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BlockFi has filed a proposal for a spot bitcoin exchange-traded fund (ETF) with the Securities and Exchange Commission (SEC).

The BlockFi NB Bitcoin ETF would trade on the New York Stock Exchange and hold bitcoin, according to its S-1.

The filing is under the Securities Act of 1933, and joins more than 20 similar proposals awaiting a decision from the U.S. securities regulator. Only 10 of those proposals have a decision date from the SEC, which comes when the attached exchange files a 19b-4 to list the product. NYSE has yet to file a 19b-4. 

The BlockFi NB Bitcoin ETF joins BlockFi’s proposed futures offering, the BlockFi Bitcoin Strategy Fund. The futures filing came after SEC Chair Gary Gensler hinted he’d be more likely to approve a futures-based bitcoin product under the Investment Companies Act of 1940 as opposed to the many 1933 Act spot proposals sitting in the SEC’s inbox. 

Since then, multiple 1940 Act futures products have received the green light to trade, though BlockFi’s futures proposal has yet to move forward.

Still, it’s unclear what will come of the spot ETF proposals. The SEC is supposed to decide the fate of VanEck’s offering by November 14, the first of the lot. Bloomberg Senior ETF analyst Eric Balchunas speculated on Twitter that BlockFi’s proposal is a way of staying in the mix of issuers vying for approval, but until Gensler indicates he’s had a change of heart on spot bitcoin products, “this thing is on ice like the rest (25-ish) of them.” 

The move may be part of a broader push towards crypto ETFs for the financial services firm. Last month, it announced it had teamed up with investment manager Neuberger Berman to create a business that would launch crypto asset management products like ETFs and “other traditional structures.”

But it’s also been a tumultuous regulatory season for the lender. BlockFi is still facing a cease-and-desist from the state of New Jersey for its interest accounts. Alabama, Texas, Vermont and Kentucky are making similar inquiries into the firm’s high-yield accounts, arguing that they constitute securities offerings themselves.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin continued to rise toward its all-time price high of nearly $66,000 on Monday. The cryptocurrency was up about 5% over the past 24 hours, indicating a rise in bullish sentiment.

Equities and cryptocurrencies are rising as central banks in Europe and the U.S. appear to be in no rush to raise interest rates. Despite plans to ease monetary stimulus, market participants generally view low interest rates as supportive for assets deemed to be risky.

Still, once seasonal strength for cryptos and equities fade, next year could be difficult for risk assets.

“The Federal Reserve has started gently reining in its bond purchase program, and could well tighten more sharply in the months to come, potentially triggering a mini sell-off,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, a British financial services company, wrote in an email to CoinDesk.

“What is particularly worrying is that many investors get caught up in the fear of missing out on rapid price gains and have borrowed money to invest in highly risky strategies,” Streeter wrote.

Latest Prices

• Bitcoin (BTC): $66,091.48, +5.33%
• Ether (ETH): $4,764.83, +2.9%
• S&P 500: 4,701.70, +0.1%
• Gold: 1,824.30, +0.44%
• 10-year Treasury yield closed at 1.498%

For now, charts suggest further upside in bitcoin if a breakout above $66,000 is confirmed this week. “Bitcoin has ample room to rise on the technical analysis side, as the bulls have built-up strength during the first cryptocurrency’s month-long consolidation,” Alex Kuptsikevich, a market analyst at FxPro, wrote in an email to CoinDesk.

Ether option volumes rise

Despite lower trading volume in the spot market, ether’s option volumes have risen to their highest level since May. Increased trading activity in the option market has coincided with a breakout in ETH to an all-time high of around $4,700.

“Option volumes generally increase when markets turn volatile and traders take directional bets as buyers of options have a potential to earn high gains while keeping their losses limited (due to a non-linear option payoff),” crypto research firm Kaiko wrote in a blog post.

“However, despite low levels of volatility, option volumes recently hit their highest level since May,” Kaiko wrote.

