Crypto Biz: Bitcoin ETFs make headway, Genesis overpaid bankruptcy plan, and more

Whether Bitcoins era has begun is hard to say, but the challenges to broader adoption may be the last breath of a prolonged crypto winter.

Bitcoin (BTC) is becoming a substitution for gold, according to ARK Invest CEO Cathie Wood.

In an interview on Feb. 4, Wood said she believes that, like gold, the cryptocurrency will soon prove itself as a “risk off asset” — a term used to describe investments generally considered safe during periods of uncertainty or financial market turmoil.

ARKs new spot Bitcoin exchange-traded fund (ETF) saw inflows of around $650 million in January, leading some ETF experts to classify the fund as a “strong middle class,” indicating that it is emerging as a strong performer with growth potential in a market currently dominated by financial giants BlackRock and Fidelity.

Adoption, however, may not come without hurdles. According to a recent Bloomberg report, Bitcoin ETFs are undergoing due diligence by large trading platforms. The outcome will determine whether companies, such as LPL Financial Holdings — one of the largest independent broker-dealers in the United States — will make BTC ETFs available to more than 19,000 independent financial advisers overseeing $1.4 trillion in assets.

The crypto market hasnt moved much since the launch of spot Bitcoin ETFs in the U.S., and data indicates it may remain that way until the second half of the year, according to market professionals. Whether the Bitcoin era has started or not is hard to say, but the current winds may be the last breath of a prolonged crypto winter.

This week‘s Crypto Biz explores the performance of Bitcoin ETFs, Vast Bank’s exit from crypto, MicroStrategy‘s latest BTC haul and Genesis’ alleged generous bankruptcy plan.

BlackRock and Fidelity Bitcoin ETFs reach top 10 in January flows

BlackRock and Fidelity‘s spot Bitcoin ETFs have ranked among ETFs with the largest January flows, totaling around $4.8 billion. BlackRock’s iShares Bitcoin Trust had an estimated $2.6 billion in net flows, reaching eighth place, while the Fidelity Wise Origin Bitcoin ETF landed 10th place with $2.2 billion in net flows, according to a Feb. 3 report from Morningstar. The data also showed the Grayscale Bitcoin Trust had the second highest outflows among ETFs in January, with $5.7 billion estimated to have net exited the fund over the month.

Two spot bitcoin ETFs among top 10 of *all* ETF inflows in January...

Never thought I'd see the day.

— Nate Geraci (@NateGeraci) February 3, 2024Genesis bankruptcy plan overpays customer claims, DCG says

Digital Currency Group (DCG) — the parent firm of the bankrupt crypto lender Genesis Capital — has objected to Genesis bankruptcy plan, arguing that it overpays creditors and violates the Bankruptcy Code. DCG filed a motion on Feb. 5 alleging that Genesis proposed to pay its customers more than they are legally entitled to. According to DCG, the proposed plan “disproportionately favors a small controlling group of creditors over others” and is “in violation of the Bankruptcy Code.” Genesis filed for bankruptcy in January 2023 after suspending withdrawals following a liquidity crisis in mid-November 2022. The firm reportedly owed more than $3.5 billion to its top 50 creditors.

First U.S. bank to let customers keep cryptocurrency in checking account exits crypto

Vast Bank, one of the first U.S. banking institutions to integrate crypto transactions with traditional checking accounts, has announced the discontinuation of its mobile cryptocurrency banking service from Google and Apple. In an FAQ posted on the bank‘s website, Vast Bank said it would be refunding any holders’ remaining crypto through liquidation. Vast Bank entered the crypto industry in 2019 and had previously partnered with Coinbase and SAP on the company‘s crypto-friendly mobile banking app in 2021. However, the bank reportedly received a consent order from the Comptroller of the Currency in late 2023. According to reports, the order claimed that Vast Bank engaged in “unsafe or unsound practices” surrounding risk management and control, with the apparent focus being on the institute’s involvement in cryptocurrency.

MicroStrategy buys $37 million in Bitcoin, bringing holdings to 190,000 BTC

MicroStrategy, the largest publicly traded holder of Bitcoin, says it acquired an additional 850 BTC in January, bringing its total holdings to 190,000 BTC, worth $8.1 billion. In its fourth quarter of 2023 earnings call on Feb. 6, the business software firm‘s chief financial officer, Andrew Kang, said it acquired 56,650 BTC throughout 2023 at an average price of $33,580. Overall, MicroStrategy posted a net income of $89.1 million, compared with a loss of $249.7 million in 2022. The company’s revenue decreased 6.1% to $124.5 million within the same time frame. MicroStrategy became the first publicly traded company to purchase Bitcoin for capital allocation in December 2020.