BitOoda Regulatory Analysis, 8/31/20: Institutional Roundup — Driving Adoption on Multiple Fronts
As a regulated institutional digital asset financial services platform, we at BitOoda wholeheartedly subscribe to the thesis that institutional entities will bolster their engagement in the crypto space as its sophistication rises, its infrastructure matures, and its regulatory framework takes shape and increasingly guides market activity. We are seeing this thesis play out not only in our daily discussions with clients interested in our expanding set of product offerings, but also in our collaboration with firms across every vertical in the digital asset ecosystem, and finally in our analysis of regulatory movements as well. We wanted to highlight a number of developments last week that lead us to believe institutional adoption is accelerating:
· Fidelity Investments filed a proposal with the SEC to launch a Bitcoin index fund, to be offered to institutional investors and custodied by Fidelity Digital Assets. As touted by a number of crypto news outlets, Fidelity’s expanding digital activity will significantly shape the space moving forward.
· The SEC officially cleared the proposed IPO of INX’s blockchain-based security token, a milestone for the digital asset industry as the first security token offering (STO) registered with the SEC and approved for public trading.
· Trade volumes on U.S. regulated exchanges continue to skyrocket because of growing institutional interest and engagement. CME’s bitcoin futures market hit a new record for open interest with $948 million earlier this month, while Bakkt volumes for its physically-settled bitcoin futures also are reaching record levels.
On the regulatory front, we noted the SEC’s expansion of the definition of accredited investor, as well as continuing indications that central banks around the world are moving more decisively toward CBDCs.
· The Bank of International Settlements published a paper assessing that a growing number of central banks are discussing and developing plans to digitize their currencies.
· The Boston Fed stated that it is evaluating more than 30 blockchains as part of its pilot program to tokenize the U.S. Dollar.
As we have noted previously, the growing role of institutional participants in the digital asset markets will continue to bolster the importance of regulated industry players — both exchanges such as CME and Bakkt, as well as firms driving the development of next-generation financial instruments, risk management and hedging strategies, and the platforms needed to effectively service the needs of sophisticated institutional investors. We encourage clients and others to reach out to us to discuss how we are helping to drive the growth of institutional digital asset engagement through our regulated products and services using our multi-stack platform and our robust partnerships across the crypto ecosystem.