Altcoin roundup

• Shiba Inu snaps five-week winning trend: Popular meme token shiba inu (SHIB) recently hit a new record, with speculative fervor in the token reaching unprecedented levels, CoinDesk’s Omkar Godbole reported. The number of addresses that acquired the cryptocurrency within 20% of the all-time high climbed sixfold in the eight days ended Nov. 2, amounting to 12% of the total count of non-zero addresses. The last time a spike like that occurred was in May, and it paved the way for a 90% crash of the token.
• Sequoia invests in DeFi project Parallel: Sequoia Capital is backing a seven-figure funding round for decentralized finance lending platform Parallel, CoinDesk’s Danny Nelson reported. The funding values Parallel, a Polkadot blockchain-based protocol, at $250 million. Parallel is building a crypto network that hasn’t fully launched yet. The round comes less than two weeks after Sequoia pledged to restructure its investing playbook in part to more aggressively court crypto startups, similar to what fellow venture capital firm Andreessen Horowitz is doing.
• Banking industry likely to capitalize on stablecoin deposit demand: Morgan Stanley’s lead cryptocurrency strategist, Sheena Shah, said in a report that the banking industry will most likely try to capitalize on the demand for stablecoin deposits on the back of the market’s exponential growth, CoinDesk’s Will Canny reported. One reason is that the coins provide access to crypto-deposit interest rates and decentralized finance. Crypto lenders offer over 5% interest on some of the coins, which will cause regulators and governments to respond, the report said. Shah added that cryptocurrencies are trading “similarly to risky assets.”

Relevant News

• Crypto Mining Stocks Rally After Bitcoin Surges Near Record, Ether Hits All-Time-High
• BlockFi, Neuberger Berman File for Spot Bitcoin ETF
• Mastercard Launches Crypto-Linked Payment Cards in Asia Pacific
• Argo Blockchain Files to Raise Up to $57.5M in Senior Notes
• Maple Finance Launches Permissioned Institutional Lending Pool With BlockTower, Genesis

Other markets

Most digital assets in the CoinDesk 20 ended the day higher.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

• Litecoin (LTC): +12.26%
• Algorand (ALGO): +8.8%
• Bitcoin Cash (BCH): +6.71%

Notable losers:

• Polygon (MATIC): -0.54%
• The Graph (GRT): -0.31%
• Tether (USDT): -0.06%
• USD Coin (USDC): -0.04%

Digital asset products saw inflows totaling $174 million last week, bringing year-to-date (YTD) inflows to $8.9 billion. This is a significant increase from the $6.7 billion pumped into digital assets in 2020.

Total assets under management (AUM) have also reached an all-time high of $80 billion, with bitcoin and ether leading the chart with roughly $53 billion and nearly $20 billion, respectively, according to CoinShares data.

Inflows in bitcoin totaled $95 million last week with a year-to-date record of $6.4 billion invested in the largest cryptocurrency.

With the recent events in the digital asset industry, these new highs shouldn’t be surprising because cryptocurrency investments are becoming more mainstream. On Monday, former Citigroup CEO Vikram Pandit said that in the coming years, every major bank and/or securities firm will think about trading crypto.

For Ethereum, sentiment has remained positive. Funds focused on the blockchain’s native cryptocurrency, ether, saw inflows of $31 million last week. “Ethereum’s market share has suffered in recent months due to bitcoin’s dominance, but the recent combination of positive price performance and inflow has seen their AUM rise,” the report said.

Meanwhile, other altcoins associated with blockchains remained popular as well. Polkadot’s DOT generated $9.6 million, the largest weekly inflow on record, while Solana’s SOL and Cardano’s ADA attracted $8.5 million and $5 million, respectively.

Another coin that stood out last week was TRON, the coin associated with a digital platform focused primarily on hosting entertainment applications; there were inflows of $22 million. Tron is now the eighth largest coin by assets under management, according to CoinShares data.

Notabene, a New York-based startup specializing in crypto regulatory compliance, announced it raised a $10.2 million Series A round on the heels of finalized guidance from the global watchdog Financial Action Task Force (FATF). 

Chicago-based Jump Capital and Cambridge, Mass.-based F-Prime Capital led the round. Jump’s Peter Johnson will serve on Notabene’s board. 

Notabene, founded in April 2020, announced a nearly $1.8 million seed round led by Castle Island Ventures in November 2020. It also raised previous support from Y Combinator and others. 

The startup largely focuses on helping crypto firms and financial institutions comply with the FATF’s “travel rule,” which requires so-called virtual asset service providers (VASPs) to “obtain, hold, and transmit required originator and beneficiary information.” FATF released its finalized crypto guidance on Oct. 28 after issuing a draft in 2019. Compliance with the guidelines will be crucial for exchanges seeking operating licenses.

“Really what it says is that if you’re a crypto exchange, and you are sending funds on behalf of your customer to another crypto exchange, you need to understand who is the ultimate beneficiary of that transaction,” Notabene CEO Pelle Braendgaard told The Block. These include withdrawals and deposits to exchanges, he said.

