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Grayscale had its day in court, and now the asset manager — and investors in its Grayscale Bitcoin Trust — must await the ruling, which could take three to six months. 

The asset manager brought the case against the U.S. Securities and Exchange Commission for rejecting its proposal to convert its flagship fund, GBTC, into a spot bitcoin ETF in June of last year. Lead counsel Don Verrilli laid out his arguments as expected and fielded questions from Chief Judge Sri Srinivasan and Judges Harry Edwards and Neomi Rao.

SEC senior counsel Emily Parise’s argument hit an early roadblock as Judge Rao questioned the regulator’s argument. 

Judge Rao said it seems that the Commission needs to explain how it understands “the relationship between bitcoin futures and the spot price of bitcoin.” Judge Rao noted one is essentially a derivative of the other, and they move together 99.9% of the time, asking Parise where the gap is “in the Commission’s view?”

When asked if the court agreed with Grayscale and what the Commission would do — approve a spot ETF or go back on its approval of bitcoin futures ETFs — Parise was unable to answer. 

Speculators speculate

GBTC and ETHE were higher despite trading in broader crypto markets being flat, as GoldenTree head of digital asset trading Avi Felman noted on Twitter. Oral arguments were “going well,” and the judges were “questioning the validity of the SEC’s arguments against spot ETF,” Felman added.

The market appeared to agree, with shares in GBTC and ETHE rising. 

GBTC traded up around 5% to $12.62 by 12:15 a.m. EST, according to TradingView data. The asset manager’s ether product, ETHE, jumped over 6% to about $7.30.

GBTC chart by TradingView

GBTC trades at a discount to its net asset value, meaning shares in the fund are cheaper than the value of the bitcoin in the fund. The discount narrowed to 42% on Monday, according to The Block’s data.

Bloomberg senior ETF analyst Eric Balchunas said the arguments were interesting, based on Judge Rao’s interruption of Parise and her “educated questions regarding futures and spot relationship.” Balchunas added that the SEC appeared to be “a bit rattled” by Judge Rao’s questions.

© 2023 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.

Software development company Alluvial launched Liquid Collective, an enterprise-grade liquid staking protocol, on Coinbase Prime and Bitcoin Suisse.

Customers of the institutional crypto platforms can access the liquid staking solution as of today, enabling them to stake ether, receiving the protocol’s liquid staking token LsETH in return. LsETH trading will also be available on Coinbase in most jurisdictions, according to a statement from Alluvial.

Instead of weighing up the opportunity cost of simply locking tokens with direct ether staking, LsETH, like other liquid staking solutions, frees up that liquidity to be transferred, stored, traded and utilized in other DeFi protocols while still accruing staking rewards for helping to secure the Ethereum network. Holders will also be protected from slashing (seizure penalties from events like network outages and node operator failures) with a built-in coverage system in partnership with decentralized crypto insurance provider Nexus Mutual and supported by Liquid Collective’s service fee.

“Currently, just over 14% of the entire Ethereum supply is being staked, but before more institutional investors can reasonably participate, those staking ether will need to be able to use it in other ways while still meeting their compliance requirements,” said Alluvial co-founder and CEO Matt Leisinger. “The launch of Liquid Collective will bridge that gap and meet the growing demand among institutional clients looking to participate in the security of the Ethereum network without sacrificing liquidity.”

How it works

Liquid Collective aims to provide a decentralized and non-custodial standard for enterprise-grade liquid staking, addressing the need for security and compliance while increasing liquidity and composability for the web3 economy.

The protocol takes an “API-first” approach, enabling integrators like Coinbase Prime and Bitcoin Suisse to offer their customers access to ether liquid staking via their own platforms.

“Liquid Collective is uniquely positioned to offer an enterprise-grade liquid staking product with robust slashing coverage and a forward-looking compliance approach to our institutional clients. We’re excited to support this new liquid staking standard as part of our multi-product strategy,” said Coinbase VP of Custody Aaron Schnarch.

All users minting LsETH through the Liquid Collective protocol, regardless of exchange, custodian or multi-wallet integrator used, will undergo know-your-customer (KYC) and anti-money laundering (AML) compliance checks before deposit and withdrawal, in partnership with the global compliance specialist Exiger.

“The AML and KYC-compliant solution by Liquid Collective enables us to provide higher capital efficiency and liquidity to our Swiss institutional clients. As the first Swiss-incorporated Liquid Collective integrator, Bitcoin Suisse is proud to participate in the further institutionalization of crypto-financial services in Switzerland for the benefit of the crypto ecosystem,” said Bitcoin Suisse Chief Product Officer Michael Gauckler.

Liquid Collective is powered by validator service providers such as Coinbase Cloud. Its Ethereum development was led by enterprise staking provider Kiln, with support from Alluvial.

