Hello and welcome to this week's edition of Overbit Insights.
Kicking off this week's edition is a story on the security front involving one of the biggest names in the cryptocurrency market.
On Friday, 1 October, it was announced that at least 6,000 Coinbase Global Inc clients' accounts were hacked. This news came from a breach notification letter given to impacted customers by the cryptocurrency exchange.
According to a copy of the letter released on the Attorney General's website, the hack occurred between March and 20 May of this year.
According to the company, unauthorised third parties took advantage of a weakness in Coinbase's SMS account recovery procedure to obtain access to accounts and move cash to crypto wallets not affiliated with the firm.
"We immediately fixed the flaw and have worked with these customers to regain control of their accounts and reimburse them for the funds they lost," a Coinbase spokesperson said on Friday.
There was no proof that the information was received via Coinbase, according to the firm. This would implicate another third party, who was responsible for the disclosure of these phone numbers.
Popular monikers in crypto like "be your own bank" and "not your keys, not your coins" ring true in moments like these. There are always custodianship risks with holding any cryptocurrency, but stories like these serve to remind those in the space that even with the best practices, you are still victim to the 'weakest link' in your personal security, which is frequently the link to your personal exchange account. Remember to review your security practices in a market like this constantly!
Closing out today's edition of Overbit Insights, we take a look at how cryptocurrency market adoption is faring in the United States.
Gary Gensler, chairman of the Securities and Exchange Commission, maintained his support for a limited class of bitcoin exchange-traded funds (ETF's) that would invest in futures contracts rather than the cryptocurrency itself on Wednesday.
Bitcoin ETFs, which invest in futures contracts traded on the Chicago Mercantile Exchange and are registered under the Investment Company Act of 1940, was singled out by Gensler.
In prepared remarks for a Financial Times conference, he claimed the so-called '40 Act "provides important investor safeguards" and added, "I look forward to staff's assessment of such filings."
He used a similar tone in an August address, which sparked a surge of custom-made bitcoin futures ETF registrations. The Securities and Exchange Commission is now evaluating over two dozen ETF registrations for bitcoin, bitcoin futures, ether, and ether futures products.
Investors, however, have been less enthusiastic about bitcoin futures-linked products. According to a tweet from Bloomberg analyst Eric Balchunas, one bitcoin futures mutual fund had only $15 million in assets two months after its inception.
This lack of investor interest may be tied to regulatory uncertainty in the United States, though it's tough to say. Nevertheless, as more and more regulatory bodies show their support for such financial products, it's almost inevitable that the wave of investor interest will continue to grow, just as the rest of the cryptocurrency market has.
That's all for this week's edition of Overbit Insights! Thanks again and take care until next time.