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SEC Chooses Treasury System for BTC ETF, Base Gains Ground, and More

The U.S. Securities and Exchange Commission has opted for a liquidity creation and redemption mechanism to address concerns about market manipulation in the event it approves the launch of a cash exchange-traded fund (ETF). Bitcoin (BTC).

The use of liquidity creation means that new shares in a spot Bitcoin ETF will only be created or redeemed through cash transactions, unlike traditional stock and commodity-based ETFs, which typically use a in kind in which market participants directly manage the underlying assets.

Originally proposed by Hashdex – one of the asset managers seeking regulatory approval for the investment vehicle – the mechanism was developed to prevent intraday price manipulation, according to Hashdex’s initial filing from August .

At the request of the regulator, other asset managers, including BlackRock, ARK Invest and Grayscale, have integrated this mechanism in recent weeks.

Some speculators believe the SEC’s next move could target the need for a significantly sized regulated market, likely requiring applicants to include the Chicago Mercantile Exchange for physical trading. However, this may not be the case.

In a recent meeting with applicants, the SEC set a Dec. 29 deadline for filing final S-1 amendments, warning that applicants who failed to meet the deadline would not be considered for the January batch of potential approvals.

The final hurdle in gaining approval was the resignation of Barry Silbert of the Digital Currency Group, described in more detail below. This week’s Crypto Biz also explores the steady growth of the core network, the rise in MicroStrategy stock, and much more.

Grayscale resubmits Bitcoin ETF application from Barry Silbert

Crypto asset manager Grayscale filed an amended S-3 filing with the US securities regulator on the same day Silbert – CEO of parent company Digital Currency Group – announced his resignation from the board Grayscale Admin. Some crypto market commentators believe that Silbert’s departure could significantly increase the chances that Grayscale will successfully convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF – a venture that is currently awaiting a decision from the Securities and Exchange Commission.

Core Network Sees Steady Growth, Exceeds $735 Million in TVL

Coinbase’s Base network is showing steady growth, although the rate has slowed since its initial surge. On December 24, Base’s total value locked (TVL) reached nearly $735 million, an increase of 4% from the previous week. More than 6.97 million transactions were made on the network over the previous 30 days, with a daily speed of 3.45 transactions per second.

China’s Web3 VC to launch $10 billion accelerator fund: report

Chinese venture capital firm GBA Capital has announced a $10 billion commitment to create a Web3 fund. According to local media, the fund will invest in startups focused on virtual reality, metaverse and non-fungible tokens, seeking to transform the Guangdong-Hong Kong-Macao economic zone into the “meta-asset capital of the world.” Since the start of the year, the region has seen an influx of Web3 startups and outsourcing abroad. GBA Capital was established by China Europe International Financial Group in Hong Kong.

MicroStrategy Stock Jumps 350% in 2023 on Bitcoin ETF Hype

MicroStrategy has seen its stock price rise more than 350% in 2023, primarily due to expectations surrounding the approval of a spot Bitcoin ETF in the United States. The company’s massive exposure to Bitcoin supports its stock performance. MicroStrategy and its subsidiaries hold 189,150 BTC, representing a combined purchase price of approximately $5.9 billion and an average purchase price of $31,168 per coin. Its exposure to the cryptocurrency leads some analysts to call its stock “essentially a leveraged Bitcoin ETF.”

MSTR performance in 2023. Source: Google Finance.

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