BITCOIN ETF

$1.5 Trillion Investment Fund Files App for Spot Bitcoin ETF

The Scoop: Franklin Templeton, a global investment firm managing $1.5 trillion in assets, has filed a Form S-1 with the U.S. Securities and Exchange Commission (SEC) to launch a spot Bitcoin ETF.

The Goal: The proposed ETF, named Franklin Templeton Digital Asset Trust, will track the performance of Bitcoin. It is designed to offer benefits such as improved liquidity and ease of trading, without requiring investors to directly hold the digital asset.

Timeline: Franklin Templeton's application is subject to a detailed regulatory review by the SEC, a process that could take several months and likely many delays as the SEC has been slow-rolling all applications of this kind - to the chagrin of Bitcoiners everywhere.

Our Take: The folks over at Franklin Templeton must have been watching the suit that Grayscale brought against the SEC over its rejection of Grayscale’s Spot Bitcoin ETF application. Once the SEC lost that case, Franklin Templeton likely smelled blood in the water. They were just waiting for their competitors to fight all the legal battles before they jumped in the ring.

WHAT WE'RE WATCHING

🤑 Last Sunday, someone mistakenly over payed $500,000 in fees for a Bitcoin transaction. Initially, there was speculation that PayPal might have been responsible for the error, but Paxos clarified that the mistake was theirs and is in contact with the miner to recover the funds. Funnily enough, Paxos could have saved an additional 4% on fees by using Taproot.

📈 August saw U.S. inflation accelerate to 3.7%, driven by a spike in gasoline prices. Even ‘core inflation’, which removes food and fuel costs, rose in August by 0.3%. Expect more hikes to come and expect them to hit BTC price.

🔄 Binance.US CEO Brian Shroder is stepping down amidst a cut of over 100 jobs, nearly a third of the company's workforce. The move comes after regulatory lawsuits against the parent company, Binance, with both companies facing scrutiny from the SEC. But this shake-up is nothing new - it follows other high-level resignations at the global crypto exchange as well.

🏛️ SEC Chair Gary Gensler testified before the Senate Banking Committee, reiterating his critical stance on the crypto industry, which he labeled as "full of fraud, abuse, and misconduct." Amid recent controversies and lawsuits over the SEC's decisions to reject certain spot Bitcoin ETFs, there have been calls to fire Gensler. Such a move is unlikely to happen, though.

📣 Coinbase CEO Brian Armstrong announced that Coinbase is integrating the Bitcoin Lightning Network, a layer-two solution for faster payments. Armstrong noted that it would take awhile to integrate lightning onto the platform so users should be patient. Armstrong added that “Bitcoin is the most important asset in crypto”.

CBDCs

Senate Majority Whip Introduces Legislation Banning Fed From Issuing CBDC

Legislative Push: Senate Majority Whip Tom Emmer has reintroduced the CBDC Anti-Surveillance State Act, which aims to prohibit the Federal Reserve from creating a Central Bank Digital Currency (CBDC).

Privacy Concerns: The bill is designed to counter the potential for government surveillance of American’s through the use of CBDCs, ensuring that any digital currency issued by the Federal Reserve respects the financial privacy and individual sovereignty of Americans.

Specific Prohibitions: The legislation explicitly forbids the Federal Reserve from issuing a CBDC directly to individuals or indirectly through intermediaries like banks. It also restricts the Fed from using CBDCs to implement monetary policy.

Political and Public Support: Tom Emmer's bill has garnered support from 50 original Republican co-sponsors and organizations like Heritage Action and Club for Growth. However, it’s unlikely he will be able to garner the votes necessary to pass this bill any time soon.

POLL

Last Thursday’s Poll Results

Will We See More Stablecoin Issuers Become Top Treasury Bill Buyers?

Yes - 80%

No - 20%

👍 Yes: “As the dollar is the highest rated fiat currency, Treasury Bills provide the best hedge and stability for Stablecoins. Until Bitcoin is more widely accepted. Digital transactions with Stablecoins make sense when backed by dollars.” - Steve

👎 No: “Tether is the 800lb gorilla in the room. No other stablecoin issuer comes even close to the size necessary to buy up that many T Bills.” - Ed

IN THE LOOP

👁️‍🗨️ SEC Chairman Gary Gensler announced that the agency is using AI to monitor financial markets for misconduct, as part of its market surveillance and enforcement actions. The increasing role of artificial intelligence in market oversight is cited as a key reason behind the SEC's request for additional funding from Congress to enhance its technological capabilities.

🔍 House Speaker Kevin McCarthy has directed the U.S. House to open an impeachment inquiry into President Joe Biden over his family's business dealings, citing "a culture of corruption." Any impeachment proceedings brought are very unlikely to be successful however, given the slim majorities in both chambers of congress and the reluctance of many house republicans to impeach.

🔨 The FTX Bankruptcy Judge has approved a plan allowing bankrupt crypto exchange FTX to sell off billions in cryptocurrency to repay creditors. The sale is capped at $100 million per week per token, potentially rising to $200 million. FTX aims to hedge assets like Bitcoin and Ether to minimize price impact. FTX, which filed for bankruptcy last November, holds $3.4 billion in crypto assets.

🛰️ Senator Elizabeth Warren has called for an investigation into Elon Musk's alleged role in limiting access to SpaceX's Starlink satellite network, which supposedly disrupted a Ukrainian military operation against Russia's Black Sea fleet. The scrutiny was prompted by an excerpt from a biography on Musk, detailing how the limitation of Starlink access interfered with a Ukrainian drone attack on the Russian fleet.

Today’s newsletter was written by Colin and edited by Jordan.