Bitcoin needs a regulated marketplace before ETF can be approved

Date: 05 Jul 2023

Karen Jones

Comments from Swarm Markets’ co-founders about the industry news that has caught our eye.

Swarm adds seven new RWAs as Coinbase sells out twice.

Swarm launched tokenized stocks and bonds back in February, and has now added seven new assets to investors, including Blackrock, Coinbase, Coupang, Intel, Microsoft, Microstrategy and NVIDIA.

The new digital asset issue was a resounding success with major tokens such as Coinbase selling out twice in the past few days. The issuance is fully compliant under an EU regulatory purview, and as one follower noted, somewhat ironic that US-based assets are heading overseas in order to benefit from tokenization.

Since the first launch of tokenized assets, the Swarm user base has expanded by nearly a fifth (17.6%). With some asset issuances selling out, the demand is clear there for investors to be able to hold assets on chain and tradeable 24 hours a day, seven days a week.

Tokenization is drastically expanding the DeFi landscape. By trading tokenized real-world assets, investors can access 24/7 markets that have greater flexibility. The significant growth of users and demand seen in the first quarter is a testament to this and highlights investor demand for a more diverse set of assets available on chain. Comments from Timo Lehes

SEC response to BlackRock BTC ETF will be highly instructive

The attempt by a major established financial institution to launch a bitcoin spot price ETF will be highly instructive of SEC thinking on new crypto financial products.

We’ve seen spot price ETF launch attempts before in the US. None have, so far, succeeded. This makes the BlackRock offering potentially highly influential in establishing who is going to be allowed to play in the space by the SEC.

The possibility here is that the regulator is looking to shake out newer players from the market and let established TradFi institutions take the lead in offering major instruments to investors. Essentially, the regulator thinks it shouldn’t be too much of a worry if an incumbent has such a product, while relative unknowns are a risk not worth allowing.

BlackRock spot ETF offered heightened surveillance and information sharing

The BlackRock spot ETF has some notable facets that might get it over the line, including heightened surveillance and information sharing to prevent fraudulent investment activity.

This looks like an attempt to circumvent concerns from the SEC around market manipulation and price data. But it is difficult to see how BlackRock can get around this while there are no broad, regulated market places in operation for bitcoin. Comments from Philipp Pieper

Successful crypto firms gravitate to EU as US regulatory fight heats up

The US war on crypto is driving successful businesses in the states to establish themselves in Europe.

The clear upshot of the regulatory fight in the US is a shift in strategic goals for US crypto firms now looking to grow a user base in Europe in order to gravitate toward more positive and forward-thinking regulatory environments.

By way of example Swarm chose to base in the EU thanks to the regulatory clarity ahead of the introduction of MiCa. Swarm is a already a regulated counterparty that can set up trading infrastructure for tokenized assets under German financial regulator, BaFin. The US is still far and away from allowing this kind of market development.

French markets regulator called for a globally coordinated framework for DeFi

On Monday the French markets regulator called for a globally coordinated framework for DeFi, underlining the lack of clarity elsewhere and the harm this causes for the market overall. With the complexity of the situation in the US, there is a growing likelihood of a bottleneck of firms wanting to register in Europe and no process has been outlined yet.

Existing large crypto exchanges all have tokenization as part of their strategy for next year and beyond, while Swarm itself can be white labeled into existing platforms. What’s clear is tokenization is reaching critical mass, but with the US failing to push forward with constructive rules, regulatory competitors are going to soak up that demand. Comments from Katie Evans.