Alluvial first announced Liquid Collective in September, built in collaboration with a diverse group of ecosystem participants, including Kraken, Coinbase, Figment, Staked, Kiln, Acala and Rome Blockchain Labs. Bitcoin Suisse joined the project in January.

© 2023 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.

If you were an Ethereum-based NFT bought or sold in the first week of March, there’s an 84% chance that you changed hands on the Blur marketplace, according to data from The Block.

As recently as January those chances would have been closer to 43%, but in a little over two months, Blur’s marketshare has nearly doubled – overtaking rival OpenSea by double digits.

Launched in October 2022 to much fanfare, Blur quickly became the third-largest NFT marketplace by volume in January, according to data from The Block. 

But the platform reached new heights this February after it launched its native token, $Blur, enticing new users with a mixture of airdrops, token incentives, and cheap trading fees. In the first 24 hours after it launched, the token did about $1.1 billion in volume, according to CoinGecko data.

The combination has created a “powerful cocktail,” according to Thomas Bialek, an analyst at The Block Research.

In February, the overall NFT marketplace rose alongside Blur, reaching its highest transaction volume since May.

It’s unclear if the spike is sustainable or merely connected to the incentives offered by Blur, according to Bialek. 

“It seems likely that this heated NFT marketplace war will continue to intensify in the near future, with Blur needing to demonstrate the longevity of its approach and OpenSea needing to come up with an effective response,” Bialek said,

© 2023 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.

Lawyers for Jimmy Fallon, star of NBC’s long-running comedy and variety series “The Tonight Show,” have asked that the late-night host be excused from testifying in a Yuga Labs trademark dispute.

In a Monday court filing, Fallon’s lawyers requested that a subpoena requiring the comedian to testify in connection with the Yuga Labs Inc. v. Ripps et al. case be “quashed,” or canceled.

Yuga Labs, the creator of the highly successful NFT collection Bored Ape Yacht Club (BAYC), is suing Ryder Ripps and Jeremy Cahen for issuing a “copycat” NFT collection that resulted in “trademark infringement, false advertising, and unfair competition,” the document said. While Fallon “acquired” a BAYC NFT and talked about the collection on his show, he has nothing to do with the Yuga Labs and Ripps case, his lawyers allege in the petition.

Fallon’s lawyers said the television star “has no connection” to the dispute, is “not a party to the Ripps Litigation and has never met or interacted with Ripps and Cahen.” Additionally, “Ripps and Cahen have needlessly burdened Mr. Fallon” with the subpoena, the petition said.

The filing also stated that Fallon is, along with other celebrities, a defendant in a separate “securities litigation” involving Yuga Labs. Along with Paris Hilton, Fallon is a co-defendant in an ongoing lawsuit that alleges they worked with payment provider MoonPay to misleadingly promote Yuga Labs’ “financial products.”

© 2023 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.

Markets sank initially on the release of U.S. Federal Reserve Chair Jerome Powell’s testimony to Congress before rebounding slightly.

Bitcoin was trading around $22,400 by 10:30 a.m. EST, up about 0.09%, according to TradingView data.

“As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said.

The leading cryptocurrency by market cap led the drop in crypto prices shortly after the release of Powell’s testimony before recovering. Ether was also down, dropping 0.5% to about $1,558. 

BTCUSD chart by TradingView

Powell’s hawkish comments initially sent markets down. The Fed chair’s comments noted the U.S. central bank is “prepared to increase the pace of rate hikes.” The pace of interest rate hikes had slowed towards the end of 2022 and increased rates by 25 basis points in February. 

Powell recognized at the time of the last increase that a “disinflationary process has started,” although he added, “it’s at an early stage.”

The Fed chair said today that “little sign of disinflation” exists in core services, excluding housing. In order to restore price stability, “we will need to see lower inflation in this sector, and there will very likely be some softening in labor market conditions,” Powell said.

© 2023 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 and ether derivatives trading volumes in dollar terms continued to climb higher in February. 

Futures and options trading volume for bitcoin rose by about 13%, and ether’s volumes rose 2% and 30%, respectively. The increase comes as spot volumes continue to rise amid a hot regulatory backdrop.  

Bitcoin futures volume came in at $791 billion across all exchanges last month, up from $697 billion in January and rising for the third month in a row, according to The Block’s data dashboard. Options rose to about $20 billion from $17.7 billion. 

High points

February marked several milestones in crypto derivatives, notably on a regulated platform.

Ether options volume on the CME reached its highest level since inception last year. Options on the exchange went live in August of last year. Volumes increased for two months through October before dropping to close out the year. 

Volumes soared in January with the momentum carrying over into February. Commentators speculated that institutional crypto traders were avoiding unregulated or semi-regulated platforms following the collapse of FTX.

The regulatory environment remains hot, said Laura Vidiella, VP of business development at LedgerPrime. “Traders and investors are still waiting for more guidance, so until then, going for a platform that is clearly regulated is the safest bet,” she said.

The move to the CME comes despite traders having to settle for cash settlement over physical settlement. Physical settlement is generally preferred over cash in crypto markets, Vidiella said.

Bitcoin also had a big month, with options open interest reaching an all-time high and crossing $1 billion for the first time. Open interest is the total number of outstanding contracts that are yet to settle. 

Rising tide

Increases in futures trading indicate a heightened risk appetite for speculation in the market, according to 21Shares research analyst Carlos Gonzalez.

“Future volumes are back to where they were before FTX’s collapse,” Gonzalez said. “But they are still far away from the excessive levels seen in the 2021 bull run.”

The volume increase was not limited to the futures market. Gonzalez noted that spot volumes on centralized exchanges in February amounted to $878.4 billion, up 87.75% from December’s $467.86 billion.

© 2023 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.

Courts in the Seychelles, where crypto exchange Coinflex is based, approved its restructuring plans on Monday, according to a statement from the company.

The court may publish the written order within the week, Coinflex said.  Until 24 hours after the written order is published, trading locked assets such as LUSD and LETH will remain halted to “allow all locked asset holders to be sufficiently informed.”

The digital currency exchange first suspended withdrawals last June, citing “extreme market conditions and continued uncertainty involving a counterparty.”

By September, the company had unveiled a restructuring plan to turn over more than 65% of its equity to creditors and vest 15% to employees. While investors in it Series A will be wiped out, Series B investors will remain shareholders.

Coinflex is one of many crypto firms to be hit by last May’s collapse of the Terra ecosystem, which wiped out $40 billion in investor value in a matter of days. Hedge fund Three Arrows Capital filed for bankruptcy at the start of July and crypto lender Celsius followed a couple of weeks later.

© 2023 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.

A recent Paxos survey shows enthusiasm for cryptocurrency in the U.S. despite a volatile year for the burgeoning asset class. 

Of 5,000 U.S.-based working-age adults surveyed, 75% remain “confident or somewhat confident in the future of crypto.” The survey occurred Jan. 5 and 6 and included adults earning over $50,000, who had a bank account and who purchased crypto in the past three years.

According to the survey, 72% of respondents were “a little worried or not worried at all” about volatility in crypto markets over the past year. Despite the rough finish to 2022, with the collapse of FTX, the survey appears to show that American consumers remain interested in digital assets. 

© 2023 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.

Serial entrepreneur Trevor Traina has raised $25 million to build Kresus, a web3 superapp for the everyday consumer that promises to be “entirely goof-proof.”

The Series A round is led by Liberty City Ventures. Other investors in the round include JetBlue Ventures, Craft Ventures, Franklin Templeton as well as angel investors such as Salesforce founder Marc Benioff and the Winklevoss twins, who founded the crypto exchange Gemini, said the company in an email.

Traina, who is the son of shipping magnate and art collector John Traina, is a veteran in the startup space. He has founded five technology companies including IfOnly, an online marketplace that curates exclusive experiences which he sold to Mastercard in 2019, and StepUp Commerce, a service that aims to convert online shoppers to in-store customers which he sold to Intuit in 2006. Former U.S. President Donald Trump nominated Traina to be  the U.S. ambassador to the republic of Austria from March 2018 to January 2021.

Kresus’s website describes the app, which hasn’t launched yet, as “part exchange, part wallet and part guide.”

The funds will be used for continuing to build out the app and enable hiring efforts and key partnerships, the company said.

© 2023 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.

Photography giant Getty Images is making rare photos available to individual collectors in NFT form for the first time. 

Photographs from its 1970s music and culture collection will be part of the offering via a partnership with NFT platform Candy Digital, according to a company release. As part of the launch, Candy Digital is also set to give away a free introductory NFT between March 7 and March 15.

Works by Don Paulsen, David Redfern, Fin Costello, Richard Creamer, Steve Morley and Peter Keegan, depicting Bruce Springsteen, Elvis, David Bowie, Stevie Nicks, The Rolling Stones, Jimi Hendrix, AC/DC, Gladys Knight, James Brown and John Lennon will be available in open-edition mints.

The collection will be available on March 21 on Candy’s website, with prices ranging from $25 to $200. It will be released to buyers in the United States (and territories), Australia, Canada, France, Germany, Hong Kong, Japan, Portugal, Spain and the UK. 

The partnership comes as life appears to be returning to the NFT market. Marketplace volume grew for a fourth consecutive month in February, according to data from The Block Research — buoyed partly by the traction of NFT marketplace Blur’s trading incentives.

© 2023 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.