The Convergence of Traditional Finance and Crypto

06.22.2023

Market Overview by Josh Burke, DeFi Trader

Crypto Roundup

Crypto markets are rallying as institutional investors show increasing interest in digital assets. Notable tradfi firms like BlackRock and WisdomTree have filed for spot Bitcoin ETFs, signaling their intention to enter the digital asset space. Additionally, Deutsche Bank is seeking a digital asset custody license, highlighting the industry’s recognition of the need for secure storage solutions.

In other news, a new institutional crypto exchange has been launched with the backing of prominent names such as Fidelity, Schwab, and Citadel. This development signifies the growing involvement of established financial institutions in the cryptocurrency sector, further validating its potential. Traditional banks are also embracing blockchain technology, with Bank of China International (BOCI) and the European Investment Bank (EIB) issuing on-chain bonds for transparency and efficiency.

Furthermore, Cardano has deployed its latest node upgrade, enhancing its blockchain’s capabilities. The European Investment Bank issued a SEK 1B ($93M) green bond on the so|bond blockchain platform, while Binance Coin (BNB) released a Layer 2 EVM Testnet based on Optimism for faster and cheaper transactions. Ethereum developers are considering increasing the validator limit to address wait times, and Japanese exchanges are advocating for regulatory ease on margin trading restrictions.

On the regulatory landscape, the UK’s House of Lords passed the Financial Services and Markets Bill, potentially recognizing cryptocurrency as a regulated activity and stablecoins as legal payment methods. Solana’s NFT activity has doubled, averaging 60,000 daily transactions in May. 

NFT Market News by Gerard Barile, Principal  

Nike has sparked anticipation in the gaming community by teasing an upcoming NFT sneaker hunt called “Airphoria” in the popular online game Fortnite. The short promotional video shared across Nike’s social media channels featured the logos of Fortnite, Nike’s Air Max sneakers, and its Web3 platform, .Swoosh, alongside Epic Games’ Unreal Engine logo. The collaboration presents a significant opportunity for Nike to introduce Web3 technology to traditional gamers, given Fortnite’s vast player base of over 242.9 million active users in the past 30 days. While specific details about the sneaker hunt and the integration of NFTs remain undisclosed, speculation within the NFT community suggests that Nike may have utilized Fortnite Creative 2.0 to create an NFT-related game​.

Nike’s .Swoosh NFT unit has been actively exploring integration within the gaming space. Earlier in June, it was announced that Nike’s NFTs would be integrated into games developed by EA Sports, known for popular franchises like FIFA​. However, the specific EA Sports games featuring Nike NFTs have yet to be confirmed​. The involvement of .Swoosh in the Airphoria event, coupled with Epic Games’ positive stance on NFT gaming, indicates the potential integration of NFTs in the collaboration. As fans await further details, Nike’s foray into Fortnite opens up possibilities for the convergence of gaming and digital collectibles.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• As noted above, BlackRock filed paperwork Thursday afternoon with the U.S. SEC for the formation of a spot bitcoin ETF with assets custodied by Coinbase. The SEC has notably rejected other fund management company attempts at opening a spot bitcoin ETF, including those from Grayscale, VanEck, WisdomTree, and many others. BlackRock, however, may be feeling more confident given only a single BlackRock filing has been denied across its 576 applications historically.
• Digital payments firm Strike is expanding its Lightning Network-based cross-border payments service to Mexico, the largest market for remittances from the U.S., which accounts for around 95% of total remittances received by Mexicans from abroad.
• As noted above, EDX Markets, a crypto exchange aimed at institutional investors, launched Tuesday after a litany of finance behemoths announced its creation back in September 2022. The exchange’s major backers include Citadel Securities, Fidelity Digital Assets, Virtu Financial, Charles Schwab, Sequoia and Paradigm. 

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. We believe the legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• The Hong Kong Monetary Authority (HKMA) is encouraging banking giants to accept crypto exchanges as clients, the