TradFi is Taking Over the Crypto Market
Right now, we're witnessing a power shift in the American crypto market. Titans of traditional finance are seizing the positions once occupied by pioneers of the digital realm.
The U.S. Securities and Exchange Commission (SEC) has been cracking down on the major players in the cryptocurrency industry. Numerous large-scale platforms have been compelled to either wind down their operations in the U.S. or limit the access of their American users. But, as the saying goes, nature abhors a vacuum.
Previously, we've reported on the emergence of new entities stepping into the shoes of bankrupt crypto banks, entities that hadn't previously engaged in digital transactions. A similar trend is occurring with crypto exchanges. Traditional Finance or 'TradFi', fills the gap created after young market players like Binance and Coinbase have been compelled to curb their expansionist ambitions under regulatory pressures.
So, what's been happening in recent days?
- Citadel, Charles Schwab, and Fidelity have all joined forces to launch a new cryptocurrency exchange known as EDX Markets. Despite CEO Jamil Nazarali's claims that this is a groundbreaking platform maintaining the high safety and transparency standards of traditional stock exchanges, it essentially operates like any standard cryptocurrency platform. However, it only caters to limited trading pairs, involving BTC, ETH, BTH, and LTC in conjunction with fiat currencies. Primarily targeting large-scale traders, the exchange has been backed by institutional investors, including the likes of Miami International Holdings.
- Blackrock has filed an application to the SEC for a Bitcoin ETF. Some market analysts consider this move provocative, while others view it as a strategy to push popular crypto exchanges out of the market.
- Deutsche Bank is ready to start providing cryptocurrency storage services. Its founders have already submitted an application for an official license to the German regulator. Meanwhile, the German securities processor Deutsche WertpapierService Bank, which has close ties to Deutsche Bank, has created a platform known as wpNex for retail crypto clients.
- The global exchange fund WisdomTree, headquartered in New York with a market capitalization exceeding $87 billion, is also vying for a Bitcoin ETF.
- Invesco, an investment management company overseeing assets worth an impressive $1.5 trillion, has refiled an application to establish a Bitcoin exchange fund, this time in partnership with Galaxy Digital.
Is Gensler not as much of a crypto-phobe as we thought?
Isn't it too many coincidences in such a short period? It seems we're dealing with a well-organized mass takeover. The actions taken by the SEC in recent months seem to be the preparatory steps for an onslaught that has now been launched. Gary Gensler, it would seem, knew precisely for whom he was making room in the crypto market. Now, the reasons behind the need to remove the most influential digital players in the U.S. have become clear.
What's most noteworthy in this scenario is the involvement of a significant player like Blackrock. The importance is not solely due to their control over a substantial volume of institutional capital (over $10 trillion), but because the digital asset management company, Grayscale, has been embroiled in legal proceedings with the SEC for nearly a year now. The Commission denied their Bitcoin ETF application back in May 2022, citing BTC's commodity status as the rationale. Therefore, should we witness Gensler endorsing Blackrock's license, it will become evident that representatives of traditional financial firms, overseen by the U.S. government, have been preparing for a long time to break into the crypto market.
