Unchained - Spot Bitcoin ETF Options Are Here. Why You ‘Can’t Overstate’ Their Importance - Ep. 739

Starting point is 00:00:00 Options are expanding the ecosystem, bringing more traders involved, increasing the liquidity, and liquidity is big fish bait. So you should see more institutions using not only the options but the ETF themselves because of the advent of options being available. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians.

Starting point is 00:00:29 I started covering crypto nine years ago, and as a senior editor of Forbes, was the first major meter porter to cover cryptocurrency full time. This is the November 22nd, 2024 episode of Unchained. Pocod is the original and leading layer zero blockchain with over 2,000-plus developers, and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Join the community at Pocodot.network slash ecosystem slash community. FBTC is the fastest-growing Omni-Chane BTC asset this summer. Join FBTC Points-inspired campaign where you can hold FBTC to earn

Starting point is 00:01:04 sparks, lucrative yields, and token drops, all on your Bitcoin. Today's guest is Eric Baltunis, senior ETF analyst at Bloomberg. Welcome, Eric. Good to be here. This week, options on Black Rock's Bitcoin ETF, I bet launched as well as some others. And Ibit on its first day saw $1.9 billion worth of these options changing hands on that first day. I wondered before we, we get into the whole discussion if you could just, first of all, explain what Bitcoin ETF options are and why this launch is so significant. Yeah, so just, you know, ETFs are trading tools or, you know, can be used in a variety of ways. You can go long or short. But options kind of open up more specific ways to

Starting point is 00:01:47 express your opinion. You know, for example, let's say you're just a little nervous about this recent, you know, melt up in the price of Bitcoin. You could buy a put option, you know, maybe $20 away from the price, that way you can just walk around a little like calmer that you won't have an 80% drawdown. And people, that's a, that's a totally rational way to use options. Right. And yeah, just for non-traders, put options allow you, give you the right to sell at a certain price. It gives you the right to sell at a certain price. So if Bitcoin went to like 60,000, like in like two days, you'd feel better because you can, you've already, you have a contract that allows you to sell it at 80. You've locked in that. Now, you, it costs a little bit though. So there,

Starting point is 00:02:28 is a price, you know, to pay for the contract. In a way, it's a little bit like insurance on the put side. On the call side, it's almost like insurance also in that you're betting on whether the price will go up. So we, most of the action on Ibit so far has been on the call side, which generally is very bullish. So for example, you could bet that Ibit will hit $70. Right now, it's 52. So Ibit's price would be different than the price of Bitcoin. Obviously, I bid is its own thing. It's, I think it's $52, $53. So the options that like, $70, $75 were pretty popular, meaning that if the price of Bitcoin were to go up between now and then, those options obviously gain in value. So you could actually sell the option for a profit.

Starting point is 00:03:09 Or let's say the price of Bitcoin goes through that. You can then buy it at a lower price because you've locked it in, which then again, you can pocket that profit. So it's just, you know, it can allow, as I put them in the meme from Stepbrother, so many activities, you know, when they make their room into bunk beds, and they're like, oh my God, we can do so many activities in the room now. I just feel like options open up

Starting point is 00:03:33 a lot of activities for traders and for institutions. And now there'll be even be ETFs that utilize these options. So to me, options are like, I've said this before, it's sort of like giving a painter like another like 20 colors.

Starting point is 00:03:49 You know, you had like five, now you get 20 more. Like it just opens up so many, you know, maybe you had the primary colors. Now you're getting more specific color. So just opens up a lot more specificity and different kinds of things you can do with expressing your opinion on Bitcoin. And so then just the fact that these are available now, like how would you expect that to impact either the price of Bitcoin or the trading of Bitcoin?

Starting point is 00:04:14 Yeah. So options are like they build what I would call the ecosystem. So if somebody is making a market in the options, they might use the futures or even the ETF itself to hedge. So if people are buying a bunch of calls, they'd probably have to hedge using the ETF because they'd be short Bitcoin long, so you got to buy something to hedge to make sure that you're not long or short Bitcoin. So on the call side, that would probably trickle into Bitcoin ETFs in terms of the market makers buying the ETF as a hedge. So that's positive. But let's say that it shifted the put side. It could go to the reverse, right? You might short the ETF because now you're long, you're already short by because of the put. So the ecosystem, though, by bringing in people

Starting point is 00:04:57 just active in these options, and then the market makers are like doing their thing, and some these market makers are pretty big. And the more people in this ecosystem, the more it'll really do is make more liquidity for the ETFs. And liquidity, again, is big fish bait. You know, the more liquid things are, the more you'll get big tuna and shark and whales. They, won't bite on some, you know, BS little ETF. They need to see like giant liquidity because they don't want anyone to know they're there. They also don't want to move the market. So this is the real benefit of all this. It just creates an ecosystem that comes back to the ETF in the form of more liquidity and like I said, optionality on how to express your view.

