Daily Edge | 3/17/23

Matt Brienen
December 13, 2022
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Crypto CliffsNotes

Grayscale announced on March 16 that the company intends to extend the review period for evaluating the market environment to determine whether it can acquire EthereumPoW (ETHW) tokens — the forked asset that emerged after Ethereum’s Merge in September 2022. During the review period, the firm also aims to decide whether, when and in what manner Grayscale may sell ETHW on behalf of the record date shareholders. “Such review period is not currently expected to exceed 180 days from the date hereof,” Grayscale noted in the announcement.
Swiss banks are exploring an alternative to private stablecoins in an effort to support the country’s economy in digital asset transaction settlements and payments execution. The Swiss Bankers Association (SBA) revealed in a white paper it is researching the potential of a deposit token (DT) — a digital currency in the form of tokenized deposits based on distributed ledger technology. “This kind of stablecoin, if carefully designed, would potentially allow for a wide range of new applications, reduce risks, increase efficiency, and open up whole new areas of business,” the group wrote in the report.
As the United Kingdom gradually develops its own comprehensive crypto framework, His Majesty’s Treasury is introducing a separate category for crypto assets in tax return forms. The particular line should appear in tax forms in 2024–25. In the table of anticipated expenses and revenues of the national budget, the crypto assets line appears only from 2025–26. That means British citizens would have to declare them for the first time in the previous tax year — 2024–25. Currently, the Treasury doesn’t provide any specific numbers of anticipated budget revenues from this tax category — the numbers in the table stand at the nominal mark of 10 million British pounds ($12 million).
Silicon Valley Bank announced that it plans to seek bankruptcy protection to find buyers for the assets it currently holds. SVB filed a voluntary petition for Chapter 11 bankruptcy at the United States Bankruptcy Court for the Southern District of New York, to preserve the value of its assets. The filing shows that SVB Securities, SVB Capital’s funds, and general partner entities are not included in the process.
Some of the largest banks in the country have come together in order to aid another struggling financial institution. Specifically, First Republic Bank is set to get up to $30 billion in deposits from JP Morgan, Bank of America, Wells Fargo, Citi, and more. Bloomberg reported the developing plan supported by the United States Government. Moreover, the deal will stabilize the lender and combat the growing concern in the banking sector following the collapse of Silicon Valley Bank and Signature bank last week.
The financial landscape is currently plagued by the banking sector crisis. The unanticipated, abrupt shutdown of a string of well-known banks in a short period of time has taken people by surprise. To calm down the situation, and assist the institutions in need, regulators have adopted several measures. The Federal regulators have indicated that they will continue supporting the distressed sector. The Federal Reserve reportedly “stands ready” to provide liquidity via the discount window to all eligible institutions.
From JPMorgan Institutional Desk: “CONTAGION VIEW – a day ago, it was thought that the Fed’s Bank Term Funding Program (BTFP) facility was sufficient to protect US banks, but overnight concerns rippled through European banks and now US large-cap banks are being sold. There are many clients wondering if we are on the precipice of a Bear Stearns or Lehman-like event? Fundamentally, there are some glaring differences… (i) US and EU banks are well capitalized, so this is primarily an issue of confidence (ii) the Fed/Treasury have an existing playbook and can put together a sizable response overnight. It should not surprise to see the $25bn BTFP increased and then levered up.”
The Fed expanded its balance sheet by $297 billion this week, the fourth greatest weekly increase ever, only exceeded by three weeks during the COVID stimulus bonanza.
TXMC Trades: "We can argue semantics re: what is QE, but the endgame for this circus never changes. A system whose unit of account is debt must expand in perpetuity lest the fragile edifice topple. Occasionally a Powell comes along believing they can alter destiny, but it's a fool's errand.

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