What happens in the crypto market doesn’t stay in the crypto market for long.
As bitcoin and other digital assets rise in popularity, real estate will be affected. After all, when people make profits, they often transform their earnings into housing wealth.
With that big picture in mind, let’s take this moment to check in on the crypto market — and some major recent catalysts.
BlackRock Quietly Bolsters Bitcoin
Bitcoin’s on the rise again, following international news coverage of BlackRock’s application to run a U.S. bitcoin ETF (exchange-traded fund). Assuming the U.S. Securities and Exchange Commission (SEC) approves the filing, the fund will be the first of its kind in the country.
The value of bitcoin has since rebounded to the $30K mark, doubling since it hit a two-year low in November 2022. Ethereum is also rising sharply.
BlackRock’s partnership with Coinbase gives it a third-party storage system for the assets in its proposed iShares Bitcoin Trust.
BlackRock’s plans to offer its investors a traditional ramp to nontraditional assets is significant. They’re part of a digital shift in world finances.
Yet Another Catalyst: EDX Markets Open for Business
BlackRock is not the only major asset management firm that’s busy with bitcoin. We’ve been reporting on Fidelity’s moves into bitcoin and ether (and the world of blockchain in general) over the past year.
As of June 2023, there’s a new crypto exchange for institutional investors only. And it’s now live. Named EDX Markets, enables the trading of four big crypto brands: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Who’s backing the new exchange? The lineup includes traditional finance powerhouses Fidelity, Charles Schwab, and Citadel Securities.
The groundswell of institutional activity will bring bitcoin and other strong digital assets to the attention of large investment companies.
All This, Despite a Crypto Clampdown
This is all unfolding even as the crypto sector faces off with federal regulators.
Last November, a major scandal shook the sector: the FTX bankruptcy fiasco. The high-profile, $32 billion cryptocurrency company imploded, swarmed by law enforcement in a crypto haven in the Bahamas.
The U.S. government’s crypto clampdown then got under way in earnest. This month, the SEC sued two large exchanges, Binance and Coinbase, characterizing them as unregistered securities exchanges. Leadership of the two exchanges are defending their positions. The SEC’s actions rocked the exchanges, but the assets themselves were unscathed. This means investors are treating them like commodities, not speculative investments. After all, says Glenn Williams for CoinDesk.com:
The price of crude oil wouldn’t sharply drop simply because the SEC sued ExxonMobil. Nor would the price of Gold plummet if the agency took action against the CEO of Barrick Gold.
Similarly, investors seem to be saying: OK, government. Vet the exchanges. But the assets remain desirable.
How the New Markets Will Navigate Regulatory Scrutiny
To earn legitimacy as sought-after assets, digital offerings have to integrate standard consumer protections. And this is what EDX Markets will do as it sets out to “meet the needs of the world’s largest and most sophisticated financial institutions.”
Notably:
- EDX Markets will be “non-custodial.” To hold the assets customers trade, EDX will rely on an independent custody provider.
- EDX Markets is focused on four blockchain assets that behave like commodities and are not the“crypto asset securities” targeted in the SEC’s legal actions.
With International Asset Management Saying Yes to the Digital Sector, the U.S. Won’t Be Left Out
This month, Deutsche Bank, based in Frankfurt, has approached German regulators for a go-ahead to offer custody services for digital assets.
The trend is clear. Digital assets are a worldwide phenomenon, much more than a flash in the pan. Any “flashes” are burning out, with help from regulators worldwide, including the SEC.
The public demands legal certainty for the sector, pointing to the FTX fiasco and similar meltdowns. The companies and currencies that make the grade will be the tried and tested entities.
Supporting References
Murtuza Merchant for Benzinga.com: Deutsche Bank Dives Into the Crypto Pool, Offering Custody Services (Jun. 20, 2023; citing reports from Bloomberg).
Murtuza Merchant for Benzinga.com: Institutional-Only Crypto Exchange EDX Markets Debuts With Support From Major Financial Firms (Jun. 20, 2023).
Murtuza Merchant for Benzinga.com: Bitcoin’s Bullish Ballet – An In-Depth Analysis of the Remarkable 6.5% Leap This Month and What It Means for Investors (Jun. 21, 2023).
Glenn Williams for CoinDesk.com: Market Analysis – Why Isn’t Bitcoin Falling More? Cryptos Are Acting More Like Commodities Than Securities (updated Jun. 9, 2023).
Tanaya Macheel for CNBC LLC (a division of NBCUniversal Data), via CNBC.com: EDX Crypto Exchange Goes Live Offering bitcoin and ether trading, backed by Schwab and Fidelity (Jun. 20, 2023; also reporting on data from Reuters).
And as linked.
Photo credits: Alesia Kozik, via Pexels.