Starting point is 00:05:42 So over the years, ETFs that have a lot of options have built a moat around them and continue to be the most liquid of their class. So for example, GLD, there's cheap. or gold ETS, but GLSD still trades the most. And a big part of that is because it has all the options tied to it, and the options market is huge. This is part of why Spy, you know, there's three S&P 500 ETFs. Actually, there's four. Spy is nine basis points.

Starting point is 00:06:06 The other ones are three basis points or lower, right? So they're three times as cheap. Spy, though, is the first and has this huge options market around it. I mean, spy options are ridiculously robust, massive, deep oceanic liquidity. So to this day, even though the other two IVV and VU's S&P ETFs are almost the same asset level of spy, spy still commands about 90% of all the volume amongst them. So again, for trading, it's just you can't overstate the importance of options. You know, for the assets of the ETF, you know, it's more important that like advisors want to buy Bitcoin. That would be a bigger bullish sentiment for assets.

Starting point is 00:06:49 but the options really are going to grow liquidity, which again, then you get the occasional big fish biting, like a pension plan or a hedge fund, which you can already see in the iBit 13Fs. So to me, I would look at it that way. But I think over time, if you're looking at like, if you're just purely interested in the assets of the ETF's growing, which means that the Bitcoin price would go up because the assets are one for one buying of Bitcoin, then you'd probably be, you know, happy about this, but the bigger deal would be like just more advisor adoption, in my opinion. Because if you look at an ETF like spy, you know, maybe 20% are these gigantic institutions, but the vast majority would be advisors in retail. Okay. And one other thing is,

Starting point is 00:07:39 so Jeff Park, head of alpha strategies at BitWise, he was saying that a number of analysts are saying that these Bitcoin ETF options will reduce while, But he actually didn't agree with that. Do you, it looks like you also don't. No, well, I might defer to Jeff. I think he's a PhD and has traded options. I, you know, maybe. We'll have to see.

Starting point is 00:08:02 I think more than that, though, what will reduce volatility is the ETF growing because the people who are using these ETFs clearly are not running at the drop of a hat. they're pretty strong hands. We've seen it, right? I've argued this on Twitter for like months that the boomers are actually,

Starting point is 00:08:24 in some cases, the stronger hands than the natives. I've argued with people plenty about that fact, but people who use ETFs are just, they're not dumb retail. They're really smart people and they know about behavior. And this exposure is probably a small portion of their portfolio.

Starting point is 00:08:41 It isn't like their whole nest egg. So they're not going to overly panic on a drawdown. I think that the mainstreamification, the ETF vacation, is probably going to lower volatility, right? Because you just have more, you know, you have more long-term money in it. And obviously, over time, you've seen a lot of the fraud, the fraudsters and the crazy stuff seems to be like getting cleaned out. And the more that's replaced with like advisors, I just think that's probably a volatility dampener over time. there are people who would disagree with me. They'll say, oh, these retail people, they're going to increase fall.

Starting point is 00:09:18 And that that whole premise would be that they're going to jump ship as soon as the price goes down a little. I would say they're not. I would say, you know, you might have 5, 10% of people freak out if the price were to go down 30%. But we saw the price went down 24% in like seven-day period back in, I don't know, three months ago. And like, I don't know, 3% of the assets left. So 97% of the people were fine with that. So I think it'll be fine. I think, and also just maturity, you know, I always tell people that that gold is 4,000 years old.

Starting point is 00:09:53 And if Bitcoin is digital gold, Bitcoin is literally 16-year-olds. It just had its sweet 16 birthday party. And if you know 16-year-olds, they're volatile. So as it gets older, by the time it turns 30, it's going to calm down, right? And I also think that's very apropos. But in the case of the positioning of Bitcoin ETFs to the marketplace, I actually think volatility is a feature, not a bug right now. Because people are a little bored with their vanguard court,

Starting point is 00:10:21 and they're looking for some excitement. And so the volatility and these kind of fun meltups that Bitcoin brings is something gold doesn't. So that's a huge advantage over gold. They're both store of values, but Bitcoin has that volatile, higher ceiling energy that people are looking for in portfolio. So I consider it more powerful value proposition than gold at this time.

Starting point is 00:10:43 And so you don't maybe want the volatility to go away so soon. Yeah, yeah. Well, he is saying that he feels like there's going to be more upside pressure, I guess. And that's actually something we can talk about in a second. But first, we're going to take a quick word from the sponsors who make the show possible. FBT is an OmniChane BTC asset contributed by Mantle Network and Antalpha Glover. Launched in early July, FBT's TVL has already passed $125 million, making the fastest-going BTC asset this summer.

