Appold Market Watch - Week ending 24 January 2025

Market Update & Industry News - Week ending 24 January 2025

🔷 U.S. President Donald Trump signed an executive order to establish a working group tasked with creating regulatory frameworks for digital assets and exploring the development of a national digital asset stockpile. The initiative includes Treasury and SEC leadership and promotes digital asset adoption while ensuring compliance within the U.S. financial system.

Appold view: This is a step in the right direction for the US blockchain industry as it now jostles to be a sector leader, as well as the industry as a whole. However, having personal interests in the $Trump coin issuance before his inauguration does leave a bitter taste in the view of many.

🔷 Prominent Silicon Valley venture capital firm Andreessen Horowitz (a16z) announced plans to close its London office and refocus on the US market, scaling back its previously ambitious expansion into the UK. Its London branch, established in 2023, was a cornerstone of its efforts to develop a substantial presence in Europe. 

Appold view: This highlights how the industry rapidly evolves. Based on US politics, they probably had little strategic choice as they sought potential new opportunities and to be seen supporting a new US government direction. The reported full closure of the London office is surprising; a scaled presence with European access and influence would have been a better option in our view. That said, the UK regulatory environment in this sector remains too slow to evolve. The situation now requires us to consider US expansion options to capture those increasing market opportunities. 

🔷 The U.S. Securities and Exchange Commission revoked Staff Accounting Bulletin 121 (SAB 121), which required companies to classify client-held digital assets as liabilities. This decision removes a barrier for Wall Street banks to adopt digital asset custody and aligns with recent efforts to promote digital asset integration in traditional financial institutions while reducing compliance costs for banks.

Appold view: Revoking this alleviates a key compliance burden, reducing costs and complexity for institutions exploring digital asset custody services. Custody services are now a significant growth area for banks entering this space.

🔷 Digital asset exchange OKX secured the first Markets in Crypto Assets (MiCA) regulation pre-authorisation for a Virtual Financial Assets (VFA) exchange. Paving the way to offer regulated digital asset services to over 400 million Europeans via its Malta hub.

Appold view: As the first global exchange to secure this, OKX positions itself as a leading venue in compliant, regulated digital services across the EU. Other Exchanges are in active pursuit, and more approvals are in the pipeline.

#Marketwatch #Blockchain #Investments