SEC Ushers in Summer of the Bitcoin ETF
Last week was flush with news of institutional adoption ranging from Fidelity Digital Assets and Standard Chartered launching a crypto trading platform that caters to investment banks and hedge funds, to news of CitiBank launching digital assets unit dedicated to cryptocurrencies and blockchain technology. This week was no different, with more traditional hedge funds with large portfolios foraying into crypto, and Europe’s largest economy making its interest in the crypto official.
SEC Commissioner Backs Bitcoin ETFs
A commissioner for the Securities and Exchange Commission named Hester Peirce has made waves in the industry by finally saying what many of the crypto enthusiasts have been thinking for a very long time: Bitcoin Exchange Traded Funds (ETFs) are long overdue.
In an interview with CNBC, Peirce stated, “I thought that if we had applied our standards as we have applied them to other products, we would already have approved one or more of them”. She went on to add, “With each passing day, the rationale that we have used in the past for not approving seems to grow weaker”. This is quite possibly the first instance that a representative of the SEC speaks out in favor of Bitcoin ETFs, a much sought-after gem in the crypto world.
For years now, the SEC has denied bids from various exchanges to list securities linked to Bitcoin, claiming that the crypto market is far too volatile for a fund and that it has the ability to be easily manipulated which makes it unsuitable.
ETFs are pooled investments (also known as baskets) of securities that investors can invest in through a brokerage firm on a stock exchange. They can be purchased and sold much like a stock. They typically have lower fees than other types of funds and assets and are considered to be popular investments for both active and passive investors.
$55 Billion Hedge Fund Betting on Crypto
London-based hedge fund Marshall Wace has revealed plans for investing in the cryptocurrency sector. According to the Financial Times, the group is planning on investing in areas such as blockchain technology, digital currencies and stable coins by way of stakes through privately owned digital finance companies.
Much like their traditional funds, the digital portfolio will be making late-stage venture capital investments in firms that deal with digital finance, stable coins, and blockchain. The company could also potentially evolve to trade digital currencies, as per FT.
The firm, which manages about $55 billion, is the latest of the large firms to break into the crypto market. Most recently, a survey of 100 hedge fund chief financial officers around the world revealed that these executives plan to hold an average of 7% of their assets in cryptocurrencies in five years’ time. This showcases a healthy appetite for crypto amongst traditional investors, ones that are normally committed to holding traditional stocks and bonds.
New Law Opens Institutional Crypto Flood Gates in Germany
A new German law by the name of Germany’s Fund Location Act just went into effect and it is set to open access to crypto for more than 4,000 of Germany’s institutional funds. The law permits “Spezialfonds” or special funds to allocate a maximum of 20% of their portfolios in crypto. These funds are a special type of investment bond that is popular in Germany.
This new law is set to create a massive influx of German capital into the crypto industry, with a whopping $415 Billion worth of investments being possible. This projection is based upon the assumption that every Spezialfond would choose to allocate the full 20% to crypto. Considering the fact that Germany just so happens to be Europe’s largest economy, this type of investment in the crypto market is set to have a ripple effect across all of Europe. Proponents of crypto also hope that the implementation of legislation such as this one will serve to bolster the legal standing of cryptocurrencies, and hopefully keep the momentum going on institutional interest in digital assets.
Earlier this year, a Deutsche Bank report called Bitcoin “too important to ignore,” and began the institutional offering of cryptocurrencies. Deutsche Bank has plans to develop a “fully integrated custody platform for institutional clients and their digital assets,” as per a World Economic Forum report.
NFT Sales Rake in $2.47 Billion During First Half of 2021
No surprises in the market as it was revealed that non-fungible tokens (or, NTFs) have managed to rake in over $2.4 billion in sales during the first half of 2021 alone. When compared to last year’s figures of $13.7 million sales during the first half of 2020, we begin to see how truly impressive this new asset is. The widely popular digital asset market has mushroomed, moving beyond what most people anticipated.
NFTs have widely surged in popularity, grabbing the attention of everyone from meme-makers to the British computer scientist who is credited with inventing the world wide web. No strangers to being at the forefront of cutting-edge technology, the NBA also has an NFT platform and marketplace (NBA Top Shot) in which one million basketball fans wait in digital queues week by week for a chance to buy the much vied for blockchain-registered reels of plays like dunks, passes, and assists by their favorite players. Depending on the popularity of the player, the digital tokens manage to sell for hundreds of thousands of dollars.
With so much potential in revolutionizing the world of intellectual property and common licensing, NFTs have recently been all the rage, with major names like Jay Z and Square’s Jack Dorsey being the latest to throw their hat in the ring in support.