Starting point is 00:11:16 FBTC's points-inspired campaign, Sparkle, has officially started, with lucrative and sustainable yields, plus points and token airdrop from Babylon, Mantle's new token cook, and more. FBTC is the BTC solution you've been waiting for. Visit FBTC.com-on-going-campaign today. back to my conversation with Eric. So I do think it does look like more people are trading these options in a way where they're basically betting the price will go up. So does that also kind of push things upward? Yeah.

Starting point is 00:11:49 And so much says the market makers and the people making the markets and all these options are going to have to hedge their position if they're short, something that's long. So yeah, I think it's going to ultimately have a good effect on the price if there's more bullish buying and the option. market than bearish. But this can reverse. You know, I think I would just enjoy the good times. Don't enjoy them too much because you don't want to go and get totally depressed when this swings the other way, which it will, you know? Yeah.

Starting point is 00:12:23 I'm a big fan of the line from the Paul Abdul song, opposites attract, which sucks. It's a sucky song. It's from the late 80s when when pop music was like really, really like inflated. is like the Millie Vanilli and Vanilla Ice era. And Paul Abdul had this like couple hit songs in the late 80s. This is right before Grunge came in and said, let's get real. And there's a line from Obisusus to track says, we take two steps forward, one step back. And I just feel like that's the that is the best mantra I could give anybody buying the ETF or in crypto. And I think that right now we're in like a two giant steps forward phase and it's great. But I, I don't know, it just seems like

Starting point is 00:13:05 from what I've seen, there's going to be like a nasty step back. And you could find some of those the options movement will reflect that. Okay. Well, one thing that I did also want to ask about what Jeff said is he probably, you probably saw this because when the options were approved, he said that he felt this would leave to a gamma squeeze, which is why he felt that Bitcoin's price could become kind of like explosively, it would move upward. But you're, you seem to think. I'm going to defer to him on that. When you get Greek letters, you know, these are people who deal in the options market. But what I do know is this, that, you know, I remember reading this book on technical analysis.

Starting point is 00:13:47 And I found it interesting that at some point in the price of a stock, there's no more resistance. All the people who were going to short, they're just, they're gone. And the people who wanted to like have an exit point, they've sold. it feels like there was a lot of that between like 60,000 and like 70,000 for like a couple months there. And then even a little bit, there's like these pauses. But it's this ironic thing. The more something goes up, the less actual overhead it has to deal with. So I just think that the gamma squeeze is part of a lack of sellers and also probably short sellers who might be afraid to step in front of a train and get run over.

Starting point is 00:14:30 over in an asset that is really having a meltup. So I don't know if it's just the gamma squeeze or if it's all part of what would be like a meltup, which I remember, this reminds me of the ARC situation in 2020. I mean, this ETF could do no wrong. Like every stock in it was up like, you know, double, even triple digits. Every day it was up another like 8%. I called it Arcmania. And this is sort of how, you know, KathyMedia, Kathy Wood was like the Beatles.

Starting point is 00:15:00 for about, you know, a year there. I mean, she was that, this fund outperformed 100% of all the funds for like a year or two. There's an arc mania element to this. Obviously, Arc has come down a lot since. It's a different deal. Those were stocks. But there was a time where Arc, I think,

Starting point is 00:15:16 broke through resistance and just became like, because it doesn't make sense that a diversified group of stocks should go up that quickly all the time. So I would, you know, I just would kind of call it a meltup that I have seen from time to time. And like I said, it's exciting when it happens.

Starting point is 00:15:32 It's hard not to think in the back of your head, you know, what's the downside here? Are we going to have a pullback? But I think, you know, for Bitcoins, you've seen a lot. You've lived through a lot. I would look at this as just like enjoy the good times. Brace for a pullback. But it does seem like net net. I was looking at the price.

Starting point is 00:15:51 Like two years ago, it was trading at like 18,000. This was fresh off of Sam Bankman fraud. And it was like nobody had any. respect for it. What a difference two years makes. I mean, that's incredible. Yeah, yeah. Who typically trades options and who do you think is trading these particular Bitcoin ETF options? Probably a mix of retail and institutions, probably a lot of retail. I mean, there's position limits, which could limit to retail, like a lot more retail than institution. But I also think that institutions are so native to options, they like them.

Starting point is 00:16:29 and they use them a lot. So I could see some of them. But whether it's the volume of the ETF or the options, like, we don't know. Like, it's all anonymous. But my guess would be some breakdown between institutional and retail, who I don't think is using them a lot as advisors. You know, I think advisors are generally like they buy and hold something and that's it. So I think the common thread between the institutions and the retail would be they like to trade. They like to put on positions.

