Crypto Scoop: SEC Confirms ETH Is Not a Security, MicroStrategy Acquires More Bitcoin

The crypto space is constantly buzzing with new developments and significant milestones. In this edition of the Crypto Scoop, we review the following:

• Recent price trends and market sentiment for top cryptocurrencies
• The SEC's decision to classify ETH as a non-security
• The growth of stablecoins, including Tether's latest offering
• Global trends in crypto adoption and regulatory changes.

MicroStrategy Expands Bitcoin Holdings Amid Positive Market Sentiments

MicroStrategy has completed an $800 million convertible note offering aimed at increasing its Bitcoin reserves, signalling strong confidence in Bitcoin's future despite recent price fluctuations. On June 20, the company announced this strategic financial move, which included the issuance of an extra $100 million in notes. Leveraging these funds, MicroStrategy purchased an additional 11,931 Bitcoins for $786 million at an average price of $65,883 per BTC, boosting its total holdings to 226,331 BTC.

The acquisition occurred as Bitcoin'sprice dipped to $64,400, contrasting with the relatively stable price of Ethereum at $3,500. Despite these fluctuating prices, the overall market sentiment remains positive, possibly fueled by low selling pressure indicated by a three-year low in Bitcoin exchange reserves and a 14-year low in miner reserves. Analytics from CryptoQuant and IntoTheBlock suggest that only 2,825,703 Bitcoins are currently available on exchanges, with miner reserves dwindling to just 1.90 million BTC.

According to experts from Storm Partners, the cryptocurrency sector has seen increased legitimacy and investor interest through the approval and launch of Bitcoin ETFs. This has provided new investment opportunities and a significant shift in investor attitudes toward cryptocurrencies.  

Supporting this optimistic market outlook, analysts at Bernstein predict a substantial rise in Bitcoin, estimating it to reach $200,000 by 2025, a notable increase from their previous target of $150,000. This bullish forecast is fueled by strong inflows into spot U.S. Bitcoin ETFs since their approval. These ETFs are expected to account for around 7% of the total circulating Bitcoin supply by 2025. 

SEC Clears Ethereum of Security Status

In a significant development for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has officially concluded its investigation into Ethereum, determining that Ether will not be classified as a security. This decision, communicated on June 19, 2024, marks a pivotal moment for Ethereum and its developers.

Consensys, a key Ethereum developer, announced through a post on platform X that the SEC's Enforcement Division had closed its investigation into Ethereum 2.0, effectively confirming that Ether transactions will not be considered securities transactions. The firm celebrated this as a "major win for Ethereum developers, technology providers, and industry participants," signalling a clear path forward without the regulatory uncertainties that have previously clouded Ethereum's evolution.

Laura Brookover, a lawyer for Consensys, underscored the importance of this resolution by stating that there would be "no more protestations from the SEC that Ether is a security," highlighting the finality of the SEC's decision. This closure brings relief and potential stability to the Ethereum community, which had been under scrutiny as part of the broader regulatory examination of digital assets. 

Stablecoins Set to Represent 10% of Global Money in the Next Decade

Circle CEO Jeremy Allaire has made a compelling projection that stablecoins could represent 10% of global economic money within the next decade. In a detailed post on X (formerly Twitter), Allaire highlighted the robust adoption of stablecoins, driven by the world's largest payment companies integrating this technology to enhance public chain benefits and expand stablecoin usage. He noted that this could significantly impact banking for the unbanked, reducing remittance costs and facilitating seamless cross-border commerce.

This optimistic outlook is supported by recent data from Token Terminal, which highlights a dramatic increase in stablecoin transactions. These transactions have surged tenfold over the past four years, reaching a monthly transfer volume of over $1 trillion. As of June 20, 2024, stablecoins hold a market capitalisation of $161.54 billion, accounting for approximately 6.48% of the entire $2.492 trillion cryptocurrency market and constituting over 60% of the global trading volume on exchanges.

Meanwhile, Tether has launched a novel gold-backed U.S. dollar stablecoin named Alloy. This introduction marks the first step towards a real-world asset tokenisation platform. Alloy will be over-collateralised by Tether Gold (XAUt), providing long-term holders with a way to maintain exposure to gold and a dollar-referenced asset for daily transactions. Tether's initiative underlines the diversification within stablecoin offerings and their growing importance in blockchain and traditional financial sectors.

Recent Developments in Global Cryptocurrency Regulation and Adoption

A recent report from Bank of America titled "2024 Bank of America Private Bank Study of Wealthy Americans" reveals a generational divide in investment preferences. Younger affluent investors increasingly lean towards cryptocurrencies and alternative investments, contrasting sharply with older generations' preference for traditional equities. This trend suggests a shift in financial strategies influenced by the potential of digital assets to offer above-average returns, which three-quarters of younger individuals believe cannot be achieved with stocks and bonds alone.

The Bank for International Settlements (BIS) reports that 94% of central banks are exploring central bank digital currencies (CBDCs), with a focus on wholesale applications. This reflects a significant global interest in adapting central banking to the digital age. Ethiopia's Council of Ministers approved a draft proclamation that paves the way for the launch of a CBDC, signalling a notable step towards integrating digital currency into its economic system.

The Australian Securities Exchange (ASX) has taken a significant step by approving the VanEck Bitcoin ETF, marking the first spot Bitcoin ETF in Australia set to start trading on June 20. This follows the successful launch of similar products in the United States, highlighting a growing demand for Bitcoin exposure through regulated, familiar investment vehicles. However, the National Australia Bank has halted the development of its Ethereum-based stablecoin, AUDN, just over a year after its announcement. 

In Argentina, President Javier Milei has endorsed the use of Bitcoin and other digital assets to invigorate the national economy, advocating for the free competition of currencies. This policy could potentially alter the financial landscape by integrating digital currencies into everyday economic activities.

Tanzania has proposed amending its Income Tax Act to include a three per cent withholding tax on income from crypto transactions, aiming to increase government revenue through digital asset activities. Italy is also tightening its regulatory grip by increasing surveillance of the crypto markets to prevent financial crimes, which aligns with the European Union's Markets in Crypto-Assets (MiCA) regulatory framework. In Brazil, the Special Department of Federal Revenue is set to begin collecting data from foreign crypto exchanges to ensure compliance with local regulations. This move is part of a broader effort to understand and regulate the operations of international crypto platforms within Brazil.

Meanwhile, Germany, which holds the fourth largest Bitcoin reserves globally, recently moved a significant portion of these assets to exchanges. These holdings originate from Bitcoin seized during the crackdown on the piracy site Movie2k.to. This transfer to exchanges has sparked discussions about potential market impacts and the broader implications for the cryptocurrency space.