Weekly Market Update: Ripple has a Big Win Against the SEC

Ripple labs, the issuer of the XRP token, won some of its multi-year legal battle with the SEC. The judge ruled that sales of the token on exchanges didn’t make XRP a security. XRP predictably went on a wild ride, flipping BNB to become the 4th largest cap crypto for the first time in 2 years.

This judgement is good for the industry as it challenges the SEC’s claims that everything other than BTC is a security, it certainly makes those claims look shaky.

It’s good for ETH as it has strong parallels to XRP. Finally it’s good for Coinbase, because if the tokens aren’t securities, then they can’t be running an unregistered securities exchange. 

Added to this, this week we saw more institutional interest in crypto, this week a European Bitcoin ETF was announced to go live this month. While the SEC acknowledged the Blackrock ETF application. 

Globally, the fall in US CPI has been welcomed with risk on assets benefitting with good price action. India’s resurgence continues, but there are hints of inflation coming through in their data.

The story is different in China where growth appears to have stalled and they are heading for deflation. The UK looks a long way off beating its inflation problems, while Australia’s sentiment has improved from dismal to mediocre. While at home, New Zealand’s CPI print for Q2 came in at 6%, marginally below the RBNZ forecast of 6.1% and fractionally above economist estimates of 5.9%.

The sentiment in the crypto market has been flat and remains in greed territory.

A mixed week in the markets with a small majority of the top 30 assets showing price gains on last week.

Trend highlights this week:

• At the time of writing BTC and BNB are down 3%.
• ETH is up 1%, while ADA, DOGE, AVAX and TRON were all up 4%.
• Having better weeks were SOL, LINK, UNI and LTC  which were all up 13 %. 
• On the back of the SEC news, XRP was our biggest gainer this week, up 63%.
• Bitcoin Cash (BCH) was our biggest loser of the week, down 12%.

View all top gainers: Visit the top gainers page to find out more. 

Looking for more flexible pricing and trading volume for your high-value crypto trades? Get in touch on our OTC page and learn how we can help.

Special section – Will New Zealand regulators follow the US SEC? 

We have been asked several times lately for our thoughts on whether New Zealand regulators will follow the SEC and crack down on crypto companies. This is a long topic but in short the answer is no.

Some time ago, New Zealand regulators made a clear distinction between regulated financial products (and things like security tokens) and what is not a financial product (or a utility token).

Essentially, our law turns on what the nature of the token. With this clear guidance, players like Easy Crypto are able to decide what to list and are able to legally operate in its space. 

As you know we are subject to other regulations like Anti-Money Laundering, and these rules are evolving and accordingly we will have to make adjustments to accommodate these changes. 

Highlights from the crypto space

Ripple labs, the company behind XRP token, had a big win in its years long court case with the SEC. It’s good for Ripple and great for the wider crypto ecosystem. 

Here is the critical piece “XRP, as a digital token, is not in and of itself ‘a contract, transaction, or scheme’ that embodies the Howey requirements of an investment contract.” The SEC is expected to appeal. 

The release of BRC-69, an update of BRC-20 which lowers fees, has led to a pickup in Ordinals activity. 

Glassnode are reporting Bitcoiners remain firmly in accumulation mode.

In quite a milestone, 20% of all ETH supply is now staked. This is up from 14.5% staked before the Shapella upgrade.

A report into active open source developer count finds that year-on-year we are down as newcomers have exited, but since 2020 we are up 92%

Arkham is planning to offer a bounty to crypto sleuths who provide information on wallets “dox to earn”. It is not going down well within the crypto community.

Remember that shady outfit Prometheum? Republican senators are asking the Department of Justice (DoJ) to investigate them 👀

The Bank of International Settlements put out a research report on CBDC’s. It looks like they favour wholesale CBDC’s

Coinbase has been confirmed as the surveillance partner for CBOE’s ETF application. Its shares had a healthy bump on the news. As an aside, what an interesting juxtaposition, at the same time as the SEC sues them, the biggest asset managers in the world choose them as a partner.