Starting point is 00:16:55 So that's who's going to be using these, which who uses most options. Okay. Well, so then I did want to ask about one other thing that I saw that Jeff tweeted, which was he said, Ibit was approved only for 25,000 contracts as a position limit. And he said that at this level, the exercise will risk represents less than 0.5% of Ibit's outstanding shares. And in contrast, he pointed to the CME Bitcoin Futures contracts, which have a 2000 contract limit, which he said, if you were to like make that, make the equivalent of that. And I bet it would be 175,000 contracts, which is obviously many multiples of 25,000. And then he concluded, it's hard to ignore the lingering special treatment Bitcoin continues to receive.

Starting point is 00:17:41 I long for the day when Bitcoin is no longer marked with an asterisk. Do you agree with him that there's, you know, some kind of, I guess, like discrimination or, yeah, prejudice against Bitcoin that causes it, you know, these Bitcoin ETF options to be treated differently? Yeah. He's right. I mean, I just lived through it for 11 years with the lack of approval. But, you know, times have changed. A, the ETFs got released, even though it happened, you know, kicking and screaming, although Gary Gensler then took a victory lap in note on his exit note. I was like, that's interesting. That's called gaslighting. Yeah. And it's a shame. you know, they still don't have in-kind creation redemption, which the ETF should have had those.

Starting point is 00:18:26 The position limits seem to be like just, you're right. They always, everything's with an asterisk here. I've always said that the SEC should have more trust in ETFs than they do lack of trust in crypto. And they always, I feel, didn't trust the ETF enough and the people who are working that industry to make it work. And obviously it does work. So I just I disagree with their policy. So I agree with Jeff that it was there's always an asterisk. It seems like we're going to have more, you know, libertarian and maybe even like someone who's,

Starting point is 00:19:02 it may even have a crypto role in the White House or, you know, as part of the cabinet or something. So I think all this is very good news. I would look for more higher position limits, in kind creations, eith staking, and altcoins being approved. if the SEC chair turns out to be somebody who's favorable to this. The only defense I'd give the SEC was, you know, it was two years ago SBF happened. It was that there have been some cases of, you know, fraud and, you know, there's a history of it. It's a, it is 16 years old. It's a new asset class.

Starting point is 00:19:40 I understand some skepticism, but, you know, I think it was too much, especially in the, in the last couple years. I just thought, and frankly, I've said this many times, had the SEC approved the ETF back, like let's say they approved after the Winklevoss filing

Starting point is 00:19:59 in 2013 or 14, or even if they approved the next cycle, 15, 16, I don't think you have an SBF. I think too many people are using the ETF and he doesn't have enough of unmet demand

Starting point is 00:20:11 to get all these people using his exchange because why would you use his exchange when you can just get the ETF for like almost no trading commission. There'd be one basis point. The fees low. He wouldn't had as big of a crowd. And then he wouldn't have had all that money to spend all those people and blow and, you know, not treat the customers correctly. And so I just think ETFs are SBF proof,

Starting point is 00:20:32 but they could have been an SBF repellent if they were approved earlier. So I think they should be treated like everything else at this point. I think it's there, they've proven themselves. It's time for, you know, big boy treatment. Yeah, yeah, I agree that, you know, for a while, the industry was kind of like artificially depressed. So one other thing that I want to ask about was obviously, so we have these options on Ibit, but then we have, you know, new option or, well, I guess it was literally the next day that a bunch of options like on BitWise and some of these other providers, Fidelity, those launched. You know, what do you expect would be like the volume spread amongst all of those? Or do you

Starting point is 00:21:10 think it's kind of, you know, that basically Ibit options will be dominant or what do you see there? Yeah, well, James put a note out yesterday. I bit utterly dominates. I mean, it's, I mean, just, I don't have the exact percentage, but it looked like it was around 90, 95% of all the options. But it's kind of unfair that I bit got to go out a day early because that one day, it meant a lot. I mean, they traded a $1.9 billion that day in volume, which by the way was four times more than Biddo options traded on the same day. So Jeff's point about the contracts is interesting because Ibit did that despite that. So even though Biddo was the more liberal, you were able to have this position limit issue

Starting point is 00:21:55 and they still did $1.9 billion, which is a lot for day. It's unheard of for day one. It was $1.7 or $8 billion the next day. So it didn't go up on day two. But still, just to maintain that, I bit's probably going to own this space. This is the thing with liquidity. You know, it's easier to steal assets than volume, and we'll have to see how this plays out, but I could see Ibit just utterly dominating here.

