Welcome to another Riveting Rake Review as August delivered on some volatility and news again. From Supply shocks, to Aussie Banking issues, to ETF's, to Russian Billionaires accidentally being blown up, we go around the world as Bitcoin quietly counts down to the next halving in April.

Just as we were sending out the Rake Review huge news came through again. We had to delay the newsletter and add this key development. 

Judge Srinivasan & Edwards found that the Securities and Exchange Commission (SEC) was wrong to reject Greyscales ETF application and failed to explain their rejection. 

The result can still be challenged but if it stands is enormous for Bitcoin and the whole industry. For Greyscale it means they could turn their current Bitcoin fund into an ETF. Their current fund is the worlds largest holder of Bitcoin (Other than the Satoshi holding). 

It also means that there is great hope for the other 7 ETF applications currently before the SEC. As you will read below in the body of this newsletter we already see the ETF applications as the biggest catalyst for the next Bull-run.

Bitcoin has already responded in trading this morning up over 6% to almost $28,000 USD. The wider crypto market has also been dragged up by this news with ETH and SOL up 5%. As the market digests the news further how will this play out?

We will post a full analysis of this news in a separate article today.

The supply of coins on exchange is historically very low. According to Coinglass, less than 10% of Bitcoin supply is accessible through exchanges. That means the rest is safely put away in cold storage or similar. Available supply is extremely low. 

Look at the green line below. Less than 2 Million BTC is on exchange.

Bitcoin on exchange is now at a 5 year low, despite 5 years of mining adding to the supply. There is significant accumulation going on amongst the whales (large holders) and according to some reports Wall St funds are starting to accumulate a position ahead of launching their ETF's. It's an environment where any demand shock could spark a sharp rise.

Which Bank has sent a letter to every customer telling them that they can't send any more than $10,000 AUD per month to cryptocurrency exchanges? The Commonwealth Bank.

ANZ and NAB seem to also be looking at similar rules. Its a very concerning development for a western country. All of a sudden the Bank gets to choose what you can spend your "hard earned" on. That's despite the fact that its all legal. They just don't think the industry is a "good fit" or fits within their "risk appetite". With cash disappearing at a rapid rate in Australia its a real concern that we are seeing the future unfold. CBDC's are on the way and you might be looking into a little window of your future where you will be told what you can and can't spend your money on. Meat, fatty foods, coke, fast food, guns, produce of countries we don't approve, etc etc.

The key here is this. While you can buy Bitcoin you really need to because your AUD offramp could be cut at anytime and then you physically won't be able to buy while watching the price rocket and not being able to do anything about it.

We wrote about this in detail in our Thunder Trading update so I won't go into great detail here. However, given that this is key news, what you need to know is that the SEC has filed for an appeal. 

The curtain has not yet fallen on the riveting drama between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs. What once was hailed as a pivotal moment with the July 13 ruling is now heating up with an appeal, bringing further uncertainty to the crypto sphere.

Read more here.

A further demand side shock is expected from any movement on the approval process for US based Exchange Traded Funds (ETF's). While some players have had applications before the SEC for quite some time, the entry of BlackRock has been significant. Other players have quickly filed changes to their applications to be in line with BlackRocks filing. The reasoning is simple, BlackRock has an incredible track record of succeeding so the others want to be as similar as possible so that the SEC has no choice but to accept all of them if they want to approve BlackRock. 

So, we are witnessing the single biggest catalyst that could start the next BTC bullrun. If all of these funds are simultaneously approved the demand it brings in is incredible. Given the already low supply and the halving this could ignite the whole market.

ETH is also there with the same players filing for ETH based ETF's also. 

The Bitcoin Halving is under 2/3 of a year away. In April, the amount of BTC released every block will halve lowering supply to hit the market. In the past this has helped put a supply shock into the market and we have seen what can happen to price. Don't get caught short.

• The Bitcoin HashRate has been widely reported as hitting a record high. Unlike traditional crypto winters where hashrate has dipped, this time around hashrate is flying. 
• The Russian Mercenary General and Billionare Prigozhin killed in a recent flight near Moscow has been linked to one of the largest crypto wallets. While you should take this with a grain of salt, it would certainly be interesting if true and would pose the question of whether he passed on his private keys.
  
• Bitcoin and Ethereum ETF applications in the US reach a record number with Wall St funds lining up to have a crack at the large end of town's demand for crypto.
• Ilya "Dutch" Lichtenstein admitted to being the Bitfinex hacker as part of his guilty plea. That hack was the largest ever and LEO holders are lining up for their piece of the seized funds.
  

If you enjoyed this Rake Review, feel free to open an account and gain access to more proprietary research and work with your very own dedicated crypto broker.

