In this recap of the crypto world, we will explore the events and news that had the most significant impact in the past week of June 12. Our focus will be on the following developments:
- CPI Falls to 4%
- Hinman Docs Unsealed
- FED Pauses Interest Rate Hikes
- SEC and Binance to Avoid Freezing Assets
- BlackRock Files for Bitcoin ETF
CPI Falls to 4%
The latest Consumer Price Index (CPI) data for the United States has revealed a significant drop in inflation, with the CPI falling to 4% in May. This news comes as a positive development, representing a steady decline from April’s figure of 4.9%. As per WatcherGuru, this positive trend has also surpassed economist forecasts, which had predicted a 4.1% inflation rate.
According to the Bureau of Labor Statistics (BLS), all Urban Consumers (CPI-U) rose by 0.4% in April on a seasonally adjusted basis, following a modest 0.1% increase in March. Housing emerged as the primary contributor to the monthly uptick, with the index for fuel, used automobiles, and trucks also experiencing notable growth.
Notably, the energy index witnessed a 0.6% gain in April, driven by a surge in the gasoline index that effectively offset declines observed in other energy component indices. Conversely, the food index remained relatively stable, showing no significant changes from March to April. However, within the food category, there were slight variations as the index for food consumed at home experienced a decrease of 0.2%. In comparison, the index for food consumed away from home increased by 0.4%.
Hinman Docs Unsealed
In a significant turn of events in the legal dispute between Ripple and the United States Securities and Exchange Commission (SEC), the unsealing of the Hinman documents has illuminated internal divisions within the SEC and sparked discussions about the agency’s motivations.
The Hinman documents pertain to internal SEC messages surrounding a 2018 speech delivered by former SEC Director William Hinman. During the speech, Hinman suggested that while cryptocurrencies like Bitcoin and Ethereum may initially be classified as securities, they could transition into commodities as they achieve a sufficient level of decentralization.
The comments are of particular interest in the unsealed documents, which raise concerns about the potential repercussions of this stance. The edits to the papers suggest that such a position could restrict the agency from easily changing its viewpoint on ETH in the future. “Even with the caveats in the sentence, it seems that it would be difficult for the agency to take a different position on Ethereum in the future,” the edited comments read.
The release seems to favor Ripple’s position in the ongoing legal dispute. Furthermore, the unsealing of these documents has been perceived by many supporters of Ripple as a key development, providing further insights into the legal status of Ripple’s native cryptocurrency, XRP. However, the release has also ignited a flurry of interpretation and speculation regarding the significance of Hinman’s opinion. Read more on this here.
FED Pauses Interest Rate Hikes
In a significant shift in monetary policy, the Federal Reserve has decided to pause its campaign of interest rate hikes after a continuous series of ten increases over the past year. As per the decision, the interest rate will be maintained at 5% to 5.25%.
FED’s decision to pause reflects a deliberate move to provide some relief to the economy from its prolonged period of tightening. Moreover, the choice was informed by recent inflation data, which indicates a slowdown in inflationary pressures. This allowed the FED to halt its interest rate hikes temporarily.
As per Coindesk, FED chairman Jerome Powell discussed the tightening policy that has been in effect since the previous year while also acknowledging the likelihood of more interest rate hikes. “Nearly all participants think further rate changes will be necessary,” Powell stated. He also emphasized the FED’s vigilance towards the risks posed by high inflation to their dual mandate of price stability and maximum employment, asserting their strong commitment to returning inflation to their target objective of 2%.
Powell also mentioned that it may be years before the FED considers interest rate cuts. While acknowledging the limitations of long-term forecasts, he maintained a stance suggesting the likelihood of consistent interest rate hikes in the upcoming meetings. He also highlighted that the FED’s decisions would depend on unfolding events, including credit conditions and macroeconomic implications, which will be factored into their interest rate decisions during the July meeting.
SEC and Binance to Avoid Freezing Assets
The United States Securities and Exchange Commission (SEC) and Binance.US, the US branch of the cryptocurrency exchange Binance, have received a clear directive from US District Judge Amy Berman Jackson to find common ground and reach an agreement to prevent the freezing of assets on the crypto exchange.
Judge Jackson emphasized that she would only issue a final ruling on the SEC’s motion for a temporary restraining order once the ongoing dispute between the two entities was resolved through mutual agreement. The judge also dismissed the SEC’s request to completely shut down the American arm of Binance, citing concerns about the impact on the crypto market.
According to Judge Jackson, both parties would be better served by engaging in negotiations, as they are “not that far apart” in their positions. She emphasized that resolving would provide relief and safeguard investors’ confidence in the crypto market. The judge further remarked that the SEC and Binance-US branches were close enough in their negotiation efforts. Read more on this here.
BlackRock Files for Bitcoin ETF
BlackRock, the esteemed asset management firm with a staggering $9 trillion in assets under management, has taken a significant step in cryptocurrencies by applying to a Bitcoin exchange-traded fund (ETF). Joining the ranks of many other hopeful applicants, BlackRock’s move underscores the increasing interest in providing regulated investment opportunities for digital assets.
In its pursuit of a Bitcoin ETF, BlackRock has chosen Coinbase Custody as a partner. The New York City-based investment firm will rely on Coinbase’s spot market data to determine the potential ETF’s pricing. This collaboration builds upon the partnership forged between BlackRock and Coinbase last August, which enabled clients using BlackRock’s investment management platform Aladdin to access and trade digital assets, starting with Bitcoin. Through this arrangement, BlackRock clients gained access to Coinbase’s suite of services encompassing trading, custody, prime brokerage, and reporting.
It is important to note that the SEC has consistently rejected applications for spot Bitcoin ETFs thus far, citing concerns such as market manipulation, investor protection, and custody practices. However, the regulatory body has granted approval for Bitcoin futures ETFs, which are designed for trading purposes. Hence, the support of BlackRock’s application may hinge on the distinction between spot Bitcoin ETFs and futures ETFs.
According to Decrypt, if the SEC grants registration, the BlackRock Bitcoin ETF will become immediately effective, as stated in the application filing. While BlackRock and Coinbase have yet to release a public statement regarding the new application, they are expected to provide further details shortly.
