Listen to the recording here: https://go.nydig.com/3TJ0xGq
Ben Lawsky, Global Head of Public Policy & Regulatory Affairs
Greg Cipolaro, Global Head of Research
Connor Wilson, Head of Institutional Solutions
Bitcoin performed relatively well during the third quarter (+3.1%) amidst a challenging environment for most financial assets. Nearly all major asset classes were down for the quarter, while bitcoin, cash equivalents, and precious metals delivered positive performance. In the second quarter, bitcoin exhibited higher correlations with equities than what’s typical. Conversely, in the third quarter bitcoin remained in a tight trading range for most of the summer (~$19 - $22K) despite challenging performance for risk assets, a good sign that the excesses of the bitcoin market may have already been wrung out.
Notably, the developments in the UK following (now) former Prime Minister Truss’s controversial economic policies remind investors that bitcoin, an alternative monetary system detached from politically motivated individuals, can act as a hedge against fiat currency debasement and fiscal irresponsibility. Unsurprisingly, there was a sharp increase in sterling to bitcoin trading activity as the British pound reached a record low against the US dollar.
Two pieces of federal legislation are progressing in a meaningful way, and they, in their current form, help clarify how crypto fits within the regulatory frameworks established for traditional assets:
It’s especially hard in an election year to predict the probability that either piece of legislation will become law in the next 12 months. However, the bipartisan nature of both bodies of work is quite encouraging and meaningful progress has been made on the Digital Commodities Consumer Protection Act in particular. In fact, NYDIG wouldn’t be surprised if that bill advances further in the Senate and reaches the House floor by the Fall of ‘23, as part of a broader Ag bill that gets passed each year. The Stablecoin Bill may be rewritten if the House flips to Republican control following the midterm elections.
The Securities and Exchange Commission (SEC) continues to focus its enforcement efforts on the crypto assets they view as securities, and the venues that enable access to these assets.
Ethereum’s technical transition from a proof-of-work consensus mechanism to a proof-of-stake model went off without a hitch.
1 SEC. Framework for “Investment Contract” Analysis of Digital Assets. Accessed October 24, 2022.
2 Estimates sourced from White House Office of Science and Technology Policy (OSTP). Accessed October 24, 2022.
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