Starting point is 00:22:19 But for these people out there talking to advisors and institutions from these other firms, at least the options are available. So when they have a client that knows them and likes them, it's like, hey, we have options. You don't have to go to Ibit for them. You can use ours. But once an ETF gets like this, like it's like a happening party, you know, and the liquidity is there, it's like unfair. It's like a snowball rolling downhill. The volume begets more volume. And then for the other guys, it's just so hard to deal with that. So it's very difficult to steal volume when you're impossible. As I explained in the example earlier with Spy, still having like 90% of the volume, even though it only has like 40% of the market share of assets amongst those three S&P ETFs. That's how powerful liquidity is. So just out of curiosity, when you talk about how the position limit on the Bitcoin ETFs, you know, should have kind of made them less attractive than the ones on the Bitcoin futures options, or ETFs?

Starting point is 00:23:17 I was wondering, is it the same thing where spot Bitcoin, even options on spot Bitcoin ETFs are superior to options on Bitcoin futures ETFs? Is that why that happened? Yeah, that's a great, it's a great question. I was a little surprised. I thought Biddo, because it'd been out a while, would have had more options activity than I think it was $400 million, and I bit was $1.9 billion. I think this speaks to something that I've seen my whole career in ETS, which is there's something about the real deal that people like.

Starting point is 00:23:51 So if you can get something physically backed, people are just going to prefer that over futures. I'll give you an example. There was a gold futures ETF that was launched in like 2011. and it basically closed. I mean, it just couldn't survive because you could have gold physically backed ETFs like GLD. And people are always going to choose the real thing over the futures.

Starting point is 00:24:15 There was once an ETN that is almost like using futures that did India before you could do physically backed India stocks. But once the India stock physical back one came out, people use that. People in the ETF world just don't want anything like synthetic or derivative. if they can avoid getting it directly. And I think that's what happened here. Further, Ibit itself trades way more than BidO. So I bit the core UTF, I think, was trading.

Starting point is 00:24:43 I mean, now it averages like $3 billion a day. It's ridiculous. That's like up there with like, you know, Netflix and Facebook, right, in terms of volume per day. And so I just think all the trading crowd was like, A, it's physically backed. B, it trades more than Bitto. So see the options on it are going to be where it's at going forward.

Starting point is 00:25:05 Even though it's only the first day, they just got started quickly. All this is probably going to make Biddo. It'll still have a role in the market. But over time, I could see it slowly losing its volume and assets. Since there have been options on the crypto exchange Deribit and those are tradable anytime, whereas the spot Bitcoin ETF options are only available during certain trading hours, I wondered what you thought the relationship would end up being between those two different assets. Yeah.

Starting point is 00:25:36 So I think some of these exchanges that do specialty things, they'll probably hang around. They serve a specific audience. But over time, like the options that are connected to Ibit are regulated and familiar to the big money centers and the big player types that are, you know, bring so much of this mainstream money. So I would look for those, that options market, to utterly dwarf the, you know, options over there. Just as I would look ultimately for, you know, some of these ETFs to dwarf some of the other ways you can get exposure to Bitcoin. The familiarity and the plumbing and the regulatory backing, it just gives a lot of the big money safety. And so when you look at options trading and we look at like dollar volume, the bigger than the investor, the faster that number goes up, right? because if, you know, it's like I just said, Ibit trades three billion a day.

Starting point is 00:26:31 Well, there could be an investor there that does 200 million trade. That's why volume is begets more volume. And so if you have bigger investors that can put that kind of money to work like that, that would be like, what, a thousand retail traders doing options on this exchange. You just need one of them. Well, let's say you get a thousand of them trading. You can see how the numbers would add up very quickly on the Ibit options versus an exchange that was operating in a time where there were no options. So I would look, again,

Starting point is 00:27:05 the more, the more activity around the ETS, whether it's ETFs themselves or the options, the more they are going to be a threat to any other intermediary. I've seen it happen. ETS are, and that's what my big exchange, my big presentation was at the Lugano Plan B event. I basically was still in the crowd, ETFs are not trad-fi, boomer suit Wall Street as you think. They are cruel. They are disruptive juggernauts. They're very similar to Bitcoin. That's why this is an interesting marriage. ETFs, they're going to disrupt some of the crypto world in a similar fashion to how crypto is doing a little disrupting to the ETF space. It's just such a fascinating marriage. And it is a marriage. That's also telling me,

Starting point is 00:27:52 I said, look, you know, get used to it. We're joining at the hip now. Like our fates are somewhat aligned here in this asset class. And I think it went over well. But I think that if you talk to people on Wall Street and the hedge funds and they don't like ETFs either. They don't charge a lot. Nobody really makes a ton of money on ETFs. They're lean, mean industry. And so even like Wall Street firms don't like the big, you know, slush, a lot of the fat cats, I'll call them, you know, ETFs aren't really great for business. So that's why when we find anything that resolves around an ETF gets a lot of action, simply because it's like, as I said, ETFs are heaven for investors, but hell for issuers.

