Behind the rebound of Bitcoin, there are undercurrents in the market

Author: Qin Jin

If the stock market is a barometer of a country's economy, then Bitcoin is the vane of the global encryption market. Its every move may hint at the future direction and trend of the global encryption market.

Bitcoin ushered in a wave of small rebound today, which was accompanied by critical moments of US regulation, Binance being suppressed by the SEC, and Wall Street's traditional financial giants scrambling to enter the market first. Therefore, compared with previous rebounds, the information conveyed to the outside world is very interesting.

On June 16, the iShares department of the US fund management giant BlackRock submitted a document to the US SEC to apply for a spot bitcoin ETF. According to the filing, the fund’s assets will be named the iShares Bitcoin Trust, and the fund’s assets will consist primarily of bitcoin held by the custodian on behalf of the trust.

Anthony Pompliano, co-founder of Morgan Creek Digital, later stated that what BlackRock applied for was not a bitcoin ETF, but a bitcoin trust. The products differ only technically, especially in terms of regulation and approvals, but the end result for investors is similar. Pompliano also said that the product, if approved, could force GBTC to introduce daily redemptions and cut fees to compete. Many Wall Street firms may launch fast-following products to compete with BlackRock.

On June 20, the digital asset trading platform EDX announced its official launch and opening of transactions. Backed by companies including Charles Schwab, Citadel Securities, Fidelity Investments, Paradigm, Sequoia Capital, and Virtu Financial, EDX aims to enable safe and compliant digital asset transactions through trusted intermediaries.

According to reports, EDX is a non-custodial trading platform for institutional customers. It does not directly deal with customers' assets, but provides customers with a trading market for encrypted assets and US dollar transactions. Products traded on EDX include $BTC, $ETH, $LTC and $BCH.

We can roughly summarize a few key words from EDX: origin in the United States, compliance, financial giants, not for retail investors, and not for custody of assets. It can also be said that the financial power of Wall Street in the United States has launched its own encryption exchange. In the future, U.S. institutions can trade encrypted assets on their own compliant exchanges. In fact, in the last round of cyclical narration, FTX, an exchange endorsed by mainstream institutions in the United States, closed down due to its own poor management and the suppression of competitors, resulting in serious damage to the assets of most institutions. The reason is that there is no effective and mature compliance regulatory framework to supervise FTX's management and control of self-custodial assets. However, EDX effectively avoids the above two shortcomings: compliance and asset custody.

Jez Mohideen, CEO of Laser Digital, a Web3 venture capital arm of Nomura Securities, believes that the regulatory debate surrounding cryptocurrencies will play a key role in determining the future trajectory of institutional adoption of cryptocurrencies.

Therefore, in the next round of mainstream encryption narratives, mainstream financial institutions in the United States will participate more as protagonists in this historically important technological wealth creation movement. To create one's own world, it is reasonable for EDX to come into being. The difference is that this round of escorting the encryption industry has added another layer of protection "compliance" in addition to Valkyrie's traditional financial institutions.

So back to the topic of SEC regulatory compliance, we can understand that before the SEC hit Binance hard, the financial forces on Wall Street may have made sufficient preparations for the launch of compliant encrypted transactions. The main role may not be the upright and selfless encryption scholar as the outside world understands, nor is it the encryption-unfriendly regulator who the outside world says is uncoordinated, weak and heavy duty.

You know, in 1979, Gensler joined Goldman Sachs and became one of the youngest partners in the firm at the age of 30. From 2009 to 2014, Gensler served as the 11th chairman of the US CFTC.

At the MIT Technology Review Forum in April 2018, Gensler once said that blockchain technology is a good thing for the entire financial industry, but cryptocurrencies, exchanges and related token issuance fundraising activities (ICO) based on this technology are still There is no law to follow, and there are no existing laws and regulations to regulate this industry.

On the contrary, Gensler, who was born as a Jew, is precisely an encryption trailblazer who speaks for the financial power of Wall Street. Looking at it this way, this may not be a coincidence but a deliberate arrangement. At the same time, the harsh regulation that Binance faces will not be simple heavy fines, but also fierce competition from the financial power of Wall Street.

Earlier on June 20 on the same day, Deutsche Bank Deutsche Bank has applied for a regulatory license to provide custody services for digital assets such as cryptocurrencies. David Lynne, head of the commercial banking department of the bank, said that we are building our own digital asset and custody business, and we have just submitted an application for a digital asset license to the German Federal Financial Supervisory Authority (BaFin).

EDX is non-custodial, while Deutsche Bank offers a custodial service. From my own understanding, everything in the world is not a coincidence.

When we look back at the landmark events that have occurred in the encryption industry in the past six months or so, on the surface, it is nothing more than Hong Kong’s new encryption policy and US encryption regulation. Hong Kong, China is actively opening its arms to embrace encryption companies, and Washington, the United States, is intensively exporting heavy blows to encryption companies. One east, one west, one welcome, one expulsion, but they may end up with the same goal by different routes, and they are all adding fuel to their own interests in the development of the encryption industry. The difference is that when Hong Kong began to embrace encryption companies, it put in place the development of corporate norms and regulatory frameworks in advance, while the United States did not have clear development norms and regulatory frameworks when it began to embrace encryption companies, and realized afterwards that regulation is in encryption The importance of the industry has begun to gradually regulate and formulate regulatory policies. Launching its own crypto exchange.

The future development and evolution of the encryption industry may exceed all of our expectations.