Bitcoin rose to a two-week high on Tuesday after a US court ruled that the Securities and Exchange Commission (SEC) should have approved an application from Grayscale Investments to create a spot Bitcoin exchange-traded fund, in a landmark victory for the asset manager.
It was last up nearly 7 per cent at $27,910.
A panel of judges in the District of Columbia Court of Appeals in Washington said the securities regulator's denial of Grayscale's proposal was arbitrary and capricious because the SEC had failed to explain its different treatment of bitcoin futures ETFs and spot bitcoin ETFs.
What happened with Grayscale?
The SEC last year denied Grayscale's application to convert its spot Grayscale Bitcoin Trust into an ETF.
While the agency has rejected spot bitcoin ETFs, it has approved Bitcoin futures ETFs, which track agreements to buy or sell bitcoin at an agreed price.
Grayscale proposed using the same manipulation safeguards that were approved for those futures ETFs, but the SEC said that did not meet its bar.
Grayscale was just one of several asset managers, including Cathie Wood's ARK, Fidelity and Invesco, whose spot Bitcoin ETF applications the SEC rejected on investor protection grounds.
Unlike those other firms, Grayscale sued the SEC. Because the defendant is a regulator, the case went straight to the appeals court.
What was Grayscale’s argument?
Grayscale argued that the Bitcoin futures ETF surveillance arrangements should also be satisfactory for Grayscale's spot ETF, since both products rely on the bitcoin's underlying price.
Bitcoin futures ETFs track Bitcoin futures that trade on the Chicago Mercantile Exchange, the chief venue for those products.
The CME checks "futures market conditions and price movements on a real time and ongoing basis in order to detect and prevent price distortions, including price distortions caused by manipulative efforts", the SEC has said.
Grayscale's lead counsel Donald Verrilli Jr told the court in March that a spot bitcoin ETF would "better protect investors" because it would give them the benefit of CME oversight of the market. Currently, Americans mostly invest in Bitcoin via less well-established or unregulated exchanges.
However, the SEC says Grayscale lacks data to determine whether the CME futures surveillance agreement could also detect potential manipulation in the spot markets.
What happens now?
Both parties have 45 days to appeal the ruling, in which case it would either go to the US Supreme Court or an en banc panel review.
Grayscale's chief executive had said earlier he was prepared to appeal if the court ruled in the SEC's favour. It is unclear if the SEC would do likewise.
If Grayscale ultimately prevails and the SEC does not appeal, the court would specify how its decision should be executed.
That could include instructing the SEC to approve the application or to revisit Grayscale's application, in which case the SEC could still reject the proposal on other grounds.
If the SEC wins, Grayscale could refile its application, but to succeed it would need to address the agency's market manipulation concerns.
What would a Grayscale victory mean for other applications?
Several firms have this year filed spot Bitcoin ETFs for listing on Nasdaq or CBOE Global Markets, including BlackRock, the world's largest asset manager, Fidelity, WisdomTree, VanEck, Bitwise and Invesco.
Many have proposed working with Coinbase, the largest US-based cryptocurrency exchange, to police trading in the underlying Bbitcoin market. The SEC has formally acknowledged those applications and can take as long as 240 days to decide.
It is unclear what a win for Grayscale would mean for those applications but it could factor into the SEC's decisions on those proposals.
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The specs
Engine: 0.8-litre four cylinder
Power: 70bhp
Torque: 66Nm
Transmission: four-speed manual
Price: $1,075 new in 1967, now valued at $40,000
On sale: Models from 1966 to 1970
The specs: 2018 Renault Megane
Price, base / as tested Dh52,900 / Dh59,200
Engine 1.6L in-line four-cylinder
Transmission Continuously variable transmission
Power 115hp @ 5,500rpm
Torque 156Nm @ 4,000rpm
Fuel economy, combined 6.6L / 100km
KILLING OF QASSEM SULEIMANI
The BIO:
He became the first Emirati to climb Mount Everest in 2011, from the south section in Nepal
He ascended Mount Everest the next year from the more treacherous north Tibetan side
By 2015, he had completed the Explorers Grand Slam
Last year, he conquered K2, the world’s second-highest mountain located on the Pakistan-Chinese border
He carries dried camel meat, dried dates and a wheat mixture for the final summit push
His new goal is to climb 14 peaks that are more than 8,000 metres above sea level
Russia's Muslim Heartlands
Dominic Rubin, Oxford
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
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Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The cost of Covid testing around the world
Egypt
Dh514 for citizens; Dh865 for tourists
Information can be found through VFS Global.
Jordan
Dh212
Centres include the Speciality Hospital, which now offers drive-through testing.
Cambodia
Dh478
Travel tests are managed by the Ministry of Health and National Institute of Public Health.
Zanzibar
AED 295
Zanzibar Public Health Emergency Operations Centre, located within the Lumumba Secondary School compound.
Abu Dhabi
Dh85
Abu Dhabi’s Seha has test centres throughout the UAE.
UK
From Dh400
Heathrow Airport now offers drive through and clinic-based testing, starting from Dh400 and up to Dh500 for the PCR test.
Avatar: Fire and Ash
Director: James Cameron
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Rating: 4.5/5
