Weekly News Roundup – 26 Jul 2021
JP Morgan greenlights wealth management advisors to take crypto fund orders
- JP Morgan has opened the doors to wealth management clients looking to invest in crypto funds, as reported by Business Insider.
- Specifically, orders for Grayscale and Osprey's crypto-based offerings are now on the table for wealth management advisors at the U.S.'s largest bank. The move reportedly opens the gates for clients ranging from retail users on Chase's trading app to the bank's private investment business.
- Notably, these offerings are not themselves crypto investments, but rather trusts based on the performance of crypto assets. JP Morgan is also only authorizing its advisors to process these orders if they come from clients themselves, barring the advisors from presenting crypto-based funds.
- These limitations reflect JP Morgan's longstanding hesitance to endorse investment in crypto. In May, CEO Jamie Dimon told a congressional committee "My own personal advice to people is to stay away from [crypto]."
BNY Mellon follows State Street in backing new crypto trading platform
- BNY Mellon has backed new crypto trading platform called Pure Digital, following in the footsteps of fellow U.S. banking giant State Street, the Financial Times (FT) reported Wednesday.
- The New York-based lender will join a group that is backing the new bank-grade trading platform that's set to go live in the coming days.
- State Street said in April it was providing the infrastructure for Pure Digital.
- BNY Mellon and State Street join four other unidentified firms in backing the new platform, and trading will begin with a bitcoin (BTC) trade "within a week," according to Pure Digital co-founder Campbell Adams, the FT's report said.
- BNY Mellon and State Street have both announced the formation of crypto custody divisions this year. BNY Mellon made the announcement in February, and State Street in June.
Goldman Sachs settling crypto ETPs in Europe
- Goldman Sachs’ prime brokerage unit is clearing and settling cryptocurrency exchange-traded products (ETPs) for some hedge fund clients in Europe, according to two sources with knowledge of the matter.
- The services are currently being offered to a limited number of clients, and the bank has been reviewing the matter internally as it eyes rolling out these services to a wider number of customers, the sources said.
- Goldman Sachs isn’t the only bank making such a move. Bank of America, has also been offering the clearing and settlement of cryptocurrency ETPs for hedge funds, as the adoption of crypto by institutions gathers pace.
- Bank of America has also approved the trading of bitcoin futures for some clients and is clearing cash-settled contracts, CoinDesk reported last week.
- Crypto ETPs are traded on exchange, much like equities and ETFs, and track the performance of an underlying asset. Their popularity has been growing as they allow clients to invest in crypto without having to invest in the underlying digital assets themselves.
- In June, ETC Group launched the first bitcoin ETP in the U.K. There has also been an increasing number of cryptocurrency ETPs listed on Switzerland’s SIX Exchange and on Germany’s Deutsche Boerse.
PayU partners with Celo to bring stablecoin payments to merchants
- PayU is teaming up with mobile-first open-source blockchain payments outfit Celo to launch a new stablecoin option to hundreds of thousands of merchants.
- Prosus-owned PayU is one of the world's biggest online payment service providers, operating in more than 50 markets, supporting over 450,000 merchants and millions of customers across Latin America, Africa, Europe and Asia.
- The firm is now making a purchase of the Celo utility and governance token and partnering with payment infrastructure company First DAG and Celo’s Alliance For Prosperity to let its merchants accept Celo’s stablecoin, cUSD.
- First DAG’s platform will act as a middle layer between the merchant and its bank of choice, so that merchants can seamlessly accept stablecoin payments without integrating additional blockchain components.
- Mario Shiliashki, the CEO of PayU Global Payments Organisation, says: “This move aligns with our vision of a world without financial borders where everyone can prosper.
Uniswap Labs restricts access to certain tokens through its interface
- Uniswap Labs, the development firm behind decentralized crypto exchange Uniswap, announced on Friday that it would cut off access to certain tokens on the protocol it supports through its interface.
- Uniswap Labs cited "the evolving regulatory landscape" in its explanation of cuts. Uniswap Labs is the best-known entity that offers access to the protocol, but it is not the only one (other aggregators in the DeFi world support access to the popular protocol). The news comes on the heels of heightened scrutiny on tokens imitating offerings that are typically regulated at an exchange level, particularly by the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission.
