weekly roundup – Galaxy Goldman BTC Futures | Paul Tudor Jones | Morgan Stanley Expands Bitcoin Fund
Bitcoin tumbled more than 10% this morning after China broadened its clampdown on the cryptocurrency mining industry, as reported by Reuters in an article which included insight from our CGO here at BCB Group.
It was another packed week for news in crypto; we’re diving into the highlights in our weekly roundup below.
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GOLDMAN SACHS TEAMS WITH GALAXY TO MEET INSTITUTIONAL DIGITAL ASSET DEMAND
As revealed exclusively by CNBC last Friday, Goldman Sachs’ efforts to help hedge funds and other big institutional clients wager on bitcoin have taken a step forward, as the bank has begun trading bitcoin futures with Galaxy Digital.
The trades represent the first time that Goldman has used a digital assets firm as a counterparty since the investment bank set up its cryptocurrency desk last month, according to Galaxy co-president Damien Vanderwilt.
The moves by Goldman may reverberate on Wall Street and beyond as banks increasingly face pressure from clients who want exposure to bitcoin, according to CNBC.
By being the first major U.S. bank to begin trading cryptocurrency, Goldman is essentially giving other banks cover to begin doing so as well, said Vanderwilt, a former Goldman partner who joined Galaxy last year.
“There’s a whole dynamic with the major banks that I’ve seen time and time again: safety in numbers,” Vanderwilt said. “Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.”
Galaxy was scheduled to announce Friday that it will serve as Goldman’s “liquidity provider” on CME Group bitcoin futures. Last month, Goldman said it would sign on “new liquidity providers to help us in expanding our offering,” in a memo.
VENTURE CAPITAL MAKES A RECORD $17 BILLION BET ON CRYPTO
In just six months, venture capital firms have invested $17 billion into the crypto industry, doubling the previous yearly record of $7.4 billion in 2018 as reported by Bloomberg and according to data provider PitchBook.
In May, Block.one, a blockchain software company whose long-time backers include billionaires Peter Thiel, Alan Howard and Louis Bacon injected $10 billion of digital assets and cash into Bullish Global, a new crypto exchange. The company also raised $300 million in an additional funding round at that time.
That investment alone would have made 2021 the biggest year for venture capital investment in the space on record. But even ignoring that capitalisation of a new exchange, the remaining $7.2 billion that has flowed in would already be on par with the previous record of $7.4 billion raised in 2018 with six months still to go in the year.
According to a recent report from Forbes, five of the top ten largest venture rounds in crypto history have happened since the beginning of March, including Circle, BlockFi, Dapper Labs, Blockchain.com, and Bitso.
GRAYSCALE EXPLORING 13 MORE INVESTMENT PRODUCTS
As reported in The Block, crypto asset manager Grayscale announced last Thursday that it is exploring 13 more investment products, including ones tied to Solana (SOL) and Polygon (formerly Matic Network) (MATIC) tokens.
The other 11 products under consideration are tied to these tokens: 1inch (1INCH), Bancor (BNT), Curve (CRV), Internet Computer (ICP), Kava (KAVA), Kyber Network (KNC), Loopring (LRC), NEAR (NEAR), Ren (REN), Universal Market Access (UMA), and 0x (ZRX).
While Grayscale is now exploring a total of 31 new products, it does not mean it will launch all of these. The asset manager said the process of creating an investment product is complex and multifaceted.
“It requires significant review and consideration and is subject to substantial internal controls, sufficiently secure custody arrangements, and regulatory considerations,” said Grayscale.
Source: The Block
UK REGULATOR COMMITS MORE RESOURCES TO ASSESSING CRYPTO FIRMS ACCORDING TO HM TREASURY
John Glen, Economic Secretary to the Treasury and City Minister, has said that the Financial Conduct Authority (FCA) has “increased considerably” the resources it has allocated to assessing applications to the cryptoasset register.
In a response published on 18th June, Glen stressed the need to “balance the potential risk to consumers with the ambition to foster competition and innovation in the sector,” but also conceded that the regulator is beefing up its crypto capabilities.
“The government believes that the FCA’s expertise in the regulation of financial products, its membership of the Cryptoasset Taskforce, and its experience as anti-money laundering supervisor for other asset-based financial services firms makes it the right supervisor for the cryptoasset sector,” he said. “As a result of the longer than anticipated time being taken to process applications, I can confirm that the FCA has increased considerably the resources allocated to assessing applications.”
Source: UK Parliament
MORGAN STANLEY SET TO EXPAND BITCOIN FUND OPTIONS
New York Digital Investment Group (NYDIG), a “financial services firm dedicated to Bitcoin,” and FS Investments have filed with the US Securities and Exchange Commission (SEC) for a pooled investment fund aimed at clients of Morgan Stanley.
According to the SEC filing, Morgan Stanley “will receive certain placement and servicing fees with respect to clients it refers to the issuer.”
The FS NYDIG Institutional Bitcoin Fund LP would be the fourth Morgan Stanley-linked fund that provides institutional clients’ portfolios some exposure to cryptocurrency, and the second from NYDIG and FS Investments.
PAUL TUDOR JONES LIKES BITCOIN AS A PORTFOLIO DIVERSIFIER
Paul Tudor Jones, founder and CIO of Tudor Investment Corporation, said in an interview during CNBC’s Squawk Box last Monday that “bitcoin is math,” noting that the cryptocurrency is a way to invest in certainty.
“Math has been around for thousands of years and two plus two is going to equal four, and it will for the next 2,000 years,” he said. “So I like the idea of investing in something that’s reliable, consistent, honest and 100% certain.”
Jones stated that bitcoin is an alternative to putting faith in nonlinear human nature through actions by the Fed and political figures like former president Donald Trump and President Joe Biden.
Jones said in the interview that the Fed’s upcoming meeting is one of the most important in the last five years as Jerome Powell, the central banking agency’s chairman, has called the threat of inflation “transitory.”
“The only thing I know for certain is I want to have 5% in gold, 5% in bitcoin, 5% in cash and 5% in commodities at this point in time,” Jones added. “I don’t know what I want to do with the other 80%. I want to wait and see what the Fed’s going to do because what they do will have a big impact.”
WEBINAR: BRINGING CRYPTO COMPLIANCE TO INSTITUTIONAL DEFI – KNOW YOUR CODE
Today at 16:00 BST there’s an expert panel discussion with Aave Head of Institutional Business Ajit Tripathi, CFA , Gunnercooke LLP Partner James Burnie (FRSA) and Trustology’s CEO Alex Batlin on bringing AML compliance to institutional DeFi.
They’ll be homing in on:
- Why is DeFi so hard to regulate?
- Should we be rethinking AML practices in general?
- Is DeFi the spark for more thoughtful guidance?
- How do global regulators differ in their approach?
- Which provisions are institutions making to get comfortable with DeFi?
- Are protocols evolving their approach to AML risk?
- How will change be enacted?
- Can there be institutional-grade security in DeFi custody?
- And can institutional crypto custodians be the catalyst for adoption?
Here’s an accompanying article covering the same themes – KYC’d DeFi liquidity pools.
BCB publishes a weekly recap of the top crypto news stories and a fortnightly regulatory recap. To sign up, please visit: https://www.bcbgroup.com/contact-us/