Starting point is 00:28:39 And because they're so cheap and they're so functional and they fit in the plumbing, you're going to get the big money investors using them and the big traders using them. And that's going to be a problem for some of these exchanges that have long lived in filled a void that was in the market. And that's good. They should have. But there's like a new sheriff in town, so to speak. Okay. Well, I did wonder, because these launched, you expect that we will see options on ether ETFs as well soon? Yes. Okay. Yeah. I don't know when, but especially, you know, that's a question that I'd be like, well, if Gensler was still there, it just never go with him. But with him out and like the way these happened, I just, it looks really good that you'll see ether options at

Starting point is 00:29:23 some point. I don't really have a, there'd be no reason not to do it. Okay. Well, last very quick question, because I think this news might have broken while we were here. But basically, Fox News reported that talks between SEC staff and issuers looking to launch a SAL spot, a SPOT, sole ETF, are progressing. The SEC's now engaging on S1 applications, according to two people familiar with the matter. Yeah. So we didn't really comment on this yet. We did a little snooping around. It's, During the spot Bitcoin drama with the SEC, when we said engaging, we meant the SEC was looking at their filings and giving them like 20 comments. Like, hey, can you answer this question? Can you clean up this sentence?

Starting point is 00:30:06 Maybe we'll call that comments. This has not comments. This is, I don't even know exactly what this is because, you know, I get there when to file 19 before. It seems more like the SEC has maybe, you know, decided to not tell them. all this is dead on arrival. And so maybe that's some good news. But this is an engagement in that like, oh, hey, we plan to approve them. Can you please file this?

Starting point is 00:30:31 I just don't put it on the same level as the word engagement that we would use here. That said, she's a great reporter. So something is happening. And I think my takeaway on this is that the issuers are probably looking at the fact that there's a new regime and president and a new chair coming as a real optimistic time to put all your filings in. And I think that's the takeaway. But I don't, I wouldn't put this in the same level as like when we had comments on the

Starting point is 00:31:01 S-1s. And this was like within months of approval. I don't think we're anywhere near there yet. Okay. Yeah. Yeah. She did. And by the way, we're talking about Eleanor Tara at Fox News.

Starting point is 00:31:11 She said that we should be seeing some 19B4 filings from exchanges in the coming days. So I guess we'll. And she's probably right. They're probably, you know, like I said, I haven't. heard that there was like any formal comments or anything from the SEC, we stooped around a little bit. The optimistic greed here is that they feel comfortable enough filing a 19B4. Because that means in 240 days, they think they'll get approval and they'll start now with that product. They'll start the clocks now. And so to me, this is, I would call this a byproduct

Starting point is 00:31:42 of the election. Yeah. Yeah, that makes sense. All right. Well, thank you so much for coming on Unchained. Thank you. Don't forget. Next up is the weekly. News Recap, today presented by Wondercraft AI. Stick around for this week in crypto after this short break. Pocodot is the original and largest layer zero blockchain with over 2,000 plus developers. The anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Upgrading the infrastructure with eight times higher transaction throughput and twice as fast block times, tailored core time for the needs of every protocol, trustless bridges to multiple chains and revise tokenomics with a token burn to reduce inflation. Perfect for GameFi and

Starting point is 00:32:25 Defi to build, grow, and scale. Get your Web3 ideas to market fast. Think big, build bigger with PocaDot. Join the community at pocadot.network slash ecosystem slash community. Welcome to this week's crypto roundup. In today's recap, we dive into Gary Gensler's announcement about resigning from the SEC, Trump's plans for a pro-crypto Whitehouse, and big leadership changes in Congress, micro-strategy's massive Bitcoin buy, sending its stock soaring, and Coinbase's decision to delist wrapped Bitcoin.

Starting point is 00:32:58 We'll also cover FTX co-founder Gary Wang's sentencing, Heather Morgan's prison term for her role in the BitFinex heist, Lido's legal challenges, and its new blockchain identity project, and Sky's launch of a Solana-based stable coin with major incentives. Finally, don't miss our Funbit story about a young meme coin creator who cashed out early and missed out on millions. Thanks for tuning in to the weekly news recap. Let's begin.

Starting point is 00:33:24 Gary Gensler to leave SEC. Gary Gensler, chair of the U.S. Securities and Exchange Commission, SEC, will resign on January 20, 2025, just as President-elect Donald Trump takes office. Gensler's departure ends speculation about whether he would seek to remain as a commissioner. During his tenure, Gensler expanded the SEC's focus from targeting individual token issue. to filing lawsuits against crypto exchanges such as Binance, Coinbase, and Cracken, accusing them of operating as unregistered securities brokers. While he initially opposed approving spot Bitcoin and ether ETFs, a court ruling forced the SEC to greenlight these products.