There has been lots of action in the layer 2 space this week. Coinbase’ layer 2 network, Base, has released their mainnet to builders. ConsenSys, the developer of Metamask wallet, will launch its own Zero Knowledge layer 2 network called Linea. Existing layer 2 scaling solution, Starkware, launched the testnet for their latest ‘Quantum Leap ‘upgrade.

Other notable highlights from the crypto space:

• After 12 months of delays, Europe is getting a Bitcoin ETF. It will be listed on Euronext exchange in Amsterdam.
• Vanguard, a trillion dollar asset manager, has bought 10% of a Bitcoin Miner called Riot. 
• The SEC has acknowledged the Blackrock ETF application which signals the start of the official regulatory review process. 
• Chainalysis mid-year crime report shows a 65% decline overall, ransomware is up though.
• Google Play has changes its rules to make it easier for digital assets to be part of the store.
• The US Department of Justice is moving some of the Silk Road BTC leading some to speculate it will be selling them. The volumes aren’t massive ~$320m. 
• Binance now supports the Bitcoin lightning network. There are also rumours that they are making quite a few employees redundant in response to the Binance US showdowns with various US regulatory bodies.
• The US CFTC has concluded that Celsius and its former CEO broke a bunch of rules before it imploded. Shocker 🫨
• With the FIFA women’s world cup about to kick off in NZ, Credit Suisse and the Swiss Football Association have launched an NFT collection. They will be available on CSX, Credit Suisse’ digital asset platform. 
• Last week we wrote about a potential hack on Multichain, more has come to light and it looks like a single person controlled all the wallets and keys, and they have been detained.

With that said, we’ll continue to dive deeper into other macroeconomic news and developments from around the globe.

Starting off with global news

China’s plan to put export controls on Gallium could have massive implications on the EV industry. 

At the same time, the International Energy Agency noted that demand for minerals is skyrocketing.

🌎 Macro news TLDR: US Inflation has turned

U.S. economic news

US CPI data for June came out and was below expectations, which is welcome news on the inflation front. Coming in at 3%, analysts expected 3.1%. 

Importantly, core CPI was also lower at 4.8% vs an expected 5%. Supporting the decline in consumer inflation, PPI or wholesale prices only rose 0.1% for June.

Meanwhile, in Europe

UK wage growth was 7.3% year-on-year. The calls for the Bank of England to ramp up rate rises to tame this inflation is increasing. 

At the same time, the BoE sustainability report signalled that mortgage holders are going to get hammered.

The UK post Covid recovery has lagged most of the world and they are just staying out of recession.

German economic sentiment declined to 14.7 in July, driven by concerns over the US/EUR exchange rate. 

The G7 nations have announced long term security and support measures for Ukraine. Meanwhile the Russian grain deal expires today, the UN is looking to renegotiate it as fast as possible.

And in Asiapac…

Chinese Banks gave out $3 trillion yuan in loans in June, triple that of May as the government relaxed credit conditions a little and attempted to get people spending not saving. 

Chinese exports continue to fall, and GDP for Q2 grew a meagre 0.8%. Q1 was 2.2% and that was disappointing. The calls for more stimulus are growing.

India’s CPI for June came in 0.5% above forecast at 4.81%, however industrial production was also higher at 5.2%. 

Japan’s industrial output fell 2.2% in May, more than expected. While Singapore narrowly avoided a technical recession, posting small GDP growth in Q2. Their non-oil exports are down 15% YoY.

In Australia, the latest Westpac consumer sentiment survey had a small bump in July, up 2.7%, but still remains deeply pessimistic at 81.3. 

Added to this, Household spending was up only 3.3% on last year, way below inflation and a clear sign that discretionary spending is down. The RBA is also getting a new Governor in Michele Bullock.

Meanwhile, in New Zealand, there are clear signs that small businesses are really struggling with a Xero report showing that 50% of them aren’t paying themselves due to cashflow constraints. 

Newly released Stats NZ data for June showed that annual food prices are increasing 12.5% per annum. Fruit and vegetables which have been affected by weather events are running at 22%.

Despite this inflationary pressure, our Q2 CPI came in at 6.0% annualised, which is down from 6.7% in March. Non-tradable (domestic) inflation is still concerningly high at 6.6%, driven by things like food, rent and energy. 

That’s a wrap for this week. Thanks for reading!

Stay tuned for the next update.

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