A highlight from News Block: Bitcoin Outperforms Other Assets, FTX's SBF Jury Questions, Binance vs SEC, Anti-CBDC Bill, Grocery Inflation
Welcome to the CoinStories news block. I'm Nathalie Brunel and in the span of just 10 minutes, roughly the same time it takes to mine a new Bitcoin block, I'll provide you with concise, insightful updates on Bitcoin and the global financial landscape so you're well informed on the week's top stories. Everything you need to know in one place in one block. Let's go. Bitcoin started the week with a nice little green candle. But zooming out, Bitcoin is officially the best performing asset class in seven of the last 10 years. That's according to data shared by market strategist Charlie Bilello. Between 2011 and 2023, Bitcoin's annualized return was about 145 percent. Compare that to the Nasdaq 100 index at 17 percent, the S &P 500 at 12 .5 percent and gold at just 2 percent. Sorry, Peter Schiff. And for those lucky enough to buy Bitcoin in 2011 and hold, their cumulative return exceeds 8 million percent. Wish that was me. More institutions are eyeing a spot Bitcoin ETF, the latest being Franklin Templeton, another giant asset manager with 1 .5 trillion dollars in assets under management. Franklin Templeton's application joins BlackRock, Fidelity, ARK Invest and several others. As I've reported here on the news block, a spot Bitcoin ETF would make getting exposure to Bitcoin as easy as buying any other stock or bond in a traditional brokerage account. It would increase access to Bitcoin and make it easier for funds to flow into the space. But of course, that's dependent on approval from the SEC, led by Chairman Gary Gensler. The SEC's main complaint for why it has rejected spot Bitcoin ETF applications is market manipulation and fraud. In a Senate Committee on Banking, Housing and Urban Affairs hearing last week, Gensler answered questions related to the SEC's oversight of the entire crypto industry. Gensler testified, quote, given this industry's wide ranging noncompliance with the securities laws, it's not surprising that we've seen many problems in these markets. Thus, we have brought a number of enforcement actions, some settled and some in litigation, to hold wrongdoers accountable and promote investor protection. Gensler is continuing to hold the court decisions for him in the SEC's lawsuits against Grayscale and Ripple Labs. And when pressed in the hearing about how the SEC will protect investors from crypto fraud, Gensler responded by saying these companies need to be compliant with existing securities laws, adding this. But right now, unfortunately, there's significant noncompliance and it's a field which is rife with fraud, abuse and misconduct. We saw some of that fraud and misconduct with the high profile downfall of FTX. FTX founder Sam Bankman -Fried's case is set to go to trial October 3rd. But this week, a story gaining attention is related to the proposed questions SPF's lawyers want to send to potential jurors. And prosecutors are trying to stop this. The would attribute a crypto firm's failures to the owner of the firm and why, and whether they think it's wrong to donate large sums to political candidates and lobbyists. Another question was about SPF's effective altruism, the idea that he only wanted to amass wealth to give it away and improve the world. And yet another was about whether the juror had experience with people with the medical condition ADHD. Now, the DOJ's prosecutors are worried these questions are aimed at getting jurors that would see SPF in a sympathetic light and have written a letter to the judge to remove these questions entirely. SPF faces more than 100 years in prison if convicted of a number of charges, including fraud, conspiracy and money laundering after he allegedly stole and lost billions of his customers' funds. Meanwhile, Binance, another exchange in hot water with the SEC, also made headlines this night, including the CEO, the head of legal and the chief risk officer. Binance US has also cut a third of its staff. Binance issued a statement blaming, quote, the SEC's aggressive attempts to cripple our industry. Now, the layoffs arrived just as the SEC is accusing Binance of not cooperating with its ongoing investigation. The SEC says Binance US has failed to hand over proper documents that ensure that its customer assets are safe and in sole control of the organization. The recent resignations of Binance US leadership, including CEO Brian Schroeder, only added to the growing concerns. Binance CEO CZ responded saying, quote, there has been some speculation regarding recent management changes at Binance US. Brian Schroeder deserved a break after accomplishing what he set out to do two years ago. Ignore FUD. Keep building. Binance makes up about half of Bitcoin's trading volume, so the government complaints and investigations could delay any spot Bitcoin ETFs from being approved. So I'll be staying on top of this developing story. Now, in other news, in an industry first, Swann Bitcoin announced its