Market Update & Industry News - Week ending 12 January 2023

🔷 The U.S. Securities and Exchange Commission (SEC) approved the first US-listed spot exchange-traded fund (ETF) to track Bitcoin. On Wednesday, the SEC approved 11 applications for spot Bitcoin ETFs from global investment firms such as BlackRock, Invesco Ltd., and Fidelity International allowing their investors more exposure to Bitcoin alongside traditional portfolios.

Appold view: Enough has been said about this welcome move from the SEC. Now we observe what the real demand is like, particularly from the institutional sector in regards to easier portfolio allocation to the sector. Will there be a spot Ethereum ETF soon? As for the other blockchain protocols, demand will be more of an issue at this stage.

🔷 The issuer of the second largest stablecoin in the world, Circle Internet Financial, filed for an IPO. The issuers of USDC announced it had submitted a draft registration statement on Form S-1 for a proposed IPO of its equity securities, post SEC approval.

Appold view: The company had previously planned to go public via a Special Purpose Acquisition Company (SPAC) at a $9bn valuation, but that did not complete. As the second largest USD-pegged Stablecoin with a market cap of approximately $25bn, against Tether (USDT) at $94bn, the company needs to address an overall falling market share over the past two years.

🔷 European alternative asset manager, CoinShares, announced that it had exercised its option to acquire Valkyrie Funds, following the approval and listing of their spot Bitcoin ETF. The acquisition of approximately $110m of managed assets will transfer under the acquisition, which is pending further due diligence and approvals.

Appold view: The Europeans take advantage of SEC changes. Stockholm-listed Coinshares was one of the early entrants into digital asset exchange-traded products, currently managing around $4.5bn in AUM. This appears to be a strategic play to expand its footprint into US markets. Its share price finished down 3.4% at the market close.

🔷 Crypto exchange, Bitfinex, announced restrictions to some of its UK customers, starting from the 16th of January. Bitfinex will no longer allow some of its UK account holders to open new positions, make new deposits or increase their margin trading. Following a recent crypto promotion regulatory change from the FCA, Bitfinex was placed on the FCA’s unauthorised firm list for allegedly breaching the new guidelines.

Appold view: Disappointing. The FCA rules were clear and firms had time to prepare and conform, of which many have. In our line of work we observe many weaknesses in processes, policies and procedures within this industry but to not address this could be deemed a weakness in corporate strategy and operational oversight, which in turn leads to loss of business and reputational damage. 

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