The Daily: Harris' first remarks on crypto, Silvergate exec reveals reasons behind shutdown, Bitfarms-Riot reach settlement agreement and more

I hope you had a good weekend, folks. In today's Daily, Kamala Harris makes her first remarks on crypto, although Bernstein analysts say the community wants more clarity on policy, a Silvergate executive says a "sudden regulatory shift" led to the crypto-friendly bank's demise and more.

Let's get started.

Harris makes her first remarks on crypto

U.S. Vice President Kamala Harris said she would " encourage innovative technologies like AI and digital assets while protecting our consumers and investors" as President during comments made during a Wall Street fundraiser over the weekend, Bloomberg reported.

• Crypto and AI are part of Harris' vision to foster an "opportunity economy," bringing together labor, small businesses and innovators with a focus on America's future competitiveness.
• Tickets for the Manhattan event ranged from $500 to $1 million, attracting celebrities like Anne Hathaway, Whoopi Goldberg and Billy Porter.
• Reuters also reported on Sunday that the Harris campaign plans to unveil new economic policies this week.
• Harris currently leads in four of six swing states, with a 51% chance of winning the presidency compared to Donald Trump's 48%, according to the decentralized predictions platform Polymarket.
• Trump also engaged further with the crypto community last week, buying burgers at the Bitcoin-themed PubKey bar in Greenwich Village and promoting his son's World Liberty Financial DeFi project.

Crypto community seeks more clarity from Harris, sentiment under Trump win would be stronger: Bernstein

Following Harris' remarks, analysts at Bernstein said the crypto community needed more policy clarity and follow-through from the Vice President.

• However, given the current administration’s "tumultuous" history in the space, including the "anti-crypto army" messaging, cutting off crypto firms during the 2023 banking crisis and ongoing SEC litigation, market sentiment would be stronger under a Donald Trump victory due to his clearer pro-crypto stance, they said.
• Regardless of the election outcome, with exchange-traded funds now live in the U.S. for both Bitcoin and Ethereum, institutional momentum should continue for major crypto assets, they noted.
• The U.S. Federal Reserve's 50 basis point interest rate cut, the Bitcoin mining industry's recovery post-halving and fears of major bitcoin selling being "done," are other factors supporting the recent crypto rally, analysts led by Gautam Chhugani argued.

Silvergate executive says 'sudden regulatory shift' led to crypto-friendly bank's shutdown

Silvergate's 2023 shutdown was ultimately driven by a " sudden regulatory shift " earlier that year, making its crypto-focused business model unsustainable, according to a recent bankruptcy filing from the bank's former chief administrative officer, Elaine Hetrick.

• Despite the crypto bear market and interest rate rises of 2022, Silvergate had met regulatory capital requirements and was capable of continuing to serve its customers before regulatory scrutiny intensified.
• Regulators, including the Federal Reserve, the FDIC and the OCC, "made clear that, at least as of the first quarter of 2023, the [agencies] would not tolerate banks with significant concentrations of digital asset customers, ultimately preventing Silvergate Bank from continuing its digital asset focused business model," the filing claimed.
• Silvergate's parent company still holds $163.1 million in cash but does not expect to repay common stockholders, focusing instead on settling lawsuits and fully repaying bondholders.

Ether outperforms bitcoin after Fed rate cut, signaling bullish market sentiment

Ether has outperformed bitcoin since the U.S. Federal Reserve's 50 basis point rate cut last week, appreciating more than 16% compared to bitcoin's 6%.

• The positive shift in ether perpetual futures' funding rates reflects increased demand for leveraged long positions, signaling bullish market sentiment, according to YouHodler's Chief of Markets, Ruslan Lienkha.
• Analysts at QCP Capital also noted the improved funding rates and more attractive basis yields across major exchanges, highlighting growing optimism in the crypto derivatives market.
• Meanwhile, Bitfinex analysts said altcoins, including ether, had outperformed bitcoin because they are coming out of over six months of suppressed open interest and valuations but cautioned about rising volatility.

Bitfarms and Riot Platforms reach settlement agreement in takeover saga

Bitfarms and Riot Platforms reached a settlement agreement on Monday, potentially bringing an end to a takeover saga between the two Bitcoin mining firms.

• Riot attempted to acquire Bitfarms in April for roughly $950 million. Since that deal was thwarted, Riot has steadily been buying up stock in the firm to become its largest shareholder, currently owning about 19.9% of the company.
• Under the terms of the agreement, Bitfarms co-founder Andres Finkielsztain stepped down from the board, with Riot's proposed independent director, Amy Freedman, taking his place.
• Riot agreed to accept customary standstill provisions until Bitfarms' 2026 annual meeting, prohibiting the company from acquiring more than 20% of Bitfarms without prior board approval.

In the next 24 hours

• Bank of Japan Governor Kazuo Ueda will speak at 1:05 a.m. ET on Tuesday. U.S. FOMC member Michelle Bowman follows at 9 a.m.

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