As major institutions take action to boost Bitcoin’s rebound, will the regulatory framework for crypto assets become a political achievement project in the election?

Author: Goro Mori

Major institutions have launched Bitcoin ETFs

Virtual currency fund management company Valkyrie submitted an application for an exchange-traded fund (ETF) based on physical Bitcoin transactions to the U.S. Securities and Exchange Commission (SEC) on June 21. The company stated in the application that it will seek to list its fund on Nasdaq under the symbol BRRR.

This is another giant company applying for an ETF this year, following a series of Bitcoin ETF applications from BlackRock, WisdomTree and Invesco.

Valkyrie has been trying its hand at the Bitcoin futures ETF business. The company launched its second U.S. Bitcoin futures ETF, the Valkyrie Bitcoin Strategy ETF (BTF), in October 2021, and VBB in December of the same year. However, VBB was liquidated in October 2022. Valkyrie also operates the Valkyrie Bitcoin Miners ETF (WGMI), which tracks the stock prices of companies that earn or benefit from Bitcoin mining. On May 16, it filed another Bitcoin futures ETF, the Valkyrie Bitcoin Futures Leveraged Strategy ETF (BTFD).

Valkyrie's actions appear to be inspired by the recent activities of its competitors. The crypto community's longest-running attempt at a Bitcoin ETF is BlackRock, which has been working on a spot Bitcoin ETF from 2017 to 2021, but all efforts have come to nothing. On June 15 of this year, that is, last week, BlackRock submitted an application to list a Bitcoin spot ETF as a trust fund on the Nasdaq. WisdomTree and Invesco also submitted similar applications on June 20. There are also unconfirmed reports that Fidelity has also submitted an application for a Bitcoin spot ETF.

Not only the giants mentioned above, but also many institutions including Grayscale, VanEck, ProShares, Invesco, Valkyrie and Cathie Wood's Ark Investment have repeatedly "hit a wall" and were wiped out in 2021.

Stephen McClurg, chief investment officer at Valkyrie Investments, said on the Hashing It Out podcast in March that he thought a bitcoin ETF would be possible after the next election or through legislative action.

Confused policy direction

However, the US President's evaluation of crypto assets is extremely volatile. Executive Order No. 14067 signed by Biden in March 2022 "Ensuring the Responsible Development of Digital Assets" instructs the government to study the impact of these new assets.

However, just one year later, the Biden administration completely denied the value of crypto assets, and the "President's Economic Report" document released by the US government in March 2023 showed that only digital dollars could be used.

However, the wind has started to change recently. It seems that the US Securities and Exchange Commission (SEC) is wielding a big stick wildly, hitting all exchanges and related companies.

On June 21, at the semi-annual policy hearing of the U.S. House Financial Services Committee, Federal Reserve Chairman Powell stated that the Federal Reserve considers stablecoins to be a "currency" and hopes to play a "strong" role in supervision.

The question was raised by Maxine Waters, a member of the U.S. House of Representatives Financial Services Committee, when she sought Chairman Powell's opinion on the stablecoin bill.

Currently, the bill is sponsored by Republicans and, if passed, will become the first virtual currency legislation in the United States. But Powell believes that the emergence of a large number of state-level stablecoins would be a huge mistake. SEC Chairman Gensler said at a hearing of the Senate Banking Committee last year that stablecoins may need to be registered and regulated. He also said on multiple occasions that all cryptocurrencies except Bitcoin are securities.

After the storm, obstacles may be cleared for traditional institutions

This serious policy direction is unclear, and the market speculates that the government is clearing obstacles for traditional institutions. In addition to the above-mentioned crypto industry movements, ChainDD has learned that many traditional financial institutions have also entered the application channel for the above-mentioned Bitcoin ETF application. Moreover, the layout of these traditional institutions on cryptocurrencies is not limited to the application of spot Bitcoin ETFs. EDX Markets, a cryptocurrency exchange invested by institutions such as Charles Schwab, Citadel Securities and Fidelity Digital Assets, also quietly launched this week.

These developments were taken after the SEC issued bans on institutions such as Coinbase and Binance, so there are different opinions in the market. More supporters of the crypto industry believe that the Biden administration will adopt more proactive policies before the US election to redistribute the North American crypto market, drive out non-local giants, and make way for better-controlled traditional financial institutions.

The European Union has begun to make a crazy move, especially in the German market. Deutsche Bank said on Wednesday, June 20, that it had applied to German regulators for a digital asset custody license.