The Latest News - Bitcoin ETF Is One Step Closer To Approval
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The latest in financial news: The Bitcoin ETF is one step closer to getting approved, the Bank of Spain looks to create its own CBDC, new shipping lanes may be more beneficial with trouble in the Red Sea, and recent bills in Oklahoma and Missouri look to eliminate state capital gains taxes on gold and silver.
Bitcoin ETF
Over this past week, the institutions interested in creating a spot Bitcoin ETF have until 08 January 2024 to file their Form S-1 to the SEC. The S-1 form is a request to the SEC to offer initial public offerings (IPOs) for a new security. This is usually the last step before an ETF is approved. With so much news focused on the spot Bitcoin ETF, there has been interest in the Ethereum ETF as well. With the SEC approving Ethereum futures ETFs, there is an argument that this makes Ethereum a commodity, similar to Bitcoin. It is expected that once the Bitcoin ETF is approved, the next ETF will be Ethereum.
With so much news about the Bitcoin ETF, there have been a few voices that have spoken out against it. They have stated that since anyone in the US can buy Bitcoin on centralized exchanges (i.e. Coinbase) or at a Bitcoin ATM there wouldn’t be a major influx of new investors. They say that people who are interested in buying Bitcoin would/should buy it themselves. We feel that there is some truth to it. Most people are interested in cryptocurrencies because of the decentralized aspect they offer. They can take and control their digital assets as they want. But we also think that the ETF will provide access to more institutional investors as it provides ease of trading and security. If institutional investors wanted to buy Bitcoin, they would have to create wallets to buy and store them and then also protect their keys. For large institutions like Blackrock and Fidelity, that would be pocket change to secure but for hedge funds with only $10 million of assets under control, that could take a lot of resources away. In the long run, we think that it will help large investors in getting exposure to cryptocurrencies.
Bank of Spain And Its CBDC
Over this past week, the Bank of Spain, Banco de España, has announced its partnership with Cecabank, Abanca, and Adhara Blockchain for the development and testing of a central bank digital currency (CBDC). They will be looking at simulation testing for processing bank transfers and payment processing. Similar to other CBDCs being developed in the world. As Spain is part of the European Union, the Bank of Spain stated that this CBDC would be separate from the European Union’s (EU) version of a CBDC for a digital Euro. The EU’s central bank, the European Central Bank, has been developing a CBDC and is scheduled to have progress by 2025 after determining regulations for the digital currency.
As another country that is testing a CBDC, it will be interesting to see how Spaniards will respond to them. There have been polls where 65% of Spaniards were reluctant to implement CBDC just as many people around the world do as well. We have said before that the idea of a CBDC is beneficial. It offers faster transactions compared to modern systems. The issue almost everyone has with CBDCs is who owns and controls them. History has multiple examples of rulers and governments abusing power to control their people. An example would be WeChat which is used in China. The Chinese government indirectly owns the company that operates WeChat. With access to so many people’s data, it is easy for anyone to take advantage of that. This is why we like and recommend Bitcoin. It isn’t owned by any particular government or entity.
New Shipping Lanes
With the rise in piracy in the Red Sea, many companies have been looking at alternate trading routes to deliver goods. Many companies have tried traveling around the Cape of Good Hope, which is the southern part of Africa, instead of traveling through the Red Sea. These goods are shipped from Asia and usually end up in the US or Europe. Due to the extended travel times and costs, this can cause major increases in goods as prices are raised. Another option that has grown lately is traveling through the Pacific Ocean. It has been calculated that it takes about 17 days to travel from Shanghai to Los Angeles compared to 43 days from Shanghai to New York City. Just the use of fuel alone is a major advantage.
As many people may remember, the COVID-19 pandemic caused a lot of disruptions in shipping around the world. We have seen what can happen to prices as supply lines are disrupted. This has caused many countries to focus on incentivizing companies to move to their country. This can be seen in the US, as more companies have returned due to the available resources and markets. Imagine a scenario for a company. You own a company that is located in Arizona that produces batteries and get a majority of your lithium from mines in Asia. Now imagine that same company in Arizona getting their lithium from a mine in Nevada. Which is more likely to struggle if there is a major disruption to the global supply chains? The first one since they are relying on so many parts to get their lithium compared to getting it from Nevada.
Gold And Silver Are Improving
In December of 2023, bills were filed in Oklahoma and Missouri to eliminate capital gains taxes on the sale of gold and silver. The bills have been added to the legislation sessions in 2024 for each state government to review and vote on. The bills proposed to eliminate state capital gains taxes for the sale of any gold or silver products. There are currently 41 states within the US that don’t have state capital gains taxes. The 9 states that do are Hawaii, Kentucky, Maine, Mississippi, New Jersey, New Mexico, Tennessee, Vermont and Wisconsin.
This is beneficial to everyone. Many people have argued that this helps to push the return of gold and silver to a form of currency instead of a commodity. This would be in line with what governments have been doing around the world. Buying gold to store in their central banks. Ever since President Nixon took the US Dollar off of the gold standard, the value of the US dollar has decreased dramatically. There are central banks and large banks around the world that have been buying gold as a reserve for their currency instead of the US dollar or US treasury.
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