Will the rebound of Bitcoin prompt large institutions to take action, and will the regulatory framework for cryptocurrency assets become a political achievement of the election?

Will the rise of Bitcoin incentivize institutional action and lead to political policies for regulating cryptocurrency assets after the election?

Author | Goro Mouri

Major Institutions Are Launching Bitcoin ETFs

Virtual currency fund management company Valkyrie submitted an application for an exchange-traded fund (ETF) based on physical bitcoin trading to the US 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 code BRRR.

This is another giant company to apply for ETFs after a series of Bitcoin ETF applications from giants such as BlackRock, WisdomTree, and Invesco this year.

Valkyrie has been trying to launch Bitcoin futures ETF business. The company launched its second US Bitcoin futures ETF in October 2021, the Valkyrie Bitcoin Strategy ETF (BTF), and launched VBB in December of the same year. However, VBB was liquidated in October 2022. Valkyrie also operates the Valkyrie Bitcoin Miner ETF (WGMI), which tracks the stock prices of companies that earn or benefit from Bitcoin mining. On May 16, it also submitted a 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. BlackRock has been the longest in the cryptocurrency industry to try spot Bitcoin ETFs. From 2017 to 2021, BlackRock has been trying for spot Bitcoin ETFs, but it has never succeeded. On June 15 of this year, last week, BlackRock submitted an application to list Bitcoin spot ETFs as trust funds on Nasdaq. WisdomTree and Invesco also submitted similar applications on June 20. There are also unconfirmed reports that Fidelity has submitted an application for a Bitcoin spot ETF.

Not only the above giants, 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 of Valkyrie Investment Company, said in the Hashing It Out podcast in March that he believes it will be possible to establish a Bitcoin ETF after the next election or through legislative action.

Policy Guidance Confused

However, the evaluation of cryptocurrency assets by the US president is extremely unstable. The executive order No. 14067 signed by Biden in March 2022 “ensured the responsible development of digital assets” and instructed the government to study the impact of these new assets. The presidential order

However, just a year later, the Biden administration completely negated the value of crypto assets. The “President’s Economic Report” released by the US government in March 2023 showed that only digital dollars could be used.

However, the winds have started to change again recently. It seems that the US Securities and Exchange Commission (SEC) is waving a big stick and cracking down on all exchanges and related companies.

On June 21, at the semi-annual policy hearing of the US House Financial Services Committee, Federal Reserve Chairman Powell said that the Fed believes that stablecoins are a “currency” and hopes to play a “strong” role in supervision.

This issue was raised by Maxine Waters, a member of the US House Financial Services Committee, when seeking Chairman Powell’s opinion on the stablecoin bill.

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

After the Storm, Clearing Obstacles for Traditional Institutions

This serious policy trend is unclear, and the market speculates that the government is clearing obstacles for traditional institutions. In addition to the above-mentioned movements in the crypto industry, Liande learned that many traditional financial institutions have also entered the application channel. Moreover, these traditional institutions’ layout of 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, quietly launched this week.

These dynamics are all taken after the SEC issued a ban to institutions such as Coinbase and Binance. Therefore, there are various opinions in the market. More supporters of the crypto industry believe that the Biden administration will adopt more positive policies before the US election, re-allocate the North American crypto market, drive away non-local giants, and make way for better-controlled traditional financial institutions.

The EU has started a crazy rush, especially in the German market. Deutsche Bank announced on Wednesday, June 20th that it has applied for a digital asset custody license from German regulators.

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