Starting point is 00:34:06 Trump has yet to announce Gensler's successor, but names such as Brad Bondi, Paul Atkins, Brian Brooks, and Teresa Goody-Gulen are reportedly under consideration. President-elect Donald Trump is considering to be his critical. Crypto policy advisors, but sources emphasize things could change quickly. Trump promised the crypto community that he would create a crypto-focused advisory council at the Bitcoin Tutank for conference in July. Sources say that people surrounding Trump have also been floating the idea of creating a separate role in the White House,

Starting point is 00:34:37 typically referred to as a crypto-Kee-R, since July as well. The crypto-Kazar would likely be someone with a policy background, sources told unchained, primarily because Office of Government Ethics, OGEE rules, would prohibit such a person from owning crypto. Some speculate, however, that Trump could appoint a new director of the OGEE who could then waive that restriction for federal staff. One possibility is Chris Giancarlo, who served as chair of the CFTC under Trump during his first term. In an ex-post published last Thursday, Giancarlo said that he was not interested in the role of either SEC chair or a crypto role in the Treasury Department. But John Carlo did not say he was uninterested in a White House or advisory council role. Trump Media explores BACT acquisition, expanding crypto footprint.

Starting point is 00:35:25 Social media company Trump Media, which is owned by Trump, is reportedly in advance talks to acquire cryptocurrency trading firm, Backed, the Financial Times reported. Shares of both companies soared following the news, with Bokt surging over 162% amid trading halts due to volatility. Created by Intercontinental Exchange, the parent company of the New York Stock Exchange backed has faced financial hurdles, including warnings of potential delisting earlier this year. The reported acquisition by Trump Media aligns with Trump's growing involvement in crypto ventures, such as his recent backing of crypto platform World Liberty Financial.

Starting point is 00:36:03 FTX sets timeline for creditor and customer distributions. FTX announced it is nearing the final steps to implement its Chapter 11 plan of reorganization, with creditor and customer distributions expected to begin in early 2025. According to CEO John J. Ray III, the company has already recovered billions for creditors and is working to finalize arrangements with global distribution agents. FTX plans to provide customers with detailed instructions to set up approved accounts for distributions by December, including completing KYC verification and tax documentation. The plan's effective date is anticipated to,

Starting point is 00:36:42 to be January 2025, with the first payments to claim holders in convenience classes occurring within 60 days. FTX emphasized the importance of meeting deadlines to ensure eligibility and noted potential delays for claims traded within 45 days of the record date. Micro Strategy scales, Bitcoin Holdings, becomes top-traded stock. Micro Strategy continued to make headlines this week. On Wednesday, the company announced it was increasing its convertible senior note offer. from $1.75 billion to $2.6 billion in order to acquire additional Bitcoin and fund general corporate purposes. The unsecured notes, due 20209, bears 0% interest and can be converted into cash, equity, or both, offering the firm flexibility in managing its debt. Earlier this week,

Starting point is 00:37:35 Micro Strategy, the world's largest corporate holder of Bitcoin, announced it had acquired 51,780 BTC, valued at $4.6 billion at an average price of $88,227 per coin. The purchase brings the total value of its Bitcoin holdings to approximately $29.7 billion, which were acquired at a cost of $16.5 billion since 2020. The latest news spurred a trading frenzy with Micro Strategy's stock, MSTR, surpassing Tesla and Nvidia, to become the most traded U.S. stock by dollar volume on Wednesday. Bloomberg analyst Eric Balcunis called the development Wild Times, reflecting the stock's 43% single-day surge and staggering 910% gain year-to-date. Coinbase to delist Rapt Bitcoin.

Starting point is 00:38:25 Coinbase announced it will delist Rapt Bitcoin WBTC on December 19th, 20 and 24, citing concerns over its listing standards, although users will still be able to move their WBTC off the exchange, even after the trading suspension goes into effect. The decision follows recent scrutiny of WBT after BitGo, WBTC's primary custodian, entered a partnership with BITG Lobel, a firm partly owned by Tron founder Justin Sun. The partnership has raised concerns about Sun's influence over the protocol. WBT, launched in 2019, tokenizes Bitcoin for use on Ethereum and other blockchains, with a market capitalization exceeding 13.6 billion.

