Appold Market Watch - Week 6 to 10 November 2023
Market Update & Industry News - Week ending 10 November 2023
Global fund manager, BlackRock, expanded its digital asset exchange-traded product (ETP) strategy with a regulatory application for an Ethereum trust that may lead to an ETF listing. This is in addition to its current spot Bitcoin application. This product adds to the growing number of spot ETF applications issuers are requesting to launch, in order to service this sector in a transparent and highly regulated manner. There is growing anticipation that these applications will be approved, all at the same time, in 2024 but no clear indications or timeframes have been given yet by the SEC.
Appold View: Blackrock is the biggest “brand name” in this process and has everything to push for. If or when the SEC gives the green light to launch, the 11+ ETFs will be pushing hard to win market share in terms of Assets Under Management (AUM). Expect competition on fees and brands!
Standard Chartered continued to grow its exposure to the blockchain industry with the announcement of a $100m venture capital fund, in conjunction with SBI Holdings, focused on opportunities around blockchain infrastructure, compliance, decentralised finance and tokenisation. Both investor groups already hold significant equity in the institutional-focused Zodia Custody and Zodia Markets, the digital asset custodian and trading businesses.
Appold View: The relationship has clearly worked well between Standard Chartered and SBI holdings as they continue to expand their exposure to early blockchain opportunities. Their Zodia custody investment appears to be on track with an anticipated Series B round possible in 2024.
The European Banking Authority (EBA) published draft rules on liquidity and capital requirements setting strict reserve requirements for stablecoin issuers. The rules are in line with the EU’s new Markets in Crypto Assets (MiCA) and focus on strict reserve requirements for stablecoins issuers. Areas of liquidity stress testing and capital requirements for stablecoin reserve assets were covered in the draft.
Appold View: We are still reviewing this but anticipate some pushback in parts as being deemed over-draconian. The UK may also take a similar stance on the MiCA rules. A lot can still change and we continue to observe and contribute to the ongoing consultations.
HSBC announced plans to launch a custody service for institutional clients focused on tokenised securities. The bank will partner with technology infrastructure provider Metaco as part of the strategic initiative. This demonstrates HSBC’s growing blockchain strategy where it announced last week the launch of a platform that tokenises the ownership of physical gold held in its London vaults. This modernisation will also allow better tracing and ownership of the underlying commodity.
Appold View: It’s very encouraging that HSBC, noted for being a more conservative financial institution, is scaling its strategy and view on blockchain.
