State Pension Fund Bets Big On Bitcoin

State pension fund get bullish on BTC, crypto is a key election issue, Chinese mining firm given the boot, and Senators rally to defend crypto

Author

Jonathan Morgan
May 14, 2024

OVERVIEW

State Pension Fund Bets Big On Bitcoin

Red is the color of the day - a color we’ve been used to seeing lately. Metals have made some interesting moves today - Copper made a new all-time high, and platinum gained nearly +4%. 🔴

Some important macroeconomic data came out today: The U.S. Producer Price Index (PPI) for April 2024 rose by 2.20% year-over-year, matching expectations and slightly up from the revised 2.10% in March.

In a nutshell, the PPI data suggest stability in producer prices with a minor uptick due to commodity price fluctuations, aligning closely with economists' expectations after adjustments.

And $COIN was down for a while during the US overnight session. Coinbase Support posted around 12:34 am EST about the outage, and again around 3:30 am EST when it was fixed. 🩹

In today’s Litepaper, we’re looking at the first state pension getting exposure to Bitcoin, crypto as an election issue, and that Chinese crypto mining firm close to a nuke base. 📰

Also on deck: Senators Lumis and Wyden’s letter to A.G. Garland about what constitutes a money transmitting service and what doesn’t.

Before we dive in, here’s today’s crypto market heatmap:

And here’s a look at crypto’s total and altcoin market cap YTD:

BITCOIN
Crypto First: Wisconsin State Fund Invests in Bitcoin ETFs 😱

Wisconsin has become the first U.S. state to dive into the Bitcoin ($BTC) market, according to a new SEC filing. The Wisconsin State Investment Board (SWIB) purchased $161 million worth of Bitcoin ETFs. 🤯

The SEC filing reveals that SWIB acquired 94,562 shares of BlackRock’s iShares Bitcoin Trust ($IBIT), valued at about $98 million, and $63 million of Grayscale’s spot Bitcoin ETF ($GBTC).

Click to enlarge.

Crypto enthusiasts have welcomed Wisconsin’s decision, viewing it as a potential catalyst for other state pension funds to follow suit. Eric Balchunas, an ETF analyst at Bloomberg, noted the significance of this move:

Normally, you don’t get these big fish institutions in the 13Fs for a year or so (when the ETF gets more liquidity), but as we’ve seen these are no ordinary launches. Good sign, expect more, as institutions tend to move in herds. - Eric Balchunas

NEWS
Biden Boots Chinese Crypto Miner Near Military Base 🔨 

How a Chinese crypto miner even got this far, and this close to setting up shop next to a nuke site makes total sense—even though it shouldn't—because why the eff would you let that even happen? 🤦‍♀️

President Biden, clearly baffled by this lapse in judgment, has ordered MineOne Partners Ltd., a Chinese-backed crypto mining firm, to pack up and sell off their property near the F.E. Warren Air Force Base in Wyoming.

The Treasury Department sounded the alarm over MineOne’s land grab near a base housing intercontinental ballistic missiles. The red flags went up because of the specialized and foreign-sourced equipment the company was using, which had "espionage" written all over it. 

Wait, wait, wait, let’s stop right here for a second. How the f*ck did a Chinese-backed mining firm end up so close to an Air Force base with nukes? ☢️

US Broker: It says here you are looking for a place to open a crypto mining operation in the US?

Definitely Not A Spy Crypto Miner: Yes, we’d like to set up somewhere in the US.

US Broker: Have you heard of Wyoming? It’s the lowest-population state in the continental US. Almost no one lives there; there are literally less than 6 people per square mile. 

Something doesn’t add up. - Click to enlarge.

Unfortunately, the only place we could set you up is right next to a place of significant US national security interest: an Air Force base that houses nukes.

Definitely Not A Spy Crypto Miner: Well, shucks. If that’s all you’ve got, I guess we can make it work.

The Sherlock Holmes we have as lawmakers in the US have been increasingly wary of Chinese investments near military sites, fearing they’re Trojan horses for surveillance.

