Appold Market Watch - Week 13 to 17 May 2024

Market Update & Industry News - Week ending 17 May 2024

🔷 Over 600 major financial institutions reported through their 13F filings to the U.S. Securities and Exchange Commission that they invested a combined total of $3.5b into Spot Bitcoin ETFs. Millennium Management had the largest holding around $1.9b allocated to Bitcoin ETFs.  

Appold view: Form 13F is a quarterly filing required by the SEC from institutional investment managers with at least $100 million in qualifying assets. This snapshot, as at the end of March, makes insightful reading. Please feel free to reach out to us for our list of hedge fund rankings. 

🔷 The US Senate passed legislation that would overturn current regulatory restrictions from the SEC which imposed on highly regulated financial firms from acting as custodians of digital assets. With a majority vote of 60 to 38 the bill that aims to dismantle the Staff Accounting Bulletin (SAB) 121 will need approval from the President who stated previously that he would veto it.

Appold view: Clearly a contentious issue. The Senate’s passage of legislation to overturn SEC restrictions on digital asset custody underscores the balance between fostering innovation and ensuring regulatory oversight. The final impact of this digital asset regulation will hinge on the President’s veto decision and potential Congressional response.

🔷 Bankrupt crypto lender, Genesis Global, received court approval of its Chapter 11 liquidation plan to return $3b in both cash and digital assets to its customers. An objection from the owner of Genesis, Digital Currency Group (DGC) to the US Judge was rejected stating that Genesis will have to pay all creditors including federal and state financial regulators before paying its owner DGC.

Appold view: A win for creditors and regulators. Bankruptcy law is very clear on how payouts work and DGC objecting was disappointing. The rule of law and fairness prevailed. 

🔷 Switzerland’s Federal Council announced plans to enforce the globally standardised Crypto-Asset Reporting Framework (CARF) tax reporting standard. In addition, the Swiss Government published a consultation paper to gauge public opinion regarding the government’s intent to crack down on tax evasion by participating in the Automatic Exchange of Information (AEOI), a tax authority collaboration group of countries worldwide.

Appold view: Switzerland's enforcement of CARF and participation in AEOI enhances its reputation as a responsible financial hub. It may be more inconvenient for firms in the short term but positive for those with a mature, longer-term outlook on doing business in this sector.

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