BitOoda Regulatory & Geopolitical Analysis, 6/15/2020: Could the need for “Inclusive Banking” jumpstart U.S. digital asset efforts on the global stage?

This week, we jump back into the dialogue on the digital dollar given the flurry of recent activity on Capitol Hill and at Treasury. We believe we can tie together several developments across the space, including the House Financial Services Committee hearing on “inclusive banking,” OCC’s request for comments on crypto activity and regulation in the U.S. banking sector, the continuing explosion of interest in CME futures, and the findings of the newest Fidelity survey. Taken together, we see these developments as indicative of growing institutional adoption as market activity progresses toward regulated platforms under more active compliance regimes around the world.

· The House Financial Services Committee virtual hearing, highlighted by comments from former CFTC Chair Giancarlo, explored initial proposals to create digital methods to deliver government payments more efficiently, particularly to under/unbanked populations. While the hearing was based on a COVID-related scenario, the discussion clearly has broader implications for the creation of a U.S. CBDC.

· Acting head of the Office of the Comptroller of the Currency Brian Brooks is soliciting input on whether U.S. banking regulations can be modernized to address digital asset technologies, a meaningful inquiry that we think speaks to the government’s growing interest in integrating digital assets into mainstream economic activity.

· Bitcoin futures open interest on the CME has increased by 3,000% since May, which we see as an indication that institutional interest will continue to be directed toward regulated platforms and compliant market participants.

· Fidelity’s survey of pension funds, family offices, investment advisers and digital and traditional hedge funds shows that a third of large institutional investors are engaged in digital assets. This represents a steady growth of institutional interest and adoption of digital assets, as regulatory uncertainty diminishes and the prevalence of sophisticated market players increases.

Again, we see each of these stories — particularly when taken together — as indications of the broader movement of the digital asset market toward one based around regulated participants and platforms under compliance rules that are increasingly well-defined. In the U.S., the potential for a relatively new player in the crypto governance scene — OCC — to jumpstart the discussion on modernizing federal digital asset regulation is not something that foresaw but in our view holds great promise as the SEC continues to take a conservative “regulation by enforcement” approach. With potential support from Capitol Hill — which is finally seeing the benefits and use cases of integrating digital assets into the broader economy — political momentum behind a Digital Dollar could be the factor that compels the U.S. to step up on the world stage as the global economy continues to digitize.

We at BitOoda will continue to expand the sophistication and diversity of compliant digital asset products, strategies, and solutions based on our market-leading regulatory posture and unmatched expertise.