Crypto investment product offerings grow as regulators expect crypto market consolidation
Data from CryptoCompare shows that the price of Bitcoin started last week at around $55,000 and mostly traded sideways throughout across the week before suddenly plunging over the weekend. After reaching a low below $43,000, the cryptocurrency started recovering.
Ethereum’s Ether – the second-largest cryptocurrency by market capitalisation – started the week moving up until it hit $4,600. Since then it has been steadily moving downward and is now trading at $3,970 while seemingly struggling to breach $4,000 again.
Headlines in the cryptocurrency space this week were dominated by the launch of numerous new cryptocurrency investment products in various regions throughout the world. These offerings give investors new ways to gain exposure to the cryptocurrency space without having to manage private or public keys.
At the start of the week, Singapore-based fund manager Fintonia Group, regulated by the Monetary Authority of Singapore (MAS), launched two Bitcoin funds for professional investors. One is a ‘physical’ Bitcoin fund, while the other is a yield fund.
A day later, trillion-dollar asset manager Invesco launched a spot Bitcoin exchange-traded product (ETP) in Europe shortly after withdrawing a futures-based offering in the US -its new offering is ‘physically’ backed by actual BTC.
Similarly, a former Citigroup executive revealed the launch of a $1.5 billion cryptocurrency fund and brought in former Goldman Sachs banker Sam Peurifoy, who quit his job at the financial institution to make money playing blockchain-based game Axie Infinity.
Moreover, Kelly Intelligence – a Denver-based investment firm – filed to launch an ETF offering investors exposure to Ethereum (ETH) futures contracts. The move came months after the first ETH futures ETF applications were suddenly withdrawn.
Adding to these offering the largest digital asset manager, Grayscale, launched a new product offering exposure to Ethereum rival Solana. The Solana Trust is set to become Grayscale’s 16th product offering catering to institutional and high-net-worth investors.
Finally, Fidelity Investments launched a Bitcoin spot ETF in Canada called Fidelity Advantage Bitcoin. The product made Fidelity the largest asset manager to offer a Bitcoin ETF.
Amid a growing number of cryptocurrency investment product offerings, more crypto-related services are set to be launched by traditional financial firms. A handful of large Wall Street banks are reportedly exploring how to use Bitcoin as collateral for cash loans to institutions. These banks, which include Goldman Sachs, would not touch cryptocurrency spot markets and would instead lean towards synthetic crypto products.
According to sources familiar with the plans, the banks would emulate tri-party repo type agreements, which are a way of borrowing funds by selling securities with an agreement to repurchase them, involving a third-party agent.
SEC hair Gary Gensler expects crypto industry to consolidate
The Chairman of the US Securities and Exchange Commission (SEC) – Gary Gensler – spoke during a keynote fireside chat at Solidus Labs’ and CryptoCompare’s DACOM conference, featuring former SEC chair Jay Clayton.
During their chat, both said they see a productive future for the cryptocurrency industry under an “environment of trust”. Both agreed that, as the industry consolidates, the path to regulation will become easier.
Currently, according to Clayton, the digital asset industry is “very dispersed globally”, which makes a “single regulatory net much more challenging”. Regulators expect the industry to consolidate the same way traditional markets consolidated around the New York Stock Exchange.
In South Korea, lawmakers have notably delayed a proposed cryptocurrency tax plan that would levy a 20% tax on gains made in the cryptocurrency space in a one-year period over KRW 2.5 million ($2,122).
Local analysts suggest that the move came as lawmakers from both ruling and opposition parties are trying to appeal to younger voters who are more likely to be cryptocurrency investors, and are therefore against the proposed tax.
In Germany, a trio of political parties struck an agreement that will see them assemble a national governing coalition. Part of that agreement includes a call for European countries to work together to monitor activities in the cryptocurrency space.
As regulators keep moving to find ways to properly regulate cryptocurrency markets, new exploits keep being found. Decentralised finance protocol BadgerDAO has this week fallen victim to a hack that saw attackers steal millions in various cryptocurrencies from its yield protocols.
While there are DeFi insurance platforms out there, the incident may not be covered because the exploit seems to have affected BadgerDAO’s frontend and not its smart contracts.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
Featured image via Unsplash.