Spot Bitcoin ETF Options Are Here. Why You ‘Can’t Overstate’ Their Importance - Ep. 739
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Options are expanding the ecosystem, bringing more traders involved, increasing the liquidity, and liquidity is big fish bait. So you should see more institutions using not only options but the ETF themselves because of the advent of options being available.

Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto nine years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the November 22nd, 2024 episode of Unchained.

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Today's guest is Eric Baltunis, Senior ETF Analyst at Bloomberg. Welcome, Eric. Good to be here. This week, options on BlackRock's Bitcoin ETF, iBit, launched, as well as some others. And iBit on its first day saw $1.9 billion worth of these options changing hands on that first day. I wondered, before we get into the whole discussion, if you could just, first of all, explain what Bitcoin ETF options are and why this launch is so significant.

Yeah. So just, you know, ETFs are trading tools or, you know, can be used in a variety of ways. You can go long or short, but options kind of open up more specific ways to express your opinion. You know, for example, let's say you're just a little nervous about this recent, you know, melt up in the price of Bitcoin.

You could buy a put option, you know, maybe $20 away from the price. That way you can just walk around a little like calmer that you won't have an 80% drawdown. And people, that's a totally rational way to use options. Right. And yeah, just for non-traders, put options allow you, give you the right to sell at a certain price. Gives you the right to sell at a certain price. So if Bitcoin went to like $60,000, like in like two days, you'd feel better because you can, you've already, you have a contract that allows you to sell it at $80,000.

You've locked in that. Now, it costs a little bit though. So there is a price to pay for the contract. In a way, it's a little bit like insurance on the put side. On the call side, it's almost like insurance also in that you're betting on whether the price will go up. So most of the action on iBit so far has been on the call side, which generally is very bullish. So for example –

you could bet that iBit will hit $70. Right now it's $52. So iBit's price would be different than the price of Bitcoin, obviously. iBit is its own thing. I think it's $52, $53. So the options at like $70, $75 were pretty popular. Meaning that if the price of Bitcoin were to go up between now and then, those options obviously gain in value. So you could actually sell the option for a profit or...

let's say the price of Bitcoin goes through that, you can then buy it at a lower price because you've locked it in, which then again, you can pocket that profit. So it's just, you know, it can allow, as I put them in the meme from Stepbrother, so many activities, you know, when they make their room into bunk beds and they're like, oh my God, we can do so many activities in the room now. I just feel like options open up a lot of activities for traders and for institutions.

And now there'll be even be ETFs that utilize these options. So to me, options are like I've said this before. It's sort of like giving a painter like another like 20 colors. You know, you had like five. Now you get 20 more like it just opens up so many. You know, maybe you had the primary colors. Now you're getting more specific colors. So just opens up a lot more specificity and different kinds of things you can do with expressing your opinion on Bitcoin.

And so then just the fact that these are available now, like how would you expect that to impact either the price of Bitcoin or the trading of Bitcoin? Yeah. So options are like they build what I would call the ecosystem. So if somebody is making a market in the options, they would might might use the futures or even the ETF itself to hedge. So if people are buying a bunch of calls, they probably have to hedge using the ETF because they'd be short.

Bitcoin long, so you got to buy something to hedge to make sure that you're not long or short Bitcoin. So on the call side, that would probably trickle into Bitcoin ETFs in terms of the market makers buying the ETF as a hedge. So that's positive. But let's say that it shifted the put side, it could go to the reverse, right? You might short the ETF because now you're long, you're already short because of the put.

So the ecosystem, though, by bringing in people just active in these options and then the market makers are like make doing their thing. And some of these market makers are pretty big. And the more people in this ecosystem, the more it'll really do is make more liquidity for the ETFs.

And liquidity, again, is big fish bait. You know, the more liquid things are, the more you'll get big tuna and shark and whales. They won't bite on some, you know, BS little ETF. They need to see like giant liquidity because they don't want anyone to know they're there. They also don't want to move the market. So, yeah.

This is the real benefit of all this. It just creates an ecosystem that comes back to the ETF in the form of more liquidity. And like I said, optionality on how to express your view. So over the years, ETFs that have a lot of options have

have built a moat around them and continue to be the most liquid of their class. So for example, GLD, there's cheaper gold ETFs, but GLD still trades the most. And a big part of that is because it has all the options tied to it. And the options market is huge. This is part of why SPY, you know, there's three S&P 500 ETFs. Actually, there's four. SPY is nine basis points. The other ones are three basis points or lower.