Starting point is 00:39:10 Despite BitGo CEO Mike Belchie's assurances that Sun's role is limited and that WBTC remains decentralized, critics have raised transparency and governance concerns. Coinbase's delisting comes shortly after Coinbase introduced its own wrapped Bitcoin token, CBBTC, on its base blockchain. FTX co-founder Gary Wang, Gary Wang, co-founder and former CTO of FTX, has been sentenced to time served with three years of supervised release for his role in the collapse of the massive cryptocurrency exchange. U.S. District Judge Lewis Kaplan highlighted Wong's cooperation, calling him the easiest cooperator authorities had encountered

Starting point is 00:39:51 and noting that his assistance was critical in the prosecution of FTX co-founder and former C. O Sam Bankman-Fried. Wong pleaded guilty in December 2022 to multiple fraud and conspiracy charges, admitting that under Bankman Fried's direction, he coded features that enabled Alameda research to withdraw unlimited funds from FtX customer accounts. During Bankman-Fried's trial, Wang testified about these special privileges granted to Alameda, which he said misled the public and resulted in an $8 billion deficit. Prosecutors credited Wang with aiding not only this case, but also broader efforts to detect

Starting point is 00:40:30 financial fraud. His contributions, Judge Kaplan remarked, were worthy of significant leniency, acknowledging Wang's minimal culpability compared to other defendants. Razlakan, sentenced to 18 months in prison for role in $10.8 billion Bitcoin heist. Heather Morgan, better known by her rap name Razlakan, was sentenced to 18 months in federal prison on Monday for her involvement in the 2016 Bitfinex hack, one of the largest cryptocurrency heists in history. Her husband, Ilya Lichtenstein, the mastermind behind the scheme, received a five-year prison sentence last week.

Starting point is 00:41:06 Prosecutors revealed that Lichtenstein used advanced hacking tools to steal, 120,000 Bitcoin worth approximately $11.7 billion at today's prices from BitFinex. The couple then laundered the stolen funds using a mix of darknet markets, fictitious accounts, and cryptocurrency mixers. Some of the funds were even converted to gold and buried by the pair. Lido dao faces legal challenges, while co-founders target World Network with new project, Lidoido, the organization behind Ethereum's largest liquid-staking platform, is facing legal scrutiny after a California federal court ruled that it could be classified as a general partnership under state law. The decision paves the way for Deo participants to be held liable for its actions.

Starting point is 00:41:51 Judge Vince Chabria stated that Lido's profit-driven structure allows for liability under general partnership laws, even for token holders engaged in governance. This precedent-setting case now advances to discovery, potentially reshaping the liability framework for decentralized autonomous organizations. At the same, same time, CoinDesk reported that Lido's co-founders, Constantine Lomaschuk and Vasili Shappavlov are pursuing a new venture aimed at challenging Sam Altman's World Network, previously known as WorldCoin. The pair's blockchain-based identity platform, dubbed Why, seeks to address privacy concerns raised by World Network's iris scanning technology. Why instead plans to authenticate

Starting point is 00:42:33 users via blockchain activity and social data, avoiding biometrics entirely. Sky's USDS Stable coin launches on Solana with $2 million monthly incentives. Sky, formerly known as Maker, has launched its USDS.S. Stablecoin on Salana in a bid to expand its footprint. The launch marks USDS as the first major Defi Native stable coin on Salana, with a circulating supply surpassing $89 million within 24 hours of its launch. In order to encourage early adoption and liquidity, Sky is offering $2 million in monthly rewards to users who deposit USDS.DS on PLUS. platforms such as Camino Finance, Drift Protocol, and Save Finance. USDS, previously known as Dai, competes against dominant stable coins, such as USDT and

Starting point is 00:43:20 USDC, which together control 88% of the stable coin market. Sky also plans to roll out its Skylink cross-chain bridge, further integrating USBS into Solana's ecosystem. Time for fun bits. Kid cashes out early and misses millions. Imagine launching a meme coin, making a tidy five-figure profit. and then realizing you just left millions of dollars on the table. That's the saga of a young entrepreneur who minted a token via pump dot fund this week.

Starting point is 00:43:49 The child, whose name is not known, sold their entire stash while on a live stream for thousands of dollars, only to watch the crypto community catapult the token's market cap past $100 million later that day. Ouch. Adding to the story, the kid created two additional meme coins after the initial sale, but these did not achieve the same explosive success. The crypto community's fascination remained focused on the original token, which was CTOed by others in the space, meaning a new technical direction was assumed for it.

Starting point is 00:44:21 The community even launched spin-off meme coins linked to the creator's family, amplifying the spectacle. And that's all. Thanks so much for joining us today. If you enjoyed this recap, go to unchainedcrypto.substack.com that is Unchained Crypto.substack.com and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Aranovich, Megan Gavis, Pam Majimdar, and Margaret Korea. The weekly recap was written by Juan Aranovich and edited by Nelson Wang. Thanks for listening. Unchained is now a part of the

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Unchained - Spot Bitcoin ETF Options Are Here. Why You ‘Can’t Overstate’ Their Importance - Ep. 739

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