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21st June 2023 > > TradFi.


One can feel the palpable excitement generated by TradFi’s crypto ventures.

Market Snap

Market Wrap

The growing prospect of spot BTC ETFs in the US, and a new centralised cryptocurrency exchange for institutions, are driving BTC’s price higher. In January and February 2021, BTC doubled from $29k to $58k in just 25 days, a quite extraordinary run before dropping to 30k in July and back close to $70k in November.

Is volatility on its way back?

Curious Cryptos’ Commentary – Now it’s Fidelity’s turn for a spot BTC ETF application

Fidelity, with $4 TRILLION of assets under management – admittedly less than half of Blackrock’s but big nonetheless – is reported to be following in Blackrock’s steps to file its own spot-BTC ETF, presumably with an anti-market manipulation facility similar in nature to the Blackrock one.

Fidelity has long been a crypto supporter, setting up its own mining facility in 2014 (we all wish we had) as well as providing BTC ETFs on European exchanges and acting as a crypto custodian for institutional investors.

It is also rumoured that Fidelity are preparing a bid to buy Grayscale Investments, issuer of the Grayscale BTC Trust currently trading at a 37% discount to the underlying assets, namely BTC. The ETH trusts are trading at closer to a 60% discount. Long-term holders who buy these products will one day wake up very pleased with themselves when the discount has disappeared overnight.

And there are others too.

Since Thursday, new applications for a spot BTC ETF in the US have been made by Bitwise, WisdomTree, Deutsche Bank, and Invesco. Gary Gensler – Chair of the SEC – has a very full in-tray to deal with.

So, what has changed?

On the face of it, nothing so far.

Larry Bloch, resident Techie at CCC Towers, has pointed out that the SEC is not there to pick winners. I haven’t seen the documents for all these new applications, but I strongly suspect that they look remarkably similar in most details to Blackrock’s (see CCC 17th June for the key points). This is a sign of confidence by the traditional investment industry that the SEC is going to struggle to reject Blackrock, and other similar proposals.

Predictably, some maxis are bemoaning these attempts by TradFi to create safe, secure, liquid, investment vehicles for investors. Preston Pysh (who?) tweeted a common theme:

“I'm sorry, but after watching, Blackrock, Fidelity, Citadel, Schwab and now Deutsche Bank, all apply for #Bitcoin ETFs, spot exchanges, etc. only a few days after the SEC drops a TRO on Binance and sues Coinbase... how can't you think this entire past year was a giant inside job coordinated between the Wall Street parasites & government regulators so they could catch-up...”

I suspect Pysh does good work pushing the lizard narrative.

Curious Cryptos’ Commentary – EDX Markets

Citadel Securities, Fidelity Digital Assets, and Charles Schwab have launched EDX Markets, a centralised cryptocurrency exchange aimed at institutions, with plans to launch EDX Clearing, to support settlement. Jamil Nazarali, CEO of EDX, explains:

“We are committed to bringing the best of traditional finance to cryptocurrency markets, with an infrastructure built by market experts to embed key institutional best practices. With the endorsement of our new and growing list of investors and customers, we’re proud to launch trading and look forward to further enhancements to our offering. Looking ahead, EDX Clearing will be a major differentiator for EDX -- and resolve an unmet need in the market – by enhancing competition and creating unparalleled operational efficiency through a single settlement process.”

One of the key features of this new exchange is the product offering is limited to only BTC, ETH, LTC, and BCH.

The SEC has declared BTC to be a commodity, and though it has muddied the waters around ETH, it looks to be backing away from claiming ETH to be a security. Both LTC (Litecoin) and BCH (Bitcoin Cash) are hard forks of BTC. With very similar technology, and enough diversification of nodes, one can be quietly confident these two are also commodities.

Most alts will go to zero. In the past the allocation of my crypto stash to alts has been between 5% & 10%. That has been decreasing of late, mostly in reaction to the SEC’s stance, down to 2-3%. This is a move confirmed by EDX’s deliberately limited offering.

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