So they're three times as cheap. SPY, though, is the first and has this huge options market around it. I mean, SPY options are ridiculously robust, massive, deep oceanic liquidity. So to this day, even though the other two IVV and VUZ S&P ETFs are almost the same asset level of SPY, SPY still commands about 90% of all the volume amongst them.

So again, for trading, the, it's just, you can't overstate the importance of options, you know, for the assets of the ETF, you know, it's more important that like advisors want to buy Bitcoin. That would be a bigger bullish sentiment for assets.

But the options really are going to grow liquidity, which again, then you get the occasional big fish biting like a pension plan or a hedge fund, which you can already see in the iBit 13Fs. So to me, I would look at it that way. But I think over time, if you're looking at like, if you're just purely interested in the assets of the ETFs growing, which means that

the Bitcoin price would go up because the assets are one for one buying of Bitcoin, then you'd probably be, you know, happy about this. But the bigger deal would be like just more advisor adoption, in my opinion, because if you look at an ETF like SPY, you know, maybe 20% are these gigantic institutions, but the vast majority would be advisors and retail.

Okay. And one other thing is, so Jeff Park, head of alpha strategies at Bitwise, he was saying that a number of analysts are saying that these Bitcoin ETF options will reduce volatility, but he actually didn't agree with that. Do you, it looks like you also don't. No. Well, I might defer to Jeff. I think he's a PhD and has traded options. I, you know, I'm

We'll have to see. I think more than that, though, what will reduce volatility is...

the ETF growing because the people who are using these ETFs clearly are not running at the drop of a hat. They're pretty strong hands. We've seen it, right? I've argued this on Twitter for like months that the boomers are actually in some cases, the stronger hands than the natives. I've argued with people plenty about that fact, but people who use ETFs are just, they're not dumb retail. They're really smart people.

And they know about behavior. And this exposure is probably a small portion of their portfolio. It isn't like their whole nest egg. So they're not going to overly panic on a drawdown. I think that the mainstreamification, the ETFification is probably going to lower volatility, right? Because you just have more...

You know, you have more long-term money in it. And obviously, over time, you've seen a lot of the fraud, the fraudsters and the crazy stuff seems to be like getting cleaned out. And the more that's replaced with like advisors, I just think that's probably a volatility dampener.

over time. There are people who would disagree with me. They'll say, oh, these retail people, they're going to increase vol. And that whole premise would be that they're going to jump ship as soon as the price goes down a little. I would say they're not. I would say, you know, you might have 5, 10% of people freak out if the price were to go down 30%. But we saw the price went down 24% in like seven day period back in, I don't know, three months ago. And like, I don't know, 3% of the assets left. So 97% of the people were fine with that.

So I think it'll be fine. I think, and also just maturity. I always tell people that gold is 4,000 years old. And if Bitcoin is digital gold, Bitcoin is literally 16-year-olds. It just had its sweet 16 birthday party. And if you know 16-year-olds, they're volatile. So as it gets older, by the time it turns 30, it's going to calm down. And I also think that's very apropos. But in

In the case of the positioning of Bitcoin ETFs to the marketplace, I actually think volatility is a feature, not a bug right now. Because people are a little bored with their Vanguard core and they're looking for some excitement. And so the volatility and these kind of fun meltups that Bitcoin brings is something gold doesn't. So that's a huge advantage over gold. They're both store of values, but Bitcoin has that volatile, higher ceiling energy that people are looking for in portfolios. So I consider it more...

powerful value proposition than gold at this time. And so you don't maybe want the volatility to go away so soon. Yeah. Yeah. Well, he, he is saying that he feels like there's going to be more upside pressure, I guess. And that's actually something we can talk about in a second, but first we're going to take a quick word from the sponsors who make this show possible.

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Visit fbtc.com slash ongoing hyphen campaign today. Back to my conversation with Eric. So I do think it does look like more people are trading these options in a way where they're basically betting the price will go up. So does that also kind of push things upward?

