Bitcoin 10 mins
Bitcoin 10 mins

Bitcoin has nearly erased the rout from yesterday's SEC charges against Binance and today's suit against Coindesk.

It's an impressive turnaround after some troubling news, particularly accusations that Binance was wash trading.

What's happening here? Three theories:

1) The crypto market was discounting action

It's no surprise that the SEC has changed its tune on crypto since the FTX fiasco and there have been plenty of hints this was coming. The selling of the rumour has happened over many months and now we're seeing the 'buy the fact'

2) Not so bad for Coindesk

I didn't like what I heard about Binance but the accusations against Coindesk are largely philosophical and I don't see signs they were operating in a dangerous or deeply unprofessional way. Given the microscope they've been under, I would have expected anything devestating would have gotten out. To some extent, the same is true with Binance if you were worried about some kind of rug pull like FTX.

3) Fed turn

Crypto has proven to be a risk asset and the mood in markets is improving with the Fed approaching a pause with a pivot coming in around six months. I wrote today how CPI could fall to 3% in as few as five weeks and that's a development that should further boost many risk assets, including crypto.

I would have thought there might be some switching from alts to bitcoin as money was pulled off exchanges but that's not the case. Ethereum is up the same 4% as bitcoin today, as are ripple and dogecoin. There are some exceptions but this is a broad-based crypto rally, not just a jump in bitcoin.

Here is a statement from Coinbase CEO Brian Armstrong:

Regarding the SEC complaint against us today, we're proud to represent the industry in court to finally get some clarity around crypto rules. Remember:

  1. The SEC reviewed our business and allowed us to become a public company in 2021.
  2. There is no path to "come in and register" - we tried, repeatedly - so we don't list securities. We reject the vast majority of assets we review.
  3. The SEC and CFTC have made conflicting statements, and don't even agree on what is a security and what is a commodity.
  4. This is why the US congress is introducing new legislation to fix the situation, and the rest of the world is moving to put clear rules in place to support this technology.

Instead of publishing a clear rule book, the SEC has taken a regulation by enforcement approach that is harming America. So if we need to avail ourselves of the courts to get clarity, so be it. Btw, in case it’s not obvious, the Coinbase suit is very different from others out there – the complaint filed against us is exclusively focused on what is or is not a security. And we are confident in our facts and the law. We'll get the job done. In the meantime, let's all keep moving forward and building as an industry. America will get this right in the end.