why, why this matters. Of course, it matters to you. It is your profession over here. We cover the news. But what should folks be taking away from these trials as we talk about them? Sure, like we talk about uh a lot of trials, there'll be, you know, a Celsius trial coming up uh in the upcoming year, but at the end of the day, um and I think everyone watching this knows that criminals and crypto crime, that's a very small fraction of this industry. And there's a lot of legitimate players out there. You know, the ripple case was a case that for example, there's a lot of focus this year because the sec actually lost uh in a high profile case. Um And I think what a lot of people are wondering is what does this mean, does this mean that the SEC is going to roll out some regulation? Does this mean we're finally gonna get a regulatory framework in the United States for crypto? Uh And the answer I think is no, I mean, the SEC, um, did dismiss uh, some of the cases but they're appealing. Um, and they are trying to move forward. They've continued their aggressive approach. I think we're gonna see more, uh, what people call regulation by enforcement for the sec where they're fighting in court, not criminal cases, but civil cases against companies like a legitimate companies that are actually interested in being compliant and trying to figure out what regulatory uh framework would be. And so unfortunately, I think we still have gonna, we're gonna have uncertainty in 2024 and that may not clear up for some time. Well, I mean, now I just feel like I'm left with more uncertainty. Renato, what, how should people be looking at, uh, what's going on with the SEC moving forward? I mean, just from a legal perspective, what would you tell your friends around the dinner table when they're asking about all of the ins and outs of this industry? Sure. And I, and I'll tell you, I tell my clients the same thing which is, there are a lot of foreign jurisdictions, uh, the UK and others that are adopting, um, crypto frameworks that are really rational that are uh from their legislative bodies, whether it's parliament or some other body, the United States, we don't have that yet. It may be that Congress comes together. I do hear from some folks in the industry that they're optimistic. Uh I'm never optimistic about the two parties that Congress agree on anything. Uh They have trouble even keeping the government open. Um If that happens, great. Uh But until that happens, I really think uh we're gonna have to see what happens in the election of 2024 before we can, um you know, see a change in direction from the SEC. I really don't think Chairman Gensler, um he has a different approach, there is some daylight between the SEC and CFTC. And as I've pointed out uh publicly, the CFT CS chair has actually come out and he's trying to portray his agency as the leader uh in, in this space and trying to position itself differently. But without a word from Congress, I really don't see the SEC uh being convinced of that. And until the SEC takes a different view, uh we're all well, you know, in the same boat in the, in this industry, it's interesting you bring up the CFTC versus SEC battle for oversight of this industry. Where do you think that might land? Do you think the two agencies can work together? I know that was suggested in a few of the draft bills that were drawn up last year, you know, they do work together occasionally but you also see differences, right? You know, look at their different approach to its Binance. The SCFTC cut a deal, the DOJ cut a deal. SEC did not. Um, and I, I really think that going forward, you know, the SEC is kind of acting um out of step with, uh the CFTC, um they're acting in a manner that I think is creating a lot of uncertainty in the industry and that's really um an issue that cannot be resolved. The CFTC doesn't have the authority to tell the SEC like to sit down or, or, you know, let's work together. They don't have the authority to force them to do anything. So I really think until Chairman Genzler and the SEC have a different approach, um we're kind of stuck although the CFTC is notably sending public signals that they disagree and they're taking a different approach which might position the CFTC in legislation um to be the, uh uh you know, regulatory body that ultimately oversees this space. I want to look forward to 2024. Like I said, everyone was talking about Sam Bakeman Fried last year. Some say that the conversation is gonna switch over to Alex Mossy who is set for his criminal trial in September of this year. What do you think is gonna happen there? Yeah, I think it's gonna be another difficult case for the defendant. You know, I, I heard Jen a lot of people telling me, oh, the prosecutors are taking it easy. He had s Bakeman freed. I think we 2023 proved that that did not. Uh, that was not the case. I mean, the guy who had his bond revoked and we, you know, was charged with lots of felonies and convicted and he's gonna spend a lot of time in prison. I, I really see the exact same fate. Uh, here, you know, Celsius, the, the entity was not ultimately prosecuted. They ended up cooperating with prosecutors and threw it, threw him under the bus. Appears rightfully so based on the allegations, obviously, he's still presumed innocent. Uh but uh it really looks like a very, very difficult case for him to win. Renato Sam didn't really make it easy for prosecutors, did he not at all? Uh Not at all. You know, most people when they're, when they're uh charged with felonies, they keep their mouth shut, they obey the conditions of release. They realize that I might lose this trial. This judge is gonna sentence me. Uh Samba MRE didn't obey the judge's orders, didn't com you know, comply with the bond conditions. Uh was out there blasting the prosecutor spreading a lot of disinformation, uh creating shenanigans even during the, the middle of the trial just did everything possible to make life difficult for the prosecutors, but also to ultimately increase his sentence at the end of the day. Renato. Thank you so much for joining the very 1st 1st mover episode of 2024. It's always a pleasure having you on and hear your perspective. Wow. I'm honored. Thank you. That was Brian Cave, Leighton Paisner L LP partner Renato Marotti. That is a wrap for the very 1st, 1st mover of 2024. Thank you so much for joining us and watching and thank you to our guests, Gracie Chen and Renato Marotti. We will be back same time, same place with first mover tomorrow. Just before we go a little note. Sometimes on first mover, we edit our interviews for consistency and clarity. You can get all of your news updates on coindesk.com. And if you're interested in what's going on in the crypto markets, check out markets daily on the Coin desk Podcast Network. That's also hosted by me. That's a wrap for first mover today. We'll see you tomorrow.