Yeah, and so much says the market makers and the people making the markets and all these options are going to have to hedge their position if they're short something that's long. So yeah, I think it's going to ultimately have a good effect on the price if there's more bullish buying in the option market than bearish. But this can reverse. I think I would just enjoy the good times. Yeah.

Don't enjoy them too much because you don't want to go and get totally depressed when this swings the other way, which it will. You know? Yeah. I'm a big fan of the line from the Paul Abdul song, Opposites Attract, which sucks. It's a sucky song. It's from the late 80s when pop music was like really, really like inflated. This is like the Milli Vanilli and Vanilla Ice era.

And Paul Abdul had this like couple hit songs in the late 80s. This is right before grunge came in and said, let's get real. And there's a line from Obvious Attracts that says, we take two steps forward, one step back. And I just feel like that is the best mantra I could give anybody buying the ETF or in crypto. And I think that right now we're in like a two giant steps forward phase and it's great. But I don't know. It just seems like from what I've seen, there's going to be like a nasty step back.

And you could find some of those options. The options movement will reflect that. Okay. Well, one thing that I did also want to ask about what Jeff said is he probably, you probably saw this because when the options were approved, he said that he felt this would lead to a gamma squeeze, which is why he felt that Bitcoin's price could become kind of like explosively higher.

it would move upward. But you seem to think... I'm going to defer to him on that. When you get into Greek letters, these are people who deal in the options market. But what I do know is this, that I remember reading this book on technical analysis, and I found it interesting that at some point in the price of a stock, there's no more resistance. All the people who were going to short, they're gone. And the people who wanted to have an exit point, they've sold. And

It feels like there was a lot of that between like 60,000 and like 70,000 for like a couple months there. And then even a little bit, there's like these pauses. But it's this ironic thing. The more something goes up, the less actual overhead it has to deal with.

So I just think that the gamma squeeze is part of a lack of sellers and also probably short sellers who might be afraid to step in front of a train and get run over in an asset that is really having a melt-up. So I don't know if it's just the gamma squeeze or if it's all part of what would be like a melt-up, which I remember this reminds me of the ARK situation in 2020, right?

I mean, this ETF could do no wrong. Like every stock in it was up like, you know, doubled, even triple digits. Every day it was up another like 8%. I call it ARK mania. And this is sort of how, you know, Cathie Wood was like the Beatles for about, you know, a year there. I mean, she was that. This fund outperformed 100% of all the funds for like a year or two. There's an ARK mania element to this. Obviously, ARK has come down a lot since. It's a different deal. Those were stocks.

But there was a time where ARK, I think, broke through resistance and just became like, because it doesn't make sense that a diversified group of stocks should go up that quickly all the time. So I would, you know, I just would kind of call it a melt up that I've seen from time to time. And like I said, it's exciting when it happens. It's hard not to think in the back of your head, you know, what's the downside here? Are we going to have a pullback? But I think, you know, for Bitcoiners, you've seen a lot. You've lived through a lot.

I would look at this as just like enjoy the good times, brace for a pullback. But it does seem like net net. I was looking at the price like two years ago, it was trading at like 18,000. This was fresh off of Sam Bankman fraud. And it was like nobody had any respect for it. What a difference two years makes. I mean, that's incredible. Yeah. Yeah. Who typically trades options and who do you think is trading these particular Bitcoin ETF options? Yeah.

Probably a mix of retail and institutions. Probably a lot of retail. I mean, there's position limits, which could limit to retail, like a lot more retail than institution. But I also think that institutions are so native to options, they like them and they use them a lot. So I could see some of them. But whether it's the volume of the ETF or the options, like we don't know, like it's all anonymous. But my guess would be some breakdown between institutional and retail options.

