Today in Crypto: Galaxy plans to deploy a new hedge fund strategy that targets both crypto tokens and traditional financial stocks as the “up-only” phase fades, a top White House crypto advisor says a crypto bill will require compromises for it to advance, and the US Commodity Futures Trading Commission has hired crypto-focused attorneys to advise the agency’s new chair.
Galaxy to launch $100 million hedge fund to bet on rising, falling crypto prices
Mike Novogratz’s digital asset company Galaxy is preparing to launch a $100 million hedge fund aimed at profiting from both rising and falling crypto prices.
The fund is set to launch in the first quarter and will be structured to take long and short positions across digital assets and traditional equities tied to financial infrastructure, the Financial Times reported on Wednesday.
Up to 30% of the fund’s capital will be allocated directly to crypto tokens, with the remainder deployed into financial services stocks expected to be influenced by digital asset regulation, blockchain adoption and technological change, per the report.
The fund has already secured $100 million in commitments from family offices, high-net-worth individuals and select institutional investors, though the company may open the strategy with additional capital. Galaxy confirmed to the FT that it will make a seed
Joe Armao, who will lead the new fund, said the market is entering a different phase. “The ‘up only’ part of this cycle is potentially coming to an end,” he told the outlet, while maintaining a positive outlook on major assets including Ethereum (ETH) and Solana (SOL). Armao added that Bitcoin (BTC) remains relevant in an environment shaped by potential US Federal Reserve rate cuts, provided equities and gold remain resilient.
“Compromises will need to be made” on crypto bill: Trump advisor
Patrick Witt, the executive director of the President’s Council of Advisors for Digital Assets, said on Tuesday that a crypto market structure bill must be passed quickly while the Senate can still cut deals to advance it, but it will require concessions.
“There *will* be a crypto market structure bill — it’s a question of when, not if,” he said. “Assuming a multi-trillion-dollar industry will continue to operate indefinitely without a comprehensive regulatory framework is pure fantasy.”
“Let’s keep working to improve the product, recognizing that compromises will need to be made in order to get 60 votes in the Senate, but let’s not let perfect be the enemy of the good,” he added.
Witt said to “take advantage of the opportunity to pass a bill now, with a pro-crypto President” and Republican control of Congress, claiming that Democratic lawmakers would “write punitive legislation.”
The bill would lay out how US market regulators would police crypto, but some lobbyists, most notably Coinbase, are unhappy with provisions it argues are too restrictive on stablecoins and decentralized protocols.
CFTC’s Selig makes crypto lawyer a senior adviser
Michael Selig, chair of the US Commodity Futures Trading Commission (CFTC), announced the appointment of a senior adviser with experience in litigating crypto and blockchain cases.
In a Tuesday notice, Selig said Michael Passalacqua, a former associate at international law firm Simpson Thacher & Bartlett, would join the CFTC as a senior adviser. Selig cited Passalacqua’s experience with “financial regulatory matters involving crypto assets and blockchain technologies.”
“Earlier in his career, [Passalacqua] served as assistant general counsel at a crypto asset capital markets firm where he advised on a range of crypto asset regulatory and transactional matters,” said Selig.
According to Simpson Thacher & Bartlett, Passalacqua helped author a letter that led the US Securities and Exchange Commission to issue a no-action letter clearing state-chartered trust companies to act as crypto custodians. The agency’s Division of Investment Management said in September that it would not recommend filing enforcement actions against advisers using a state trust company as a crypto custodian.
Selig named Passalacqua and former Treasury Department official Cal Mitchell as senior advisers as the CFTC prepares for an expanded role in crypto regulation. The appointments came as Selig said the commission is working to “future-proof” its regulatory approach, citing pending US Senate legislation that would give the CFTC a “broad set of new responsibilities” over digital asset markets.