- The list that Uniswap published included more than 100 tokens, as per The Block's estimates. These range from tokenized stocks, mirror stocks, options and derivatives. Examples include Tether Gold, opyn options on ETH at different strikes and expirations, synthetic products on other coins and stocks, tokenized versions of Zelda and Mini Mario Cash, UMA yield dollars, and stocks like "mirror Amazon" and "mirror Tesla."
- SEC Chair Gary Gensler recently cautioned the crypto industry about securities offerings in tokenized form. Gensler said: "It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities."
- However, the announcement noted that the protocol itself remains unchanged: "Importantly, the Uniswap Protocol — unlike the interface — is a set of autonomous, decentralized, and immutable smart contracts. It provides unrestricted access to anyone with an internet connection."
Amazon wants to hire a digital currency and blockchain product lead
- E-commerce giant Amazon appears to enter the digital currency waters, outlining a blockchain-specific role in a new job ad.
- The job spec appears wide-ranging, mentioning "central bank digital currencies" and "distributed ledger" among other catch-all phrases for digital currency applications.
- Specific duties for the would-be hire include working on "Amazon’s Digital Currency and Blockchain strategy and product roadmap."
- In a statement, the company positioned the role as a means for Amazon to "explore" what's happening in the crypto space.
'Vast majority' of institutions will own crypto by 2026 reports Fidelity
- The number of institutional investors—wealth managers, foundations, etc.—that own crypto assets has grown dramatically, and will continue to do so in the future, according to a new survey from Fidelity Digital Assets.
- According to the survey, 70% of institutional investors intend to buy or invest in digital assets in the near future, with over 90% of them planning to do so by 2026.
- While the crypto industry churns out optimistic surveys on a regular basis, the Fidelity findings are worth noting given the company's size and influence in the broader financial markets. The findings are also a bit of bright news for the industry at a time when markets have been mired in a months-long slump.
- Tom Jessop, the president of Fidelity Digital Assets, attributes the bullish findings to a "growing sophistication" toward crypto among professional money managers, and new attitudes borne of recent crises.
- The survey, which was conducted blindly, sought the views of more than 1,100 institutional investors, roughly divided across the U.S., Europe and Asia. It defined crypto ownership as owning digital assets directly or investing in companies in the crypto field.
- Another notable feature of the survey was that Asian investors currently have considerably more exposure to crypto than other parts of the world, but that those in the U.S. and Europe are catching up rapidly.
- There is still some skepticism toward crypto among institutions, however. Investors cited price volatility as the prime deterrent to acquiring crypto, but also expressed concern over the risk of market manipulation and the lack of fundamentals to gauge value.
Silvergate's growth continues thanks to SEN, but it's looking to Diem for future expansion
- Silvergate posted another round of strong quarterly results on Tuesday.
- The transfer service generated more than $239 billion in volume during the second quarter of 2021, equating to a 44% increase from Q1 2021. That also drove average deposits from digital currency customers to new heights, according to Lane. Average deposits jumped from $3.5 billion to $9.9 billion during the most recent quarter.
- Though SEN is its main driver, it also appears to be an overall good time to be a crypto-friendly bank. Signature Bank also posted its earnings on Tuesday, disclosing it now has nearly $20 billion in deposits coming from the digital assets industry. Crypto drove about 50% of its quarter-to-quarter growth.
- Silvergate's digital currency fee income rose 59% since last quarter to $11.3 million. This can be attributed to increased volume on the SEN and related cash management for foreign exchange services from digital asset customers, according to the bank.
- Despite Silvergate's interest in building out so-called "stablecoin infrastructure," transaction fees for minting and burning stablecoins didn't play a role in the growth.
- "Transaction fees for minting and burning stablecoins were immaterial this quarter," said CFO Antonio Martino. "But as Alan [Lane] mentioned, we are well-positioned to benefit from the growing use cases for stablecoins over time."
- Silvergate is hoping one such avenue is its deal with Diem, the stablecoin project out of Facebook. The project left Switzerland for the U.S. in May of this year, announcing it would work with Silvergate to issue its long-awaited USD-backed token.