Who I don't think is using them a lot is advisors. You know, I think advisors are generally like they buy and hold something and that's it. So I think the common thread between the institutions and the retail would be they like to trade. They like to put on positions. So that's who's going to be using these, which who uses most options. Okay. Well, so then I did want to ask about one other thing that I saw that Jeff tweeted, which was he said, I bet was approved only for 25,000 contracts as a position limit, but

And he said that at this level, the exercisable risk represents less than 0.5% of iBit's outstanding shares. And in contrast, he pointed to the CME Bitcoin futures contracts, which have a 2000 contract limit, which he said is

If you were to to like make that make the equivalent of that, and I bet it would be one hundred and seventy five thousand contracts, which is obviously many multiples of twenty five thousand. And then he concluded it's hard to ignore the lingering special treatment Bitcoin continues to receive along for the day when Bitcoin is no longer marked with an asterisk. Do you agree with him that there's, you know, some kind of, I guess,

like discrimination or prejudice against Bitcoin that causes these Bitcoin ETF options to be treated differently? Yeah, he's right. I mean, I just lived through it for 11 years with the lack of approval. But times have changed. A, the ETFs got released, even though it happened kicking and screaming, although

Gary Gensler then took a victory lap on his exit note. I was like, that's interesting. That's called gaslighting. Yeah. And it's a shame, you know, they still don't have in-kind creation redemption, which the ETF should have had those. The position limits seem to be like just, you're right. Everything's with an asterisk here. I've always said that the SEC...

should have more trust in ETFs than they do lack of trust in crypto. And they always, I feel, didn't trust the ETF enough and the people who are working in that industry to make it work. And obviously it does work. So I disagree with their policy. So I agree with Jeff.

that there's always an asterisk. It seems like we're going to have more libertarian and maybe even like someone who's, they may even have a crypto role in the White House or as part of the cabinet or something. So I think all this is very good news. I would look for higher position limits, in-kind creations, ETH staking, and altcoins being approved if the SEC chair turns out to be somebody who's favorable to this.

The only defense I'd give the SEC was, you know, it was two years ago SBF happened. It was that there have been some cases of, you know, fraud and, you know, there's a history of it. It is 16 years old. It's a new asset class. I understand some skepticism, but, you know, I think it was too much, especially in the last couple of years. I just thought, and frankly, I've said this many times, but

Had the SEC approved the ETF back, like let's say they approved it after the Winklevoss filing in 2013 or 14, or even if they approved the next cycle, 15, 16, I don't think you have an SBF. I think too many people are using the ETF and he doesn't have enough of unmet demand to

to get all these people using his exchange, because why would you use his exchange when you can just get the ETF for like almost no trading commission? There'd be like one basis point. The fee's low. He wouldn't have had as big of a crowd. And then he wouldn't have had all that money to spend on those people and blow and not treat the customers correctly. And so I just think ETFs are SBF proof, but they could have been an SBF repellent if they were approved earlier.

So I think they should be treated like everything else at this point. I think it's there. They've proven themselves. It's time for, you know, big boy treatment. Yeah. Yeah. I agree that, you know, for a while the industry was kind of like artificially depressed. So one other thing that I want to ask about was obviously, so we have these options on iBid, but then we have, you know, new option or, well, I guess it was literally the next day that a bunch of

options like on Bitwise and some of these other providers, Fidelity, those launched. What do you expect would be the volume spread amongst all of those? Or do you think it's kind of that basically iBit options will be dominant? Or what do you see there? Yeah, well, James put a note out yesterday. iBit utterly dominates. I mean, I don't have the exact percentage, but it looked like it was around 90, 95% of all the options. But

It's kind of unfair that iBit got to go out a day early because that one day, it meant a lot. I mean, they traded $1.9 billion that day in volume, which, by the way, was four times more than Biddo options traded on the same day. So Jeff's point about the contracts is interesting because iBit did that despite that.

So even though Bitto was the more liberal, you were able to have this position limit issue, and they still did $1.9 billion, which is a lot. It's unheard of for day one. It was $1.7 or $8 billion the next day, so it didn't go up on day two. But still, just to maintain that, iBit's probably going to own this space. This is the thing with liquidity.

You know, it's easier to steal assets than volume. And we'll have to see how this plays out. But I could see iBit just utterly dominating here. But for these people out there talking to advisors and institutions from these other firms, at least the options are available. So when they have a client that knows them and likes them, it's like, hey, we have options. You don't have to go to iBit for them. You can use ours.

But once an ETF gets like this, like it's like a happening party, you know, and the liquidity is there, it's like unfair. It's like a snowball rolling downhill. The volume begets more volume. And then for the other guys, it's just so hard to deal with that. So it's very difficult to steal volume when you're impossible, as I understand.

explained in the example earlier with SPY still having like 90% of the volume, even though it only has like 40% of the market share of assets amongst those three S&P ETFs. That's how powerful liquidity is.