Notabene estimates that more than 80% of the world’s exchanges will have to implement the travel rule by the second quarter of 2022. 

“It’s really difficult — it’s not an easy thing to do,” Braendgaard said. 

Notabene already counts exchanges like Bitso, Crypto.com, Luno and Paxful among its customers. Financial institutions and banks are also reaching out to Notabene, Braendgaard said. The company will use the fresh funds to continue building out its product team. 

The global nature of exchanging digital assets appears to be driving some of this urgency to comply with the travel rule. VASPs are not just faced with the challenge of appeasing their own regulators — they also have to figure out how to not lose overseas transaction volumes in the process, Braendgaard explained. 

For example, South Korean exchanges will be required to implement the travel rule by March. But now, any exchanges sending large amounts of transaction volumes from South Korea — whether or not they’re based in the country — also have to heed those regulations.

“So, we’re seeing a large influx of companies that are moving up their own internal travel rule compliance so they don’t lose transaction volume,” Braendgaard said. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Coinbase Global Inc.’s (COIN) trading volumes and revenue will likely be the focus of investor attention as the cryptocurrency exchange gets set to report third quarter financial results Tuesday after the market close.

“Coinbase’s platform trading volumes are a key metric given the majority of company revenue comes from retail and institutional trading fees,” John Todaro, a research analyst at New York-based Needham & Co. told clients in a note, who has a buy recommendation on the stock.

Coinbase posted trading volume of $462 billion in the second quarter, its second ever as a public company, up from $335 billion in the first quarter. Mizuho Securities expects that figure to fall to about $315 billion in the third quarter.

Coinbase warned in last quarter’s earnings report that monthly transacting users and trading volume would be lower in Q3 compared to Q2, citing lower volume levels stemming from a drop in crypto asset prices in the quarter. “August month-to-date, retail [monthly transacting users] and Trading Volume levels have slightly improved compared to July levels but remain lower than earlier in the year,” Coinbase wrote. The company also slightly lowered its yearly forecast range for monthly active users to 5.5 million to eight million, from 5.5 million to nine million previously.

What’s next?

The recent jump in the price of bitcoin could aid Coinbase’s commissions, though Wall Street remains divided on Coinbase’s prospects moving forward. Mizuho Securities analyst Dan Dolev wrote recently that Coinbase’s “over-reliance” on trading commissions leaves the firm exposed to long-term take rate compression and industry competition. Still, about two weeks ago, Dolev boosted his overall revenue estimates for Coinbase’s third quarter, citing higher bitcoin prices and increased volatility. Mizuho has a neutral recommendation on the shares.

At least one analyst is urging investors to overlook quarterly trading fluctuations and focus on the larger industry trends. “Some of the near-term themes have similarities to HOOD [Robinhood] as trading engagement slowed in the quarter from a record first half, deflating some of the first-half enthusiasm,” JMP Securities’ Devin Ryan told clients in an early October research note. “This near-term focus misses the bigger story around the ongoing rapid evolution of the crypto economy, growing use cases for crypto, and Coinbase’s value proposition,” Ryan added.

Meanwhile, Coinbase said last week it was testing a no-fee trading subscription service for users, which could be discussed more on this quarter’s conference call as rivals, including Robinhood, offer commission-free crypto trading.

Overall, analysts are calling for Coinbase to report $1.57 billion in revenues for the third quarter, down from $2.23 billion in the second quarter, and adjusted earnings per share of $1.73, down from $6.42 in Q2, according to FactSet.

Coinbase shares were up about 5% to $354 on Monday and are up more than 40% from their reference price of $250. But they are still down from their opening trading price of $381.

Read more: Coinbase Direct Listing Gets $100B+ Valuation as Share Price Jumps in Nasdaq Debut

Argo Blockchain, a crypto mining firm listed on the London Stock Exchange, filed for a proposed public debt offering with the US Securities and Exchange Commission on Monday. The offering includes 8.75% senior notes that will mature on November 30, 2026, and will be sold in increments of $25. 

Argo intends to raise $57.5 million through the offering, according to the filing and people familiar with the matter. The funds will be used to help purchase crypto mining hardware and to complete the construction of its forthcoming 800-megawatt Texas mining facility — which could cost between $1.5 billion to $2 billion. 

In addition, the firm plans to use the funds for “general corporate purposes” as well as to potentially fund other crypto or blockchain-based businesses, according to a company release. 