plans to launch a Bitcoin only trust company with crypto custodian BitGo. This comes after Swann's former custodian Prime Trust filed for bankruptcy in August, and its current custodian partner, Fortress Trust, was acquired by Ripple Labs. The creation of a Bitcoin only trust company is a positive development given the risks that we've seen arise when custodians hold other cryptocurrencies or do business with companies that handle them. Let's turn now to a bill reintroduced by House Republicans that would outlaw a central bank digital currency or a CBDC. Last week, Republican House Majority Whip Tom Emmer, along with forty nine co -sponsors, reintroduced the CBDC Anti -Surveillance Act. The bill aims to prevent the Federal Reserve from issuing a digital dollar due to the risk it imposes to privacy and individual freedoms. Tom Emmer tweeted, quote, if not designed to emulate cash, a government digital currency would dismantle Americans' right to financial privacy and embolden the administrative state. I won't let that happen. Specifically, the updated bill prevents the Federal Reserve from issuing a, quote, intermediated CBDC, which would be a digital currency issued by the Fed but managed by retail banks. This is a similar system to what's currently being deployed by China with its digital won. Congressman Emmer adds that this bill puts a check on unelected bureaucrats and ensures the U .S. digital currency policy upholds our American values of privacy, individual sovereignty and free market competitiveness. Whereas Republicans are focused on stopping a CBDC, the Fed is only concerned about bringing down inflation. But this past month, inflation was on the rise again. CPI rose to three point seven in July, and that's mainly driven by rising energy and food prices. But don't worry, economist Paul Krugman, the guy who famously said the Internet was a passing fad, notes that if you exclude everything people actually need, like food, energy, shelter and used cars, inflation is actually down. But here in the real world, people continue to struggle with the rising cost of essentials like groceries and gasoline. And instead of taking responsibility for their inflationary policies, some politicians are identifying scapegoats for the rising cost of living. In a speech last week, Canadian Prime Minister Justin Trudeau blamed grocery stores for price rises and said the companies could be hit with new taxes if they do not take steps to control food prices. And let me be very clear. If their plant doesn't provide real relief for the middle class and people working hard to join it, then we will take further action and we are not ruling anything out, including tax measures. Leaders of the Canadian grocery store chains responded by saying they are not profiting from inflation because although prices have risen, so have their costs. Grocery store profit margins remain razor thin. In fact, the CEO of one major Canadian grocery chain, Loblo's, said that on a customer's $25 grocery basket, they earn just $1 in profit. Performing price controls or taxing these companies would only negatively impact the available supply of food even more and risk putting these grocers out of business. But once again, government policies are threatening to worsen the problem they helped create in the first place. This is true in America, too. Grocery store profit margins remain some of the lowest in the economy, averaging about 1 to 3 percent. Some grocery stores are struggling to keep their doors open here, especially in big cities amid massive waves of theft. This has even led to cities like Chicago proposing to open government -run grocery stores. Will this help the inflation picture? Doubtful. Of course, inflation isn't the result of grocery stores profiteering. It's the result of central banks and governments injecting trillions of dollars into the economy since 2020. As politicians continue to blame inflation on everything but their spending and central banks continue to raise interest rates to try to bring it down, inflation continues to erode the savings of every household holding the currencies that these institutions manage and control. Bitcoin fixes this. All right, let's wrap up this news block with the craziest Bitcoin headline of the week. It was reported that Paxos accidentally paid more than $500 ,000, that's more than 19 Bitcoin, in a transaction fee. Bitcoin fees are up in 2023, but not by that much. Now, the good news is the mining pool that won that block is going to refund that payment to Paxos. That's got to be a relief. If you want to learn more about Bitcoin fees, full blocks, and what Bitcoin block scarcity means for your investment, don't miss my latest Coin Stories episode with Bitcoin miner Bob Burnett. That's it for the news block, your weekly Bitcoin and economic news update. I'm Nathalie Brunel. Make sure you're subscribed to Coin Stories so you never miss an episode. This show is for educational purposes and should not be construed as investment advice. Until next time, keep stacking.