False narratives and misinformation pervade Bitcoin discussion as institutions make moves

News of the Week — The cryptocurrency world's biggest stories of the week

The overwhelming optimism pervading the digital assets market over recent months was reined in this week after United States Treasury Secretary nominee Janet Yellen claimed cryptocurrency transactions are primarily used for illicit activity and misguided reports of a nonexistent Bitcoin double-spend caused a surge of mainstream negativity. At the same time, the institutional side is busy behind the scenes with crypto-related plans.

Here's everything you need to know about these stories, and more, in this week's edition of OKEx Insight's News of the Week.

U.S. Treasury Secretary nominee claims crypto mainly used for "illicit finance"

U.S. Treasury Secretary nominee Janet Yellen dominated Bitcoin-related headlines early this week with her initially negative statements regarding cryptocurrency use cases. The former Federal Reserve head said in her Senate confirmation hearing on Jan. 19 that she believes "many [cryptocurrencies] are used at least in a transactions sense mainly for illicit finance."

Yellen altered her stance via written testimony yesterday, explaining:

"Bitcoin and other digital and cryptocurrencies are providing financial transactions around the globe. Like many technological developments, this offers potential benefits for the U.S. and our allies. [...] I think it important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system. At the same time, we know they can be used to finance terrorism, facilitate money laundering, and support malign activities that threaten U.S. national security interests and the integrity of the U.S. and international financial systems. I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities."

Key takeaways

• Yellen's statements early in the week was largely regarded by those in the cryptocurrency industry and community as FUD — short for "fear, uncertainty and doubt" — given that new data from leading blockchain analysis firm Chainalysis illustrates that criminal cryptocurrency activity fell to 0.34% last year.
• Yellen's statements also make clear the fact that the creation of regulatory frameworks for fintech and cryptocurrencies are a priority for the Federal Reserve Board and U.S. financial regulators.

Craig Wright asserts ownership of Bitcoin whitepaper via takedown requests

Lawyers representing Satoshi Nakamoto-claimant Craig Wright, nChain's chief scientist, sent legal notices to Bitcoin.org and Bitcoincore.org on Wednesday demanding the websites remove the Bitcoin whitepaper. Wright claims to own the copyright for Bitcoin's founding document, and also claims to be the original owner of Bitcoin.org.

Bitcoin.org refused to remove the whitepaper. Bitcoincore.org, on the other hand, took it down.

Key takeaways

• Wright has a long history of legal threats and is widely disliked among the Bitcoin community. In response to the latest legal actions, a slew of crypto-related companies — including Square, Chaincode Labs, Paradigm, Coin Center, Facebook subsidiary Novi, Casa and others — began hosting the Bitcoin whitepaper in an act of defiance against the Bitcoin SV creator.
• Wright has yet to definitively verify that he is the pseudonymous Satoshi Nakamoto, despite years of claims. This fact continues to make the wider Bitcoin community tire of his persistent legal threats.

BlackRock indicates BTC futures interest in twin filings

Trillion-dollar asset management behemoth BlackRock is apparently ready to allocate capital into BTC futures by way of BlackRock Funds V and BlackRock Global Allocation Fund, Inc., as suggested by recent filings with the U.S. Securities and Exchange Commission.

The filings read, among other mentions of BTC futures, that "the only bitcoin futures in which the Funds may invest are cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC."

Key takeaways

• While the filings don't explicitly state that BlackRock will be involved with BTC futures in the immediate future, they suggest that the asset management giant is looking to do so, should it so choose.
• BlackRock's entrance into the BTC futures space would be a significant chapter in the growing history of institutional investment into Bitcoin.

False reports of a Bitcoin "double-spend" anger industry

Some fake news got spread late this week after the Bitcoin blockchain underwent a block reorganization that was misinterpreted as a "double-spend," which is the term for when the same BTC processed in two transactions.

BitMEX Research was the first to point out the "double-spend-like scenario," which sparked (sometimes incorrect) reports from both industry and mainstream financial media.

Key takeaways

• A double-spend did not take place on the Bitcoin blockchain. What occurred, in layman's terms, was actually fairly pedestrian and nothing to be alarmed about.
• Many individuals in the industry lambasted BitMEX Research, Cointelegraph and mainstream financial media outlets for spreading misinformation by way of click-bait headlines and uninformed reporting.

VanEck files ETF tracking crypto companies

American asset manager VanEck has filed a new exchange-traded fund — which will track the performance of the digital asset industry by way of the Global Digital Assets Equity Index from subsidiary MV Index Solutions — with the SEC.

Specifically, the ETF would largely track the performance of companies involved in the digital asset industry — such as exchanges, cryptocurrency mining companies, payment gateways, etc.

Key takeaways

• VanEck is most well-known in the cryptocurrency industry for its many unsuccessful filings for a BTC ETF in the U.S. Its latest application was filed on the last day of 2020, though former-partner SolidX is suing VanEck for allegedly plagiarizing it.
• Should VanEck's ETF garner approval, it would be a much-needed victory for the company beleaguered by rejection from the SEC.

OKEx Insights presents market analyses, in-depth features and curated news from crypto professionals.

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