Here come the Bitcoin E.T.F.s
Bitcoin has been on a tear in recent weeks, approaching record high prices above $60,000, as crypto enthusiasts anticipate history in the making. Tomorrow morning, ProShares will launch a long-awaiting exchange-traded fund on the New York Stock Exchange linked to Bitcoin futures, the firm and the exchange told DealBook. The E.T.F. will give investors exposure to Bitcoin without having to hold the cryptocurrency directly, via any ordinary brokerage account.
“2021 will be remembered for this milestone,” said Michael Sapir, the C.E.O. of ProShares. Investors who are curious about crypto but hesitant to engage with unregulated crypto exchanges want “convenient access to Bitcoin in a wrapper that has market integrity,” he said. For nearly a decade, crypto entrepreneurs and traditional finance firms have sought permission to launch a Bitcoin E.T.F. in the U.S., but their applications have been delayed or denied by the S.E.C. Many remain pending.
A Bitcoin futures E.T.F. falls short of what some purists want: a fund that holds crypto directly. Gary Gensler, the S.E.C. chair, recently suggested that the agency might allow crypto E.T.F.s based on futures — bets on Bitcoin’s price fluctuations rather than the underlying crypto itself — that trade on a highly regulated exchange. Approval for the ProShares E.T.F., which is based on Bitcoin futures that trade on the Chicago Mercantile Exchange, won’t be announced by the S.E.C., but the firm’s final prospectus met with no opposition ahead of its effective deadline, and the N.Y.S.E. is readying for launch tomorrow.
Bitcoin’s true price isn’t easy to quote, Sapir said. There’s no single, reliable market reference and prices vary up to 5 percent from one crypto exchange to another. Many analysts believe that futures prices on the Chicago exchange are the most accurate reflection of Bitcoin market sentiment. From Sapir’s perspective, the futures-linked fund is effectively a Bitcoin E.T.F., even if not tied to spot markets. (It also avoids issues like custody of cryptocurrencies.)
“This is an exciting step but not the last,” Douglas Yones, the N.Y.S.E.’s head of exchange traded products, told DealBook. He foresees a range of crypto-linked E.T.F.s getting approval, eventually. Tomorrow’s E.T.F. launch is another sign of crypto’s mainstream legitimacy in a year of milestones for the industry, including the crypto exchange Coinbase going public. Critics remain wary of cryptocurrencies, as do regulators, but the digital asset craze of 2021 shows few signs of abating.
HERE’S WHAT’S HAPPENING
China’s economic growth hits a decades-long low. G.D.P. rose just 4.9 percent in the third quarter — the slowest pace since 1990, excluding the pandemic — as efforts to overhaul the economy took a toll. Chinese officials asserted that the embattled real estate developer Evergrande wasn’t a factor and its troubles could be contained.
Saks’s e-commerce spinoff targets a high valuation. The business could be valued at $6 billion in its coming I.P.O., triple its valuation earlier this year, The Wall Street Journal reports. The move was cited by activist investors pushing rival Macy’s to do a similar deal.
Hollywood may yet face a rebellion from behind-the-scenes workers. The union representing employees such as camera operators and set dressers reached a tentative deal on Saturday to avert a strike, which could have led to a crippling production shutdown. But many of the union’s members say the agreement doesn’t offer enough protections, and are threatening to reject it.
“Squid Game” is worth $900 million to Netflix. That’s according to internal metrics leaked to Bloomberg, which suggest Netflix believes the violent South Korean TV series will be one of its biggest successes. (It also outperformed the more expensive, and controversial, special from the comedian Dave Chappelle.)
Another former top Delaware judge is joining Big Law. Andre Bouchard, who retired as chancellor of the Court of Chancery last year, will join the New York firm Paul Weiss. He’s following in the footsteps of Leo Strine Jr., Myron Steele and E. Norman Veasey.
Manchin’s climate curveball
For the White House’s ambitious climate agenda to pass a narrowly divided Congress, it needs the support of Senator Joe Manchin, a Democrat from coal-rich West Virginia. Manchin, though, has told the White House that he strongly opposes the $150 billion clean electricity program in the administration’s $3.5 trillion social policy plan.
White House staff members are now rewriting legislation without the clean electricity provision, trying to cobble together a mix of other measures. The alternatives are unlikely to lead to the same kind of rapid reduction in emissions. They may include:
About $300 billion to extend existing tax credits for utilities, commercial businesses and homeowners that use or generate electricity from zero-carbon sources.
$32 billion in tax credits for individuals who purchase electric vehicles.
$13.5 billion for electric car charging stations and $9 billion to update the electric grid.
$17.5 billion to reduce carbon dioxide emissions from federal buildings and vehicles.
Several Democrats say now is the moment for a carbon tax. “I’ve had a carbon pricing bill in my desk for the last three years just waiting for the time,” said Senator Ron Wyden, the Oregon Democrat who chairs the Senate Finance Committee. But a carbon tax is politically touchy: Industries could pass along higher costs, making Democrats vulnerable to claims that they are raising taxes on the middle class; climate campaigners say a tax allows companies to continue polluting, albeit at a higher cost; and, crucially, it is also unclear if Manchin would support a such a tax.
“That’s how it always goes at Bild. Those who sleep with the boss get a better job.”
— A junior employee of the German tabloid Bild, to a law firm hired by its parent company, Axel Springer, in the spring to investigate its work practices. Axel Springer, which recently added Politico to a growing stable of digital properties in the U.S., has faced allegations of creating a hostile work environment for women in its home country. “The culture at Bild was not up to our standards and does not reflect the broader culture at the company,” Mathias Döpfner, Axel Springer’s C.E.O., said in a statement.
The week ahead
► WeWork is finally going public. Two years after the shared-office-space company was forced to shelve its plans for a public offering, it is expected to take a less traditional path to the public market this week by merging with a SPAC at a $7.9 billion valuation (down from nearly $50 billion in its heyday). Since its first attempt at going public, WeWork has cut costs and appointed new management. But membership fell during the pandemic, and it’s unclear what the long-term impact of the change in office work will mean for WeWork’s business.
► The F.D.A. is likely to decide on more boosters. A panel of advisers late last week recommended emergency authorization of booster shots for many of the recipients of Moderna’s coronavirus vaccine, as well as boosters of Johnson & Johnson’s one-dose vaccine for people 18 years or older. The F.D.A. typically issues decisions within a few days of its advisory committee’s meetings. Later this month, the panel is scheduled to discuss Pfizer’s request to authorize emergency use of its coronavirus vaccine for children ages 5 to 11.
► Apple announces new Macs. Today, the tech giant will reveal the redesign of its MacBook during a media event ahead of the holiday season. The event comes after Apple introduced the new version of its entry-level $300 iPad last month.
David Solomon thinks the deal boom isn’t over
Wall Street’s deal makers are having a banner year, helping their banks report blockbuster quarterly profits. There were $4.4 trillion worth of global corporate combinations in the first nine months of the year, which already tops the previous full-year record of $4.3 trillion set in 2015.
Pent-up demand is part of it. But this year’s deal making has more than made up for the pandemic-induced drop last year. The Fed may soon unwind some monetary stimulus measures, and interest rates could rise from rock-bottom levels. The boom in SPACs late last year and early in 2021 has slowed.
Can M.&A. keep up the pace? Few have a better view than David Solomon, the C.E.O. of Goldman Sachs, which has advised on more deals than any other Wall Street firm this year. The Times’s Lananh Nguyen talked with Solomon about what’s driving the boom in deals and whether it will continue.
On the deal making outlook:
“There’s no question that we’re seeing extraordinarily robust levels of M.&A. at the moment. I think you’re going to continue, based on our backlog, which is usually a relatively good indicator of forward activity. You’re going to see these activity levels run high in terms of revenue accruing for a period of time.”
On private equity deal activity:
“The private equity firms are extremely flush with cash, financing and funding is very, very attractive and so you’re seeing the amount of activity that’s being driven by private equity firms increasing. I think that will continue for a period of time, but the levels at which it’s running I don’t think are long-term sustainable. And so that’s a place where over time you might see things back off a little.”
“There was a lot of excess in the SPAC market going back earlier in the year, and obviously the amount of activity has cooled. And so this is a capital markets innovation that’s here to stay, and we’re going to have SPAC activity, but I think earlier this year what we saw was quite excessive, and I think it’s getting to a much more balanced place.”
THE SPEED READ
Regulators cleared Goldman Sachs to take full control of its Chinese operations. (NYT)
Expensify, a maker of corporate expense management software, filed to go public via an I.P.O. (Bloomberg)
The chief of the Japanese cosmetics group Shiseido said he was looking to step up acquisition efforts in the U.S. and Europe. (FT)
Lawmakers asked Amazon whether top executives, including Jeff Bezos, misled them during a Congressional investigation into the company’s business. (WSJ)
Why Britain may be more at risk of a Covid-19 resurgence than Western Europe, in charts. (FT)
“Behind the Energy Crisis: Fossil Fuel Investment Drops, and Renewables Aren’t Ready” (WSJ)
Goldman Sachs has a new partnership with the incubator Echoing Green to fund a fellowship for Black women social entrepreneurs. (DealBook exclusive)
Roblox wants to grow its older audience, while keeping a safe environment for its youngest users. (NYT)
Best of the rest
Pfizer/BioNTech and Moderna could almost double their coronavirus vaccine sales next year, to a total of nearly $100 billion. (FT)
Internal Instagram documents reveal that executives are worried about the “existential threat” of the app losing cachet among teenage users. (NYT)
“Is the Army of Lockdown Traders Here to Stay?” (FT)
David Kennedy, whose Wieden+Kennedy ad agency helped make Nike a household name, died last week. He was 82. (NYT)
“Jews Built Hollywood. So Why Is Their History Erased From the Academy’s New Museum?” (The Forward)
We’d like your feedback! Please email thoughts and suggestions to [email protected].