Argo notes in the filing that possible risks to investors could include delays related to the availability of crypto mining hardware, skilled labor and water and transportation for the Texas facility — where Argo intends to power 90% of its operations through renewable sources. The mining firm also disclosed in the filing that it had $58 million in outstanding debt as of September 30, 2021. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

This episode is sponsored by NYDIG.

Download this episode

Today on “The Breakdown,” NLW looks at why the fracas around Elon Musk’s Twitter poll about his selling 10% of his Tesla stock is about much more than Tesla. It has implications for domestic politics, market structure and why crypto is the future.

Additionally, the Brief covers:

• The NYC mayor-elect says bitcoin should be taught in schools
• The latest on the infrastructure bill
• Pension funds are moving into alternative assets to find yield

See also: Bitcoin Tops $66K, Resuming Uptrend as Real Bond Yields Slide

“The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Dark Crazed Cap” by Isaac Joel. Image credit: Samuel Corum/Bloomberg/Getty Images, modified by CoinDesk.

Matter Labs, the project behind the Ethereum Layer 2 technology zkSync, has raised $50 million in a Series B funding round led by Andreessen Horowitz (a16z).

Other investors in the round included Blockchain.com, Crypto.com, Consensys, ByBit, OKEx, Alchemy, Covalent, and many angel investors. Existing backers Placeholder, Dragonfly, and 1kx also participated in the Series B round, who joined its $6 million Series A funding round in February.

With fresh capital at hand, Matter Labs plans to expand its team and finance its business growth. COO Zoé Gadsden said that until recently, Matter Labs has been more focused on technological developments. “Now it’s time to put a similarly concerted effort into reaching users and developers, which will require scaling our business development and marketing efforts and building out our community and ecosystem,” said Gadsden.

Matter Labs’ technology uses ZK-rollups (based on zero-knowledge proof method). ZK-rollups are one of the two popular Ethereum scaling techniques; the other one is optimistic rollups. The key difference between the two techniques is that a transaction can be challenged with optimistic rollups, whereas with ZK-rollups transactions are valid by design.

Ethereum inventor Vitalik Buterin has said that ZK-rollups “will win out in all use cases” in the medium to long term because of their application-specific and other use cases.

Matter Labs’ zkSync technology is currently live as version 1 and it supports ether (ETH) transfers on the mainnet. Version 2 of zkSync, which is still under development, will also support EVM-compatible smart contracts.

“Our long-term goal is to make self-sovereign participation in the digital economy — that is, maintaining true control over one’s digital assets — affordable for anyone in the world,” said Matter Labs co-founder and CEO Alex Gluchowski.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Users of the Coinbase crypto exchange can now access their Coinbase wallet through a standalone browser extension, bypassing the need to confirm transactions on their smartphones, the company said in a blog post Monday.

• Coinbase first introduced the extension in May, and now customers can use it to browse decentralized apps, access thousands of cryptocurrencies, trade on decentralized exchanges, earn interest and collect non-fungible tokens, Coinbase said.
• In addition, users can import an existing self-custody wallet, including MetaMask, Trust Wallet, Coinbase Wallet or another Ethereum blockchain-based wallet.

Read more: Coinbase Wallet Users Can Now Purchase Crypto Inside the App

Federal Reserve Governor Randy Quarles has tendered his resignation to President Joe Biden.

In October, Quarles ended his term as the first-ever vice chair for supervision, a position created by the Dodd-Frank Act. He will remain in his position as chair of the Financial Stability Board until December 2.

Quarles’s term as governor, which began in 2018 as President Trump’s first appointment to the Fed, was not set to expire until 2032. He has not revealed what he plans to do next.

The vice chairmanship of supervision is broadly responsible for ensuring that Wall Street banks do not recreate the conditions that led to the 2008 financial crisis. Broadly considered a moderate, Quarles invoked the ire of some Democrats over his hesitance to exercise supervisory authority. 

It is widely expected that the Biden administration will appoint a more aggressive regulator to the position — potentially fellow Fed Governor Lael Brainard, who is known for her suspicion of private stablecoins and interest in issuing a central bank digital currency (CBDC).

In a hearing before the Senate Banking Committee in May, Quarles noted that the Fed would require additional statutory from Congress to actually launch a CBDC, a prospect that seems unlikely given current congressional deadlock.

Meanwhile, Jerome Powell’s term as Fed Chairman is set to expire in February, but he seems likely to clinch the renomination. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.