So just out of curiosity, when you talk about how the position limit on the Bitcoin ETFs, you know, should have kind of made them less attractive than the ones on the Bitcoin futures options or ETF options. I was wondering, is it the same thing where spot Bitcoin, even options on spot Bitcoin ETFs are superior to options on Bitcoin futures ETFs? Is that why that happened or? Yeah, that's a great, it's a great question. Um,

I was a little surprised. I thought Biddo, because they've been out a while, would have had more options activity than I think it was 400 million. And I bet was 1.9 billion. I think this speaks to something that I've seen my whole career in ETFs, which is there's something about the real deal that people like. So if you can get something physically backed, people are just going to prefer that over futures. I'll give you an example. There was a gold futures ETF that was launched in like 2011.

And it basically closed. I mean, it just couldn't survive because you could have gold physically backed ETFs like GLD. And people are always going to choose the real thing over the futures. There was once an ETN that is almost like using futures that did India before you could do physically backed India stocks. But once the India stock physical back one came out, people use that. People in the ETF world just don't want anything like

synthetic or derivatives if they can avoid getting it directly. And I think that's what happened here. Further, iBit itself trades way more than Bitto. So iBit, the core ETF, I think was trading, I mean, now it averages like $3 billion a day. It's ridiculous. That's like, you know, up there with like, you know, Netflix and Facebook, right, in terms of volume per day.

And so I just think all the trading crowd was like, A, it's physically backed. B, it trades more than Biddo. So C, the options on it are going to be where it's at going forward. Even though it's only the first day, they just got started quickly. All this is probably going to make Biddo, it'll still have a role in the market. But over time, I could see it slowly losing its volume and assets.

Since there have been options on the crypto exchange there a bit, and those are tradable anytime, whereas the spot Bitcoin ETF options are only available during certain trading hours. I wondered what you thought the relationship would end up being between those two different assets. Yeah, so I think some of these exchanges that do specialty things, they'll probably hang around. They serve a specific audience.

But over time, like the options that are connected to iBit are regulated and familiar to the big money centers and the big player types that are, you know, bring so much of this mainstream money. So I would look for those that options market to utterly dwarf the, you know, options over there, just as I would look ultimately for, you know, some of these ETFs to dwarf some of some of the other ways you can get exposure to Bitcoin, you

The familiarity and the plumbing and the regulatory backing, it just gives a lot of the big money safety. And so when you look at options trading and we look at like dollar volume, the bigger the investor, the faster that number goes up, right? Because if, you know, it's like I just said, I bet trades 3 billion a day. Well, there could be an investor there that does 200 million trade.

That's why volume begets more volume. And so if you have bigger investors that can put that kind of money to work like that, that would be like, what, 1,000 retail traders doing options on this exchange. You just need one of them. Well, let's say you get 1,000 of them trading. You can see how the numbers would add up very quickly on the iBid options.

versus an exchange that was operating in a time where there were no options. So I would look, again, the more activity around the ETFs, whether it's ETFs themselves or the options, the more they are going to be a threat to any other intermediary. I've seen it happen. ETFs are, and that's what my big presentation was at the Lugano Plan B event. I basically was telling the crowd,

ETFs are not TradFi boomer suit Wall Street as you think. They are cruel. They are disruptive juggernauts. They're very similar to Bitcoin. That's why this is an interesting marriage. ETFs, they're going to disrupt some of the crypto world in a similar fashion to how crypto is doing a little disrupting to the ETF space.

It's just such a fascinating marriage. And it is a marriage. That's also telling me, look, get used to it. We're joined at the hip now. Our fates are somewhat aligned here in this asset class. And I think it went over well. But I think that if you talk to people on Wall Street and the hedge funds, they don't like ETFs either. They don't charge a lot. Nobody really makes a ton of money on ETFs. They're lean, mean industry.

And so even like Wall Street firms don't like the big, you know, slush, the big, a lot of the fat cats, I'll call them, you know, ETFs aren't really great for business. So that's why when we find anything that resolves around an ETF, it's a lot of action simply because it's like, as I said, ETFs are heaven for investors, but hell for issuers. And because they're so cheap and they're so functional and they fit in the plumbing, they're

you're going to get the big money investors using them and the big traders using them. And that's going to be a problem for some of these exchanges that have long lived and filled a void that was in the market. And that's good. They should have. But there's like a new sheriff in town, so to speak. Well, I did wonder, because these launched, do you expect that we will see options on Ether ETFs as well soon? Yes. Yes.

Okay. Yeah. I don't know when, but especially, you know, that's a question that I'd be like, well, if Genzer was still there, but with him out and like the way these happened, I just, it looks really good that you'll see ether options at some point. I don't really have a, there'd be no reason not to do it.

Okay. Well, last very quick question, because I think this news might have broken like while we were here, but basically Fox News reported that talks between SEC staff and issuers looking to launch a Sol spot, a spot Sol ETF are progressing. The SEC is now engaging on S1 applications, according to two people familiar with the matter.

Yeah. So we didn't really comment on this yet. We did a little snooping around. It's during the spot Bitcoin drama with the SEC, when we said engaging, we meant the SEC was looking at their filings and giving them like 20 comments. Like, hey, can you answer this question? Can you clean up this sentence? Maybe we'll call that comments. This has not comments. This is I don't even know exactly what this is because, you know, I get they want to file 19 before. It seems more like

Um, the sec has maybe, you know, decide to not tell them like all this is dead on arrival. And so maybe that's some good news, but this is an engagement in that like, Oh, Hey, we plan to approve them. Can you please file this? I just don't put it on the same level as the word engagement that we would use here. That said, she's a great reporter. So something is happening. And I think my takeaway on this is that the issuers are probably looking at the fact that there's a new regime that

and president and a new chair coming as a real optimistic time to put all your filings in. And I think that's the takeaway. But I don't, I wouldn't put this on the same level as like when we had comments on the S1s and this was like within months of approval. I don't think we're anywhere near there yet.

Okay. Yeah, yeah. She did. And by the way, we're talking about Eleanor Tara at Fox News. She said that we should be seeing some 19B4 filings from exchanges in the coming days. So...

I guess. Well, it's and she's probably right. They're probably, you know, like I said, I haven't heard that there was like any formal comments or anything from the SEC. We stooped down a little bit. The optimistic read here is that they feel comfortable enough filing a 19 before because that means in 240 days, they think they'll get approval and they'll start now with that. They'll start the clocks now. And so to me, this is I would call this a byproduct of the election. Yeah. Yeah. That makes sense.

All right. Well, thank you so much for coming on Unchained. Thank you. Don't forget, next up is the weekly news recap, today presented by WonderCraft AI. Stick around for This Week in Crypto after this short break.

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Welcome to this week's crypto roundup. In today's recap, we dive into Gary Gensler's announcement about resigning from the SEC, Trump's plans for a pro-crypto White House, and big leadership changes in Congress, MicroStrategy's massive Bitcoin buy sending its stock soaring, and Coinbase's decision to delist wrapped Bitcoin. We'll

We'll also cover FTX co-founder Gary Wang's sentencing, Heather Morgan's prison term for her role in the Bitfinex heist, Lido Dao's legal challenges and its new blockchain identity project, and Sky's launch of a Solana-based stablecoin with major incentives. Finally, don't miss our fun bits story about a young meme coin creator who cashed out early and missed out on millions.

Thanks for tuning in to the weekly news recap. Let's begin. Gary Gensler to leave SEC. Gary Gensler, chair of the U.S. Securities and Exchange Commission, SEC.

SEC, will resign on January 20, 2025, just as President-elect Donald Trump takes office. Gensler's departure ends speculation about whether he would seek to remain as a commissioner. During his tenure, Gensler expanded the SEC's focus from targeting individual token issuers to filing lawsuits against crypto exchanges such as Binance, Coinbase, and Kraken, accusing them of operating as unregistered securities brokers.

While he initially opposed approving spot Bitcoin and Ether ETFs, a court ruling forced the SEC to greenlight these products. Trump has yet to announce Gensler's successor, but names such as Brad Bondi, Paul Atkins, Brian Brooks, and Theresa Goody-Gulen are reportedly under consideration. President-elect Donald Trump is considering to be his crypto policy advisors, but sources emphasize things could change quickly.

