Bitcoin is in its third consecutive week of losses, having fallen below the $40,000 as it drops from the near-$50,000 peak it hit after the SEC approved spot bitcoin ETFs. At this rate, January will be the first month since August last year that the cryptocurrency has fallen.
Although it’s too early to tell how the new way to invest in crypto will impact the industry, this week offered a few clues:
The products have seen around $4 billion of inflows (according to Deutsche Bank analysts), but more than half of this is accounted for by flows out of Grayscale’s bitcoin fund-turned-ETF, which previously dominated the regulated bitcoin investing market.
BlackRock and Fidelity saw the majority of inflows in the first few days, and BlackRock’s was the first to hit $1 billion in assets.
If spot bitcoin ETFs are taken up, top U.S. exchange Coinbase could lose out, analysts said, because the exchange’s customers might decide to invest in bitcoin via the ETFs instead, attracted by the protection of trading through a regulated stock exchange and lower-than-average fees.
Meanwhile, more details have emerged about the SEC’s X account being hacked. It took place via a SIM swap, the SEC said, when attackers gain control of a telephone number by having it reassigned to a new device. Once they had control of the phone number, the attackers then used it to reset the password, the SEC said.
Crypto crime remains a major concern for lawmakers, with the European Union agreeing tougher anti-money laundering rules, which will cover cryptoassets, luxury goods traders, football clubs and agents and “golden” visas granted by some EU states in return for investment in property.
The rules, which need to be approved by EU states before they become law, would require crypto asset service providers to make checks on customers who carry out transactions worth 1,000 euros or more and report suspicious activity.
A report by crypto researchers Chainalysis found that at least $24.2 billion worth of crypto was sent to illicit crypto wallet addresses in 2023, including addresses identified as sanctioned, or linked to terrorist financing and scams.
While this appears to be a drop from last year’s total, the true figures aren’t known, as Chainalysis revised up its 2022 estimate and said it expects 2023’s figure to go up too. It’s important to note that these figures do not capture when crypto is used by criminals (e.g. crypto payments for drug dealing) unless the wallet address has already been labelled as illicit by an external source, such as by government sanctions.
Want to learn more about the role of crypto in illicit finance? Here’s what we know and don’t know.