They could, you know, just not let people build near our bases - just an idea. 🤔

NEWS
Crypto Becomes a Battleground in the 2024 Election ⚔️

Donald Trump has turned cryptocurrency into a key issue in the 2024 presidential election. By courting crypto traders, it marks the first time crypto has taken center stage in a presidential race. 🪙

Trump’s Crypto Pivot

Former President Donald Trump, once a critic of digital assets, has now embraced them with open arms. Speaking at Mar-a-Lago, Trump urged crypto supporters to vote for him, citing the Biden administration’s regulatory crackdown led by SEC Chair Gary Gensler.

Trump’s crypto holdings have also become a focus of discussion. With over $6 million in digital assets, Trump tops the list of celebrities with significant crypto investments. His portfolio includes a memecoin named after him and substantial holdings in Ether. ☀️

Crypto PACs Flexing Their Muscles

Crypto political action committees (PACs) are gearing up for the 2024 elections, raising over $100 million. Key players like Coinbase ($COIN) and Ripple ($XRP) are leading the charge, funding candidates who support crypto-friendly policies. The Stand With Crypto nonprofit, backed by Coinbase, aims to build a significant election war chest to influence House and Senate races. 🗳️

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NEWS
DOJ's Misguided Crackdown on Non-Custodial Crypto Services 🧠

The DOJ’s recent policy interpretations have drawn sharp criticism for their unprecedented and absurd overreach. 😤

Senators Lumis (R-Wyoming) and Wyden (D-Oregon) have expressed grave concerns about the Department of Justice's expansive interpretation of the Federal prohibition on unlicensed money transmitting businesses, particularly targeting non-custodial crypto asset software services.

Misinterpreting Money Transmission

The DOJ's expansive reading of the Federal money transmitting business has sparked controversy. The statute criminalizes operating an unlicensed money transmitting business. This includes circumstances where a person is required by state or federal law to register or if they are engaged in illicit finance.

However, the key element here is the term "accepting," which means to take control of users' assets. Non-custodial service providers, who never take control of user assets, should not be classified as money transmitters - like MetaMask’s wallet.

FinCEN’s regulations are clear on this matter. They define money transmission as the acceptance and transmission of currency or its substitutes. Since non-custodial providers do not accept anything from users, they do not meet the criteria for money transmission.

If this overreaching interpretation were to be accepted, even internet service providers and postal carriers could potentially fall under the definition of money transmitters simply for handling data and messages about payments. 🤦

NEWS
Crypto News In Three Sentences 📰

🌟 OpenAI’s Newest ChatGPT Upgrade

OpenAI's latest, GPT-4o, can now interpret video and audio in real-time, making it feel eerily human-like. It can help with interview prep, call customer service, share dad jokes, and even react to your puppy. Text and image input is already live, with voice and video rolling out soon. From CryptoSlate.

💸 Hong Kong’s Crypto ETFs Take a Hit

Hong Kong's crypto ETFs saw record net outflows of $39 million on Monday, erasing two weeks of gains. Major losers included ChinaAMC's Bitcoin ETF, which had $15.50 million in outflows. This marks the third consecutive trading day of net outflows for these funds. Cointelegraph has more.

🕵️ Rain Exchange Exploited for $14.10 Million

Rain Exchange reportedly suffered a $14.10 million exploit on April 29, with funds quickly moved to instant exchanges. On-chain analyst ZachXBT highlighted suspicious outflows from Rain’s wallets. The stolen funds were converted to Bitcoin and Ethereum, then transferred to two addresses. More from CryptoNews.

🚔 China Busts $295M Crypto Underground Bank

Chinese police shut down a crypto underground bank converting yuan to won, handling $295 million in illicit transactions. Six individuals were arrested, highlighting digital currencies' role in bypassing financial regulations. This bust is part of China's broader crackdown on illegal crypto activities. Full story at Bitcoinist.

😬 Tokenized Funds Could Threaten Stablecoins

Polygon's Colin Butler suggests tokenized financial products could challenge stablecoins' dominance. BlackRock and Franklin Templeton have already launched tokenized funds amassing $743 million in assets. Unlike stablecoins, these funds offer yields, potentially attracting more investors. From BlockWorks.

🚫 Notcoin Suspends Deposits to Exchanges

Notcoin announced that users can't deposit tokens to crypto exchanges starting May 14. The withdrawal option reopens after Notcoin's listing on May 16. Notcoin, a web3 gaming project, will distribute 5% of its supply to community members and exchange clients. Crypto.News has more.

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