Trump promised the crypto community that he would create a crypto-focused advisory council at the Bitcoin Tutankhamen Conference in July. Sources say that people surrounding Trump have also been floating the idea of creating a separate role in the White House.

typically referred to as a crypto keyer, since July as well. The crypto khazar would likely be someone with a policy background, sources told Unchained, primarily because Office of Government Ethics, OGE, rules would prohibit such a person from owning crypto.

Some speculate, however, that Trump could appoint a new director of the OGE who could then waive that restriction for federal staff. One possibility is Chris Giancarlo, who served as chair of the CFTC under Trump during his first term. In an ex-post published last Thursday, Giancarlo said that he was not interested in the role of either SEC chair or a crypto role in the Treasury Department. But Giancarlo did not say he was uninterested in a White House or advisory council role.

Trump Media Explores Bakkt Acquisition: Expanding Crypto Footprint Social media company Trump Media, which is owned by Trump, is reportedly in advanced talks to acquire cryptocurrency trading firm Bakkt, the Financial Times reported. Shares of both companies soared following the news, with Bakkt surging over 162% amid trading halts due to volatility.

Created by Intercontinental Exchange, the parent company of the New York Stock Exchange, Bakkt has faced financial hurdles, including warnings of potential delisting earlier this year.

The reported acquisition by Trump Media aligns with Trump's growing involvement in crypto ventures, such as his recent backing of crypto platform World Liberty Financial. FTX Sets Timeline for Creditor and Customer Distributions FTX announced it is nearing the final steps to implement its Chapter 11 plan of reorganization, with creditor and customer distributions expected to begin in early 2025.

According to CEO John J. Ray III, the company has already recovered billions for creditors and is working to finalize arrangements with global distribution agents. FTX plans to provide customers with detailed instructions to set up approved accounts for distributions by December, including completing KYC verification and tax documentation.

The plan's effective date is anticipated to be January 2025, with the first payments to claim holders in convenience classes occurring within 60 days. FTX emphasized the importance of meeting deadlines to ensure eligibility and noted potential delays for claims traded within 45 days of the record date. MicroStrategy Scales: Bitcoin Holdings Becomes Top-Traded Stock MicroStrategy continued to make headlines this week.

On Wednesday, the company announced it was increasing its convertible senior note offering from $1.75 billion to $2.6 billion in order to acquire additional Bitcoin and fund general corporate purposes. The unsecured notes, due 2029, bear 0% interest and can be converted into cash, equity, or both, offering the firm flexibility in managing its debt.

Earlier this week, MicroStrategy, the world's largest corporate holder of Bitcoin, announced it had acquired 51,780 BTC, valued at $4.6 billion, at an average price of $88,227 per coin.

The purchase brings the total value of its Bitcoin holdings to approximately $29.7 billion, which were acquired at a cost of $16.5 billion since 2020. The latest news spurred a trading frenzy, with MicroStrategy's stock, MSTR, surpassing Tesla and Nvidia to become the most traded U.S. stock by dollar volume on Wednesday.

Bloomberg analyst Eric Balkunis called the development wild times, reflecting the stock's 43% single-day surge and staggering 910% gain year-to-date. Coinbase to delist wrapped Bitcoin

Coinbase announced it will delist wrapped Bitcoin WBTC on December 19, 2024, citing concerns over its listing standards, although users will still be able to move their WBTC off the exchange even after the trading suspension goes into effect.

The decision follows recent scrutiny of WBTC after BitGo, WBTC's primary custodian, entered a partnership with BITG Global, a firm partly owned by Tron founder Justin Sun. The partnership has raised concerns about Sun's influence over the protocol. WBTC, launched in 2019, tokenizes Bitcoin for use on Ethereum and other blockchains, with a market capitalization exceeding $13.6 billion.

Despite BitGo CEO Mike Belshi's assurances that Sun's role is limited and that WBTC remains decentralized, critics have raised transparency and governance concerns. Coinbase's delisting comes shortly after Coinbase introduced its own wrapped Bitcoin token, CBBTC, on its base blockchain. FTX co-founder Gary Wang avoids prison.

