Spot Bitcoin and Ethereum ETFs in the U.S. continued their respective outflow streaks on Wednesday. Bitcoin ETFs saw $37.29 million in outflows while Ethereum ETFs were hit with $37.51 million in outflows. The SEC also postponed its decision on the 7RCC Spot Bitcoin and Carbon Credit Futures ETF until November. Meanwhile, Zurich Cantonal Bank launched 24/7 crypto trading and custody services for Bitcoin and Ethereum, while the U.S. Federal Reserve issued a cease-and-desist order to United Texas Bank over governance and compliance issues related to crypto customers.
Negative Flows Persist for Bitcoin and Ethereum ETFs
Spot Bitcoin exchange-traded funds (ETFs) in the U.S. experienced outflows of $37.29 million on Wednesday. This was the sixth consecutive day of negative flows for these ETFs.
Data from SosoValue revealed that Grayscale’s GBTC, which is the second-largest spot Bitcoin ETF by net assets, led the outflows with $34.25 million. Fidelity’s FBTC followed with $7.59 million in outflows, while VanEck’s HODL saw $4.91 million exit the fund.
Bitcoin ETF flow (Source: Farside Investors)
The only spot Bitcoin ETF to see inflows was Bitwise’s BITB, which gained $9.46 million. BlackRock’s IBIT, the largest spot Bitcoin ETF, recorded zero flows for the day, along with seven other ETFs that also logged no movement. Total daily trading volume across the 12 spot Bitcoin ETFs dropped from $1.56 billion on Tuesday to $1.41 billion on Wednesday.
U.S spot Ethereum ETFs also saw negative flows of $37.51 million on the same day, continuing the trend from Tuesday. The Grayscale Ethereum Trust (ETHE) recorded the largest outflow, with $40.63 million exiting the fund. However, the Grayscale Ethereum Mini Trust saw an inflow of $3.12 million, while the seven other Ethereum ETFs reported no movement.
Total trading volume for the nine Ethereum ETFs also decreased, falling to $145.86 million from $163.5 million the day before.
Ethereum ETF flow (Source: Farside Investors)
Despite the outflows, the price of Bitcoin and Ethereum (ETH) were able to climb back into green territory over the past 24 hours in the market. At press time, BTC was trading hands at $57,206.98 after its price rose slightly by 0.80%. ETH was worth $2,415.23 at press time after a small 0.59% price jump throughout the past day.
Bitcoin and Carbon Credit ETF Faces Another SEC Delay
Meanwhile, the United States Securities and Exchange Commission (SEC) once again postponed its decision on the New York Stock Exchange (NYSE) Arca’s request to list an ETF that combines spot Bitcoin and carbon-credit futures. According to a Sept. 4 filing, the final decision has been delayed until Nov. 21, after a previous delay in May.
The ETF is issued by Tidal Investments, and initially filed its S-1 registration in December of 2023. NYSE Arca submitted its 19b-4 request in March.
The 7RCC Spot Bitcoin and Carbon Credit Futures ETF plans to offer exposure to Bitcoin while also adopting an environmentally conscious approach by offsetting carbon emissions. The ETF is designed to track a portfolio consisting of 80% Bitcoin and 20% carbon credit futures.
Bitcoin mining, which consumes very large amounts of electricity to solve cryptographic puzzles and secure the network, contributes to approximately 1% of global greenhouse gas emissions, according to a report from the International Monetary Fund. However, an August report in the Journal of Cleaner Production suggests Bitcoin mining may help reduce methane emissions after April’s halving event.
The ETF’s carbon credit futures will track the value of emissions allowances under cap-and-trade programs in jurisdictions like the European Union and California. These futures contracts are intended to limit greenhouse gas emissions over time.
The SEC had also delayed a separate decision in August whether a crypto portfolio ETF could be listed on Nasdaq’s electronic securities exchange. This ETF was proposed by Hashdex, and aims to offer a more diversified crypto investment solution.
Swiss Bank Launches Crypto Trading and Custody Services
While the U.S. delays expanding its Bitcoin ETF offerings, Zurich Cantonal Bank (ZKB) introduced crypto trading and custody services for Bitcoin and Ethereum. In a Sept. 4 announcement, the bank revealed that the service is available to both customers and third-party banks, and it is seamlessly integrated into ZKB’s eBanking and Mobile Banking platforms.
ZKB customers can now trade cryptocurrencies 24/7, with holdings integrated into their portfolio view. The bank will also take responsibility for securely storing private keys, which eliminates the need for customers to manage their own wallets. Alexandra Scriba, ZKB’s head of institutional clients, placed a lot of emphasis on the high level of security offered by the new service.
ZKB’s crypto custody and trading solution is also available as a business-to-business (B2B) service for other Swiss banks. Thurgauer Kantonalbank is the first partner to adopt it. Trades will be facilitated through Crypto Finance AG, a subsidiary of Deutsche Börse Group.
ZKB has been quite active in the digital asset space, and even participated in the issuance of the world’s first digital bond on the SIX Digital Exchange in 2021. It also handled digital bonds with central bank digital currency as part of a Swiss National Bank pilot project in 2023.
Other Swiss banks, including Zuger Kantonalbank and St. Galler Kantonalbank AG, have also introduced cryptocurrency services.
Fed Cracks Down on United Texas Bank
On the other hand, banks in America might be a bit more hesitant to get involved in the crypto space after the United States Federal Reserve issued a cease and desist order to United Texas Bank. According to the Sept. 4 order, an examination that was conducted in May revealed issues with the bank’s corporate governance, particularly oversights by the board of directors and senior management.
The Fed pointed out some problems related to foreign correspondent banking and virtual currency customers, specifically in risk management and compliance with anti-money laundering (AML) regulations and the Bank Secrecy Act (BSA).
While the order did not specify exactly how United Texas Bank had failed to comply with regulations concerning crypto clients, it stated that the bank has since implemented measures to strengthen its AML program and BSA adherence. The bank’s board has agreed to submit a formal plan to improve oversight and compliance with these requirements.
United Texas Bank employs 75 people and manages assets totaling around $1 billion. Unfortunately, it is also not the first crypto-friendly institution to face similar enforcement actions.
In August, the Fed took similar measures against Pennsylvania-based Customers Bancorp and its subsidiary Customers Bank for deficiencies in their risk management systems and AML practices. These actions fueled accusations of a government-led initiative, referred to as “Operation Chokepoint 2.0,” that is aimed at preventing banks from engaging with the crypto industry.
