BitOoda Global & Regulatory Analysis, 2/3/2020: Is increasing regulatory clarity driving market maturation, or vice versa?

Our outlook on the development of the digital asset ecosystem is increasingly being buoyed by (1) the migration of market activity to regulated platforms, (2) the consolidation and clarification of regulatory requirements around the world — at both the national and multinational level, and (3) a consistent rhythm of U.S. political and economic leaders calling for a more forward-looking U.S. digital asset policy. Addressing these trends one by one:

(1) The rollout of bitcoin options on CME and Bakkt, complementing their existing futures offerings, has bolstered market activity and confidence, and signals a significant step forward for U.S. and global markets. The SEC has cited the small state of the bitcoin derivatives market in its rejections of proposed ETFs; we feel that the growth and success of regulated platforms is not only a sign of rising confidence in the asset class, but also that the growth of derivative activity will be a catalyst for the continued maturation of the ecosystem and could strengthen institutional confidence and engagement in the space.

(2) Singapore — one of the few nations to have developed a clear and comprehensive regulatory regime for digital assets — implemented a law passed last year requiring crypto businesses operating in the country to be licensed and registered. In addition to the EU implementing 5AMLD, Ukraine also updated its AML law to adhere to the new FATF crypto guidelines, including tracking suspicious transactions above a certain amount. These are the latest examples of what we see as a growing trend of national regulators tightening and clarifying their countries’ digital asset rules, which we view as welcome changes for market participants looking to engage and transact in a compliant manner.

(3) Following former CFTC Chair Giancarlo’s recent establishment of a think tank to promote the development of the digital dollar, current CFTC Chair Tarbert reiterated his belief that we could see ether futures this year. In addition, presidential candidate Andrew Yang stated that the U.S. needs a consistent crypto legal framework in order to be a market leader, calling the current U.S. approach “hodgepodge.” We are hopeful that these statements could signal the growth of advocacy efforts by U.S. political and economic leaders, rather than just a flash in the pan.

Looking beyond these individual actions, we contemplated this week whether growing global regulatory clarity and calls for a more modern U.S. approach are fueling the growth of regulated market activity, or vice versa? Regardless, BitOoda’s strong regulatory stack and our focus on compliance are enabling us to take full advantage of the market shift to regulated platforms, and we invite our clients, partners, and readers to contact us and discuss how to leverage our platform’s innovative products and advisory services to engage early in the rapidly-expanding regulated derivatives market.

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