Gary Wang, co-founder and former CTO of FTX, has been sentenced to time served with three years of supervised release for his role in the collapse of the massive cryptocurrency exchange. U.S. District Judge Lewis Kaplan highlighted Wang's cooperation, calling him the easiest cooperator authorities had encountered, and noting that his assistance was critical in the prosecution of FTX co-founder and former CEO Sam Bankman-Fried.

Wang pleaded guilty in December 2022 to multiple fraud and conspiracy charges, admitting that under Bankman-Fried's direction, he coded features that enabled Alameda Research to withdraw unlimited funds from FTX customer accounts. During Bankman-Fried's trial, Wang testified about the special privileges granted to Alameda, which he said misled the public and resulted in an $8 billion deficit.

Prosecutors credited Wang with aiding not only this case, but also broader efforts to detect financial fraud. His contributions, Judge Kaplan remarked, were worthy of significant leniency, acknowledging Wang's minimal culpability compared to other defendants. Razlcon, sentenced to 18 months in prison for role in $10.8 billion Bitcoin heist.

Heather Morgan, better known by her rap name Razzlecon, was sentenced to 18 months in federal prison on Monday for her involvement in the 2016 Bitfinex hack, one of the largest cryptocurrency heists in history. Her husband, Ilya Lichtenstein, the mastermind behind the scheme, received a five-year prison sentence last week. Prosecutors revealed that Lichtenstein used advanced hacking tools to steal 120,000 Bitcoin.

worth approximately $11.7 billion at today's prices from Bitfinex. The couple then laundered the stolen funds using a mix of darknet markets, fictitious accounts, and cryptocurrency mixers.

Some of the funds were even converted to gold and buried by the pair. LidoDAO faces legal challenges while co-founders target World Network with new project LidoDAO, the organization behind Ethereum's largest liquid staking platform, is facing legal scrutiny after a California federal court ruled that it could be classified as a general partnership under state law. The decision paves the way for DAO participants to be held liable for its actions.

Judge Vince Chabria stated that Lido's profit-driven structure allows for liability under general partnership laws, even for token holders engaged in governance. This precedent-setting case now advances to discovery, potentially reshaping the liability framework for decentralized autonomous organizations.

At the same time, Coindesk reported that Lido's co-founders, Konstantin Lomaschuk and Vasily Shapovalov, are pursuing a new venture aimed at challenging Sam Altman's World Network, previously known as WorldCoin. The pair's blockchain-based identity platform, dubbed WI, seeks to address privacy concerns raised by World Network's iris scanning technology. WI instead plans to authenticate users via blockchain activity and social data, avoiding biometrics entirely.

Sky's USDS stablecoin launches on Solana with $2 million monthly incentives. Sky, formerly known as Maker, has launched its USDS stablecoin on Solana in a bid to expand its footprint. The launch marks USDS as the first major DeFi-native stablecoin on Solana, with a circulating supply surpassing 89 million within 24 hours of its launch.

In order to encourage early adoption and liquidity, Sky is offering $2 million in monthly rewards to users who deposit USDS on platforms such as Camino Finance, Drift Protocol, and Save Finance. USDS, previously known as DAI, competes against dominant stablecoins such as USDT and USDC, which together control 88% of the stablecoin market.

Sky also plans to roll out its SkyLink cross-chain bridge, further integrating USDS into Solana's ecosystem. Time for fun bits: Kidd cashes out early and misses millions. Imagine launching a meme coin, making a tidy five-figure profit, and then realizing you just left millions of dollars on the table.

That's the saga of a young entrepreneur who minted a token via Pump.Fun this week. The child, whose name is not known, sold their entire stash while on a livestream for thousands of dollars, only to watch the crypto community catapult the token's market cap past $100 million later that day. Ouch. Adding to the story, the kid created two additional meme coins after the initial sale, but these did not achieve the same explosive success.

The crypto community's fascination remained focused on the original token, which was CTO'd by others in the space, meaning a new technical direction was assumed for it. The community even launched spin-off meme coins linked to the creator's family, amplifying the spectacle.

And that's all. Thanks so much for joining us today. If you enjoyed this recap, go to unchainedcrypto.substack.com, that is unchainedcrypto.substack.com, and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin, with help from Matt Pilchard, Juan Aranovich, Megan Gavis, Pam Majumdar, and Margaret Correa. The weekly recap was written by Juan Aranovich and edited by Nelson Wang. Thanks for listening.

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