As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
COINBASE RECEIVES WELLS NOTICE FROM SEC: Paul Grewal, Chief Legal Officer at Coinbase (COIN), said in a Tuesday blog post that the company had received a Wells notice from the Securities and Exchange Commission about its planned Coinbase Lend program. “As surprised as we were at the SEC's threat to sue without ever telling us why, we want to be transparent with you about the course of events leading up to it,” he said. “Coinbase has been proactively engaging with the SEC about Lend for nearly six months…Specifically for Lend, we're seeking to allow eligible customers to earn interest on select assets on Coinbase, starting with 4% APY on USD Coin... After our initial meeting, we answered all of the SEC's questions in writing and then again in person. But we didn't get much of a response. The SEC told us they consider Lend to involve a security, but wouldn't say why or how they'd reached that conclusion... They also asked for the name and contact information of every single person on our Lend waitlist. We have not agreed to provide that because we take a very cautious approach to requests for customers' personal information. We also don't believe it is relevant to any particular questions the SEC might have about Lend involving a security, especially when the SEC won't share any of those questions with us. The net result of all this is that we will not be launching Lend until at least October.”
Following the blog post, Coinbase CEO Brian Armstrong said in a Tuesday tweet, “Some really sketchy behavior coming out of the SEC recently…Millions of crypto holders have been earning yield on their assets over the last few years. It makes sense, if you want to lend out your funds, you can earn a return. Everyone seems happy…If we end up in court we may finally get the regulatory clarity the SEC refuses to provide. But regulation by litigation should be the last resort for the SEC, not the first.”
Meanwhile on Wednesday, Cowen analyst Jaret Seiberg said Coinbase's disclosure that the SEC is investigating its plan to let costumers loan stable coins in exchange for interest payments is a broader crackdown on crypto lending. The analyst thinks the SEC will stick to its view that these transactions result in securities that must be registered and thinks crypto will be regulated the same as the product it tries to replace.
MASTERCARD TO ACQUIRE CIPHERTRACE: MasterCard (MA) announced Thursday an agreement to acquire CipherTrace, a cryptocurrency intelligence company with insight into more than 900 cryptocurrencies. The acquisition is part of Mastercard's strategy in the digital assets space to help provide customers, merchants and businesses with more choice in how they move digital value. Terms of the agreement were not disclosed, and the transaction is anticipated to close before the end of the year, pending certain conditions.
DMG BLOCKCHAIN TO JOIN MARAPOOL: Marathon Digital Holdings (MARA) announced Thursday that DMG Blockchain (DMGGF) will become the first North American bitcoin miner, excluding Marathon, to join Marathon's mining pool, MaraPool. On Monday, September 13, 2021, DMG Blockchain will begin pointing 100% of its hash rate towards MaraPool, as the pool opens to additional bitcoin mining companies. MaraPool is a U.S.-based bitcoin mining pool that is focused on reducing the environmental impact of Bitcoin mining through carbon neutral mining. The pool, which is fully audited by a third-party firm in the U.S., provides its members with transparency, an intuitive reporting system, and access to exclusive services from NYDIG.
MVB BANK, NYDIG TO OFFER BITCOIN, BANKING PLATFORM: MVB Bank, a wholly-owned subsidiary of MVB Financial, and Victor Technologies, a wholly-owned subsidiary of MVB Edge Ventures, announced Tuesday a partnership with NYDIG to integrate bitcoin into MVB's Banking-as-a-Service solutions. This partnership will allow MVB's Fintech clients to offer bitcoin-related products. all powered by NYDIG's secure, regulated, full-stack platform, alongside the banking products MVB enables currently.
RIOT BLOCKCHAIN REPORTS AUGUST BITCOIN PRODUCTION: Riot Blockchain (RIOT) announced Wednesday its August production and operations updates, including its unaudited bitcoin production for August 2021 and its miner deployment status. In August 2021, Riot produced 441 BTC, an increase of approximately 451% over its August 2020 production of 80 BTC. Year to date through August 2021, the company produced a total of 2,051 BTC, an increase of approximately 221% over its production during the same 2020 period of 639 BTC. As of August 31, 2021, Riot held approximately 3,128 BTC, all of which were produced by its self-mining operations. The company currently has a deployed fleet of approximately 22,050 miners, with a hash rate capacity of 2.2 exahash per second.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), Ideanomics (IDEX), Riot Blockchain, Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin dropped roughly 9% this week to $45,736 in U.S. dollars, according to TradeBlock.