There are 2 weeks to go until the end of the Financial year in Australia. Are you ready with your tax strategy? We will discuss this later but first we have so much news in such a short period of time. The SEC is going to war with the largest crypto exchanges in the world while declaring more and more currencies as "unregistered securities". What does this mean for the industry, your investments and the next bull run?

Binance had previously already been flagged as the "bad guy" when the CFTC released a detailed dosier alleging that Binance targeted US customers without a licence, traded against their own clients with hidden accounts as well as a raft of other impropriety so it was no surprise when the SEC officially went after them. The biggest exchange in the world is now in damage control with the founder CZ desperately trying to maintain the status quo. CZ has recently been accused of selling BTC to buy BNB (The Binance token) in order to defend the price of it from free falling. If you recall what happened with Sam (SBF)  and FTX this all seems like a perfect mirror image. Needless to say if you have funds on Binance or hold the BNB token please speak to us urgently and work out a plan of action. 

The following day after suing Binance the SEC officially went after Coinbase. This was more of a surprise because Coinbase was seen as a good actor trying to walk the path of full transparency and legitimacy. Under SEC's watch Coinbase listed on the US stock exchange and became the largest custodian of funds including for Greyscale and Blackrock. Brian Armstrong the CEO has been vocal in trying to work with regulators to make sure they could operate by the book. Coinbase had reached an impasse with the SEC recently and threatened to go completely offshore by leaving the US. So, the legal action makes it clear the SEC sees the whole crypto industry as a threat and the announcements took a swipe at several prominent cryptocurrencies. For a full list see here.

The implications are significant for the web3 and crypto industry. Effectively, the current environment makes it impossible for a new coin to be available for sale in the US. Now, given the global nature of cryptocurrencies the US regulators see global issues as US issues. Every founder of a cryptocurrency that has been named as a security may soon find themselves in trouble with the law. Now do you see why Satoshi disappeared? 

As an investor you have to ask yourself: Should I still be holding Cardano or Matic or BNB? What does the future hold? The answer is important. Many of our clients have chosen to consolidate their altcoins into Bitcoin (BTC).

Bitcoin is now at almost 50% dominance again. This means that Bitcoins value is half of all the other (top100) cryptocurrencies put together. The other currencies come and go. They have their time in the sun and then fade into insignificance. The greater fool theory has it that you can make money if the guy you sell to is a greater fool than you are. As the price rises everyone wins until the last guy gets stuck holding a bag of worthless tokens.

Bitcoin is different. It is not a security according to the SEC. It also doesn't have a founder or headquarters that you can send a subpoena to. It can't be sued. It can't be stopped and it can't be controlled by the government or the regulators.  

The Largest Home Loan Bank in Australia CBA has updated its fraud system and set a limit of 10,000 per calendar month for deposits to crypto exchanges as well as a compulsory 24 hr block. It's the kind of overreach we haven't seen yet from banks in Australia. Is there more to come? Either way, as we always say, deposits to Stormrake should never say "crypto" or "BTC". Please only use your customer ID as the reference and no description. We have never had a problem and we'd like to avoid any issues in the future. For now we have full complete access to all our Banks and can fully service all AUD needs. If anyone has a banking issue please let us know.

Meanwhile the Australian Bitcoin Industry Body has officially replied to the CBA:

As Financial Year 2023 draws to a close, we remind all clients to have a think about their positions. Note that we do not provide financial advice and we are not tax experts or accountants. However, there is only 2 weeks left in the financial year for any trades to count towards FY23. Speak to your accountants as to what is best for your tax position and let us know if you need to transact.

As the year draws to a close Stormrake will charge the accrued custody fees for all accounts holding crypto. Look out for that in your next statement which will detail any charges.

• SEC files lawsuits against Binance and Coinbase on consecutive days. These are the 2 largest centralised exchanges in the world. Coinbase especially was trying to be a fully regulated exchange and listed in the US under the watch of the SEC. The SEC also declared a new list of cryptocurrencies as securities. Full list here: Contact your broker if you have these tokens.
  
• Commonwealth Bank announces all withdrawals to crypto exchanges will be held for 24hrs to protect their clients from fraud.
  
• BlackRock files for a Bitcoin only Spot ETF (Technically a trust) in a complete 180 after calling Bitcoin an "Index of Money Laundering" in 2013. BlackRock is the worlds biggest fund manager.
  
• The RBA raises rates again by 0.25% but the Fed decides to halt for the first time since the record tightening began.
  

During the week we wrote an education piece on the way that SEC looks at what is and isn't a security. The Howie Test is used to decide and if a cryptocurrency is a security it needs to fully comply with securities law in the US. Bitcoin is not a security and never was. The article here looks at this in more detail.

Many people think confiscation is impossible in the western world but studying history allows us to see that confiscations have happened before and there is a chance of confiscations in the future. The article here looks at what happened in more detail.

If you enjoyed this Rake Review, feel free to open an account and gain access to more proprietary research and work with your very own dedicated crypto broker.