Bitcoin whipsaws after Fed cuts interest rates for the first time in four years: CNBC Crypto World

Today, crypto markets react to the Fed's first rate cut in four years. Prager Metis, the auditor for FTX, settles with the SEC over negligence claims. And Turnkey Lab CEO Tyrone Ross discusses why he's not a fan of crypto ETFs. Welcome to CNBC's Crypto World. I'm Lindsay Jacobson. We have our first rate cut in more than four years, and crypto investors are making sense of the news. By 2.15 Eastern, Bitcoin was bouncing between a 1% gain and a 1% loss. After the Fed's announcement, it was cutting interest rates by 50 basis points. Ether dropped nearly 2%. And XRP fell to 57 cents. Prices are likely to continue bouncing around as we get comments from Fed Chair Powell around 2.30 Eastern time. He's expected to talk about the Fed's outlook for the economy and whether more rate cuts are on the way. For the latest price moves, head over to CNBC.com. OK, let's talk about the top stories. Accounting firm Prager Metis reached a settlement with the SEC over the company's involvement in an audit of FTX. Prager agreed to pay a $745,000 fine to settle the agency's claims of negligence-based fraud without admitting or denying allegations. The SEC alleged the firm falsely misrepresented compliance standards for FTX audit reports prior to the collapse of the crypto exchange. We reached out to Prager Metis and Bruce Braun, a lawyer for the firm, said Prager Metis is pleased to have settled and that it was also a victim of FTX's mismanagement. Next, sticking with the SEC, the agency is cracking down on pig butchering scams in a series of enforcement actions. The SEC announced it charged five entities and three individuals for their alleged involvement with two fraudulent trading platforms, NanoBit and CoinW6. The SEC says this is the agency's first enforcement action tackling relationship investment scams. The SEC claims the alleged scammers impersonated wealthy individuals on social media. The individuals would direct victims to WhatsApp, where they would build a relationship. After the alleged scammers gained their trust, the agency claims victims would be convinced to make investments into fraudulent crypto platforms. The director of the SEC's Division of Enforcement, Gerber Graywall, said these sorts of scams pose a risk of catastrophic harm to investors and that, quote, the threat is increasing rapidly as these scams become more popular with fraudsters. This comes a week following the CFTC's announcement that the commodities and securities regulators are teaming up to educate customers on these scams. All right, let's head back over to Huntington Beach, California, for our main story. CryptoWorld's Tanaya Mikhail caught up with Tyrone Ross, the CEO of 401 Financial and Turnkey Labs. He explains why he's not a fan of the crypto ETFs that have gotten so much attention this past year. He also lays out what catalysts he thinks will drive the market's next rally. So Tyrone, last time we spoke, we were talking about financial advisors kind of not really being interested in these Bitcoin ETFs. Yeah. That came to market here in the U.S. this year. Has anything about that changed since we last spoke? Probably the only thing that's changed is my opinion. But again, I've been on record. My mother told me if I have nothing nice to say, don't say anything at all. But I'm known not to be a fan of them. But I will say there has been a lot of progress on firms doing due diligence to get access. So your Merrill's of the world, your Wells Fargo's and so on and so forth. So I do think at first advisors were a little concerned that the Bitcoin ETF wasn't going to make a difference in client conversations in the planning side. And I believe at last count, like three, four percent of the purchases of the ETFs have been advisors. So it seems like the space have adopted it. Bitwise continues to say that they have advisors that are allocating meaningfully. So I think that's a good sign. I still personally believe that advisors don't need them. But we'll see what happens here over the next 18, 24 months. Why are you not a fan of the Bitcoin ETF? I think that the best way to hold an asset is directly. And why are we putting training wheels on a Ferrari? It just doesn't make any sense. I think Bitcoin is meant to be held self-custodial in a wallet that you control. But in trade 24, 7, 365, if I put it inside of a vehicle that stops trading, I introduce myself to all these other type of risk. And if I'm being completely frank, which I'm known to be, is a money grab. Right. You can get you can buy Bitcoin anywhere at multiple venues right now. Why put it in an ETF and buy it that way? But Wall Street loves money. They package it up in a way and firms are buying it. And I think that's great. But I think the best way to hold something like Bitcoin is to hold it directly on your person. And it's a bearer asset for that reason. What about the steep learning, the steep learning curve? I don't believe that that's an excuse anymore. I think there are firms like Coinbase and Robinhood and others, like Cash App allows you to buy it on your phone and it automatically goes into cold storage. Right. And you can sell it right there inside of the app. It'll transfer the cash. So that steep learning curve thing I never bought because there were firms that made it so much easier. Now, there is a learning curve if you actually want to hold it on your person in a self-custodial way on a hardware wallet. But even that has gotten easier with Treasure and Ledgers. And we help clients with it all the time. Coinbase Wallet, which is a better version of Coinbase, their self-custodial wallet. So I think that's no longer an excuse for the space. There's a lot of venues to do so. But there are folks that deal with clients that are 55 and older who don't want anything to do with it, buy it in an ETF. And I get it. I completely understand that. OK, so because sentiment seems to be shifting, at what point do you expect to see investors who have slowly warmed up to the ETFs start to have their eyes open to the idea of self-custody and put that into action? So here's what I believe. And I have really good evidence of this, especially in the last couple of weeks. And this has been my thesis for years. Once advisors make the Bitcoin ETF or Ethereum ETF or any crypto ETF available to clients, what they're going to learn is the clients already own it away from them. So you want to buy me this Bitcoin ETF, great. But I also have a Coinbase account with $12.5 million in it. Got a call from an advisor there. Another one where the client had four or five positions in Coinbase and a couple of million dollars. So I think what is going to happen is, again, remember, this space was built for retail, right? Retail have been in. Institutions and advisors are coming in later. So the advisors and the wealth techs and the platforms have to catch up to where the end client is. That to me is, folks will figure that out. So I think there'll be an education where the advisors learn and the client have it away. And then the advisor will be forced to say, all right, how do we help the client deal with the risk that comes along with custodying on person versus at a custodian? What are the tradeoffs? And then how do they help them do that? Where do you stand on the rest of the crypto space? Well, let's run through it. I'm a big fan of DeFi. I think decentralized finance is going to be very big. It's very early now. But when you look at Uniswap versus Coinbase, the numbers speak for themselves. I don't understand all of the tokenization hype. I think we'll get there. Big theme at this conference. Big theme at the conference. We've been hearing about tokenization for years. I'm 12 years in. All these buzzwords have been here. But I think BlackRock will finally get us over the hump there. The ETFs, not a fan, never will be. I think data is a big story. I'm here because we're announcing a big integration with Morningstar to bring data, performance data, reporting and cost basis data to advisors of their Coinbase accounts for their clients. To me, it's a big data story. So that's it. Again, I'm the biggest crypto hippie you will meet. But I think as far as where we are on wealth management and the broader themes, I think there's not too much that excites me now, except for the fact that decentralized finance seems to be finding its way. And I think the future of asset management is wealth management is going to be non-custodial. And listen, if you don't believe me, look at Fidelity and Schwab. They are both invested in the non-custodial exchange. So they see it too. So I'm excited about that and start to disintermediate a lot of the centralized power in the space. But all of the buzzwords and the other fancy stuff, I just can't. It doesn't. Stablecoins, too, is one that I think is there's some promise there, but I think a ways to go. Well, let's talk about Bitcoin, because while that might seem like one of the more boring topics in the space, which I think is a good thing, depending on who you're asking. We're expecting a Fed rate cut. We have an election coming up. And I think that the reality is that life is going to kind of come back into the space when we see the next meaningful Bitcoin rally to another all time high. So what are you looking at? What's driving things for Bitcoin right now? I think, yeah, I think the rate cuts are going to be interesting. I think we have a series of cuts coming, right? Probably, you know, end up being somewhere around 200 basis points. We'll see. But I think the other thing is, if you look at, I think Coinbase, 8 million monthly actives, Robinhood is around 13 million. And for Coinbase at 8 million, that's a low. Right. So I think retail has kind of gone away from trading now. I think that's another one. You and I chatted about that. And then I think the last thing is there are still folks who are doing due diligence to larger wire houses on getting the access to clients for the ETFs. But I think it's going to take I don't think it's it's going to take a new high. Right. I think if we hit a new high, folks will get animal spirits again. They'll start logging in the Coinbase and they'll start trading. But again, led by retail, I think the institutions are coming. Yeah, they're here. But it takes a long time for those investment committees to get comfortable with this. So, again, I'm in it for the long term. I don't think Bitcoin matters to me to actually pay attention to the price and all that. Five, 10 years from now, perhaps we're not even 20 years of track record yet. Right. So we get to 20 years of track record. Let's see where we are. But I think there are some some tailwinds here that will happen. But in the interim, I think folks continue to discover it, the ETFs finding their way, good research and events like this and shows like this will get more people exposed. And I think that's what the space needs. OK, that's all for Crypto World today. We'll be back again tomorrow and we'll see you then.