So, after the Nasdaq last week which plans to launch its custodial services for bitcoin and ether by the end of June, it is the turn of the sixth largest stock exchange in Europe, Boerse Stuttgart, to reveal that it has received permission from the German financial regulator, BaFin, to provide traditional investors with crypto trading services.
Fierce competition between institutional asset managers to establish themselves in the crypto segment
Initiatives which, after that of two Wall Street flagships, BlackRock et Fidelityand other asset managers less visible in the media (Charles Swab, Schroders, Abrdn…) raise questions about a seizure of power by institutions to the detriment of industry players. And the sign that bitcoin and ether, the two cryptos favored by these new entrants in the crypto market (but most of whom have been working for a long time to carve out a place for themselves in this perceived lucrative market), are here to stay. And this, despite political diatribes that affirm their death or their uselessness at the slightest opportunity. The intention being to frighten the individual tempted by an incursion beyond the conventional banking offer.
This fierce competition among asset managers to establish themselves in the crypto segment may suggest that there is not much time left before they carve out the lion’s share in a market dominated by native companies. like Binance.
An institutional offer that also targets individuals
Because, coincidence or not of the calendar, the world leader in exchanges crypto, with 100 million claimed users worldwide, is going through arguably the trickiest phase of its short but explosive existence (2017). Confronted for a long time with the ire of the regulators, the platform of CZ has, until the warning shot of the CFTC, knew how to maneuver to lead its boat. But there, the case takes a serious turn, the flagship of the crypto crumbling under accusations that could make him take the water, perhaps even to the point of sinking him. Well, there is room, but the sinking in November of FTX (more platform of scammers than cryptos) in barely a week remains a trauma that remains vivid, suggesting that the worst is always possible.
Nevertheless, Binance users being mostly individuals, we say that the institutional offer that is being put in place is not aimed at the same audience. But that would be a mistake. In effect, Fidelity has just activated a consumer BTC/ETH trading option available from $1 investment, demonstrating its desire to reach well beyond its usual clientele. A pioneer in this field, it could be followed by others who, for the moment, are building an offer aimed exclusively at “deep pockets”.
‘Deep pockets’ likely to blow up crypto market capitalization
So, cleverly in the style of BlackRock, the asset management giant, which has entered into a partnership with Coinbase, the only listed crypto platform that has always been favored by institutional investors. With this alliance, the world investment champion wants to offer its customers the combination of two recognized expertise in their field, the objective being that it invests with confidence in this type of asset via its house software Aladdin. Asset management software based on artificial intelligence (AI) which, it should be remembered, carries billions of dollars (in 2020, the equivalent of 21,600 billion dollars) from pension funds, insurers or more companies entrusting their savings to it. We then imagine the royal road to open crypto to the arrival of huge capital and more particularly to Bitcoin to which BlackRock has dedicated a specific fund.
A very hotly contested bargain, as evidenced by the crypto exchange platform made in Wall Street launched by a consortium of heavyweights and driven by the essential Fidelity.
But which is still under construction, because logically subject to the goodwill of US regulators, it is waiting to perfect its offer, limited for the moment to BTC, of know which tokens will be classified as commodity (digital raw material) in order to avoid disputes related to cryptos assimilated to ” securities » (financial securities). In the line of sight, the ether which, according to the US regulator who speaks, is sometimes one (security for the SEC) sometimes the other (commodity for the CFTC).
Neutralize bitcoin
As Fidelity’s last annual report on digital assets observed, digital assets are no longer seen as an “alternative asset class”. Emerging from their marginality, they now appear as respectable and “investable”. And the regulatory uncertainty that continues to weigh on the sector, and which has always been a major obstacle to institutional adoption, nevertheless seems to be less and less dampening enthusiasm.
The promise is obviously too good not to take bets, even risky ones. In Europe (the EU MiCA regulation) and Asia, restrictive but clear legislative frameworks are likely to open the doors to actors already well established to the detriment of small structures which have invented (almost) everything in this field, but which do not have the backbone strong enough to assume the financial costs generated by the required compliance. That financial centres, like Boerse Stuttgart, are committing themselves to it even more deeply is symptomatic of the change at work. As to whether it is wanted by regulators, one can assume so: integrating to disintegrate is a good formula for neutralization.
Or adopt it while respecting its essence
So, of course, today, regulators, eyes fixed on the horizon of their state digital currency (the famous MNBC or CBDC supposed to advantageously replace the outdated version of sovereign currencies), seem ready to throw Bitcoin with the bath water. Except that uncensorable by its decentralized nature, it is safe from their sneaky and crude maneuvers.
Never mind, there are other ways to put pressure on a booming industry that more often than not tends the woods to get beaten: stifle centralized players in the sector, target cryptos “ non-headless” and make bitcoin a financial asset like any other (the paper ETFs approved by SEC boss Gary Gensler are a demonstration of this). The scandals that marred the crypto saga in 2022 will have helped them well, with its cohort of nauseating practices largely inspired by legacy finance which remains, despite alarming news, safe from widespread anathema.
In the meantime, since banks are no safer than crypto platforms or any financial intermediary to keep and preserve their assets, this is a good opportunity to remind you that bitcoin remains an opportunity to take refuge from threats emanating from from each other. The condition: to assume the decentralized aspect of this universe. In a context of general mistrust, the “Not your keys, not your bitcoin!” remains vibrantly topical!
Disclaimer : This article deals with cryptocurrency news. It is not financial investment advice. Any position must be accompanied by personal research and requires cross-referencing several sources before launching. DYOR!
