Some of the biggest names in finance are placing fresh wagers on cryptocurrencies, boosting the industry’s momentum and bringing competition to a young player that is coming under increased regulatory pressure from the US.
#6. BLACKROCK PLANNING TO LAUNCH A NEW EXCHANGE-TRADED FUN ALONGSIDE – BlackRock (BLK), the biggest money manager in the world, plans to launch a new exchange-traded fund with bitcoin as the underlying asset.
#5. CITADEL SECURITIES SUPPORTING A NEW CRYPTOCURRENCY – A new cryptocurrency exchange is backed by Citadel Securities, one of the largest hedge funds in the world, together with Fidelity Investments and Charles Schwab (SCHW), two other significant money managers.
Additionally, one of the largest lenders in the world, Deutsche Bank, plans to run a crypto custody business where it would store digital assets for its customers.
The value of cryptocurrencies, especially bitcoin (BTC-USD), is rising as a result of these endorsements from organisations with a solid Wall Street reputation.
The price of the biggest cryptocurrency in the world reached $31,389 on Friday, its highest level in a year, after breaking through the $30,000 barrier for the first time since April. Bitcoin had increased 81% year to date as of Friday.
This week saw gains in a number of other cryptocurrencies, including Avalanche’s AVAX (AVAX-USD) token and Ether (ETH-USD).
On Friday, the market capitalisation of all crypto assets surpassed $1.2 trillion, an increase of 14% over the previous week.
This renewed interest from traditional financial institutions comes at a risky moment for an industry that has been struggling to recover since the collapse of cryptocurrency exchange FTX in 2022 and the subsequent regulatory crackdown.
The Securities and Exchange Commission filed lawsuits earlier this month against Coinbase (COIN) and Binance, the two largest cryptocurrency exchanges in the world and the US, alleging that they both permitted the trading of digital currencies that should have been registered with the agency on their platforms.
That sparked fresh worries that trading particular digital assets would becoming trickier. The SEC has accused 15 separate cryptocurrency actors of breaking securities laws since the year 2023’s began.
When BlackRock, which manages more than $9 trillion in assets, submitted papers with the SEC to establish a spot bitcoin exchange-traded fund, the market’s perception unexpectedly began to change.
Instead of focusing only on following bitcoin futures, such a fund would be tied to the value of the underlying digital asset. The custodian of the bitcoin holdings would be Coinbase.
#4. BlackRock’s head of strategic alliances Joseph Chalom stated – “I think there’s an element of — we need institutional custodians to step in and play roles and participate in digital token economies,” on Thursday at the Coinbase State of Crypto Summit, which was organised in collaboration with the FT.
Bitcoin’s value increased as a result of the news. Invesco and Wisdom Tree Investments, two other institutional players, swiftly followed suit by renewing spot bitcoin ETF applications they had previously made to regulators.
The efforts still have a big obstacle to overcome. Since 2013, the SEC has rejected 27 earlier requests to establish spot bitcoin ETFs on the grounds that the instruments are susceptible to market manipulation.
In 2021, Wisdom Tree was actually denied entry. In order to transform its Grayscale Bitcoin Trust (GBTC) into a spot bitcoin offering, one asset management, Grayscale Investments, is suing the SEC.
Another impetus for the industry came last week, when a new cryptocurrency exchange backed by Citadel, Fidelity, and Charles Schwab announced that it had begun completing deals.
EDX Markets, a firm that began outlining its plans in late 2022, touts itself as an organisation that will “remove significant conflicts of interest that affect existing cryptocurrency exchanges.”
Last week, it reiterated the same position, citing a “non-custodial model designed to mitigate conflicts of interest.” It will not manage customer-owned digital assets, instead operating a marketplace where buyers and sellers deal directly with one another.
It was disclosed as part of FTX’s demise last year that a linked trading firm utilised customer assets to conduct its own transactions. The SEC has also accused Binance with misusing client funds, which Binance disputes.
In a press conference earlier this month, SEC Chair Gary Gensler stated that a conventional business model for cryptocurrency exchanges is “built on conflicts,” “limited disclosure,” and “at times deception.”
#3. EDX CEO Jamil Nazarali stated – In an interview, EDX CEO Jamil Nazarali stated, “FTX just validated our business model.” He went on to say that EDC is “taking the best of the digital world, 24 by seven trading, many of the blockchain innovations, and combining it with the investor protections in traditional finance.”
According to EDX, it will only support four cryptocurrencies: bitcoin, ether, litecoin, and bitcoin cash. Because none of those assets have been designated securities by the SEC, EDX may be able to avoid some of the issues that Coinbase and Binance have encountered.
These exchanges allow for the trading of 19 digital currencies that the SEC has designated as securities, requiring them to be registered with the agency. According to statistics provided by Cryptorank.io, the agency has recognised 55 cryptocurrencies as securities in separate disputes.
Coinbase is contesting the lawsuit and rejects the SEC’s allegations. While speaking at a crypto conference in New York on Thursday, its CEO, Brian Armstrong, did not appear concerned.
#2. COINBASE SAID – Instead, he predicted that the Coinbase platform would become a “superapp” like WeChat, which is used in Asia for everything from chatting to banking to buying meals, within the next five to seven years.
“This industry is moving forward despite some negative rhetoric and headlines,” he remarked.
#1. ROGER BALSTON SAID – According to Roger Balston, Franklin Templeton’s head of digital assets, regulatory supervision is important.
“As challenging as it has been, regulatory clarity is clearing the way for the adoption of standards that will allow capital to flow,” he told Yahoo Finance.
