Welcome to the Forward Guidance newsletter, brought to you by Casey Wagner and Ben Strack. Here’s what you’ll find in today’s edition:

• A closer look at why GOP state attorneys general are going after the SEC and its leader

• How a new ETF filing could be “a major test” of the new administration’s crypto views

• The Jerome Powell comments and economic data you might have missed while watching crypto prices

GOP officials side with crypto industry in suit against SEC

As if we didn’t already have enough lawsuits to keep track of, 18 Republican state attorneys general sued the SEC and Chair Gary Gensler Thursday for allegedly infringing upon states’ rights to enforce the crypto industry. 

The states — including Kentucky, Florida and Texas — claim the securities regulator is “attempting to shoehorn digital assets into ill-fitting federal securities laws and inapt disclosure regimes,” according to the complaint. 

Their argument is that economic policy, like those concerning cryptocurrency, should be left up to state regulators. The SEC is violating federalism and separation of powers, the attorneys general state. 

The language is reminiscent of similar suits we’ve seen in the past. In Coinbase’s lawsuit against the SEC, the exchange alleged securities regulators were unlawfully overstepping. 

“The [SEC] is asserting sweeping new authority over a vibrant, rapidly expanding industry — digital assets,” Coinbase’s team wrote in the opening brief of the case. “But the SEC is pursuing this power grab through enforcement actions, and it has refused to set forth its new interpretation of its enabling statutes in a rulemaking, where the lack of legal basis for its self-aggrandizement would be laid bare.”

The states’ legal action comes as the industry continues to hold out hope that President-elect Donald Trump’s second term will bring a new era of crypto policy. Trump’s campaign promises to “fire Gary Gensler on day one” and hire Tesla CEO Elon Musk to overhaul "government efficiency” have many crypto fans hopeful the “regulation by enforcement” age is coming to an end. 

Gensler, who has not shared any plans to leave the agency, said during a Thursday legal conference in New York that the SEC, under his leadership, has been backed by the law.

“Court after court has agreed with our actions to protect investors and rejected all arguments that the SEC cannot enforce the law when securities are being offered — whatever their form,” Gensler said. 

When closing out his Thursday remarks, though, Gensler made a comment that could be an allusion to his possible departure. 

“It’s been a great honor to serve with them, doing the people’s work, and ensuring that our capital markets remain the best in the world,” Gensler said, thanking the staff and his fellow commissioners at the agency. 

As we wrote about last week, SEC chairs tend to resign when the incoming administration differs from the one under which they were appointed. Former Chair (and new US attorney to the SDNY) Jay Clayton announced his resignation on Nov. 16, 2020 after President Joe Biden won. 

I don’t know what’s going to happen. But if history is any indication, I’d keep your eyes peeled on Monday. 

— Casey Wagner 

The number of consecutive trading days that both bitcoin and ether ETFs saw net inflows after the election, Farside Investors data shows. Those streaks ended yesterday.

Before $401 million left US spot BTC fund coffers on Thursday, those ETFs reeled in roughly $4.7 billion from Nov. 6 to Nov. 13. Their US-listed ether counterparts saw a combined $796 million over that span before seeing $3 million exit the products yesterday.

Notably, the ETH fund segment’s overall net inflows since launching in July officially turned positive this week, currently standing at $239 million.

Pre-election crypto ETF filings that went beyond bitcoin and ether (focused on solana, XRP, etc.) appeared to be fund firms betting on a Trump victory and a change in SEC leadership. 

The election outcome is no longer unknown, and Trump’s win appears to have made ETF issuers more optimistic of potential approval across more types of funds.

People were thus on the lookout for more filings — ETF Store president Nate Geraci included:

We indeed saw some fund plans this week.

Canary Capital filed on Tuesday for an ETF that would hold HBAR, the native asset of the Hedera Network. The firm had previously filed for XRP- and litecoin-focused products. 

Then, Bitwise revealed plans on Thursday to have its crypto index fund converted to an ETF. If the SEC allows that, it would trade on NYSE Arca. 

This came about a month after NYSE Arca sought a rule change to have the Grayscale’s Digital Large Cap Fund trade on its exchange. Hashdex in June plotted an ETF that would hold both BTC and ETH (and potentially other crypto assets as regulations evolve).

Along with bitcoin and ether, the Bitwise 10 Crypto Index Fund’s holdings include: solana, XRP, cardano, avalanche, bitcoin cash, chainlink, uniswap and polkadot.

It makes sense for issuers to attempt new US crypto launches given the upcoming administration change. Still, we likely won’t see an SEC ruling for a while (and don’t even know yet who Trump will pick to replace SEC Chair Gary Gensler). 

ETF.com senior analyst Sumit Roy called this Bitwise/NYSE Arca filing “a major test of the new administration’s views on crypto ETFs and crypto more broadly,” noting the SEC has considered XRP a security in the past.

Roy added: “An approval would suggest that the new administration will be much more permissive when it comes to crypto, while a rejection could temper some of the enthusiasm among crypto bulls and clarify what the SEC will allow going forward.”

— Ben Strack

Happy Friday! Bitcoin continued its historic run this week, while US equities stumbled Thursday. Economic data came in mostly as expected, but comments from Fed Chair Jerome Powell had Treasury yields once again on the rise. Here’s a recap: 

• Powell on Thursday said the central bank can proceed cautiously when continuing its rate-cutting path given encouraging signs that the economy is strong. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully,” Powell said during an appearance at the Dallas Fed. The comments come roughly a month ahead of the FOMC’s next rate-setting meeting. 

• PPI on Thursday — similar to the CPI print earlier in the week — came in as-expected, showing a 0.2% month-over-month increase. While it is a bit warm, the report still supports the likelihood of a 25-basis point cut come December. What remains to be seen is what will happen in 2025. 

— Casey Wagner

• Bitcoin’s price was roughly $89,450 at 2 pm ET — a 2.4% increase from 24 hours prior. Ether’s price at that time was around $3,020, which was 1.3% lower than a day ago. 

• An official at the Southern District of New York told Reuters that Manhattan’s US attorney's office will scale back its efforts to police crypto-related crimes. This comes after President-elect Donald Trump nominated ex-SEC Chair Jay Clayton as the SDNY’s top attorney. 

• Our colleagues (David Canellis and Katherine Ross) over at the Empire newsletter put out some interesting pieces today. Read about the so-called Crypto-Industrial Complex here, or visit this link to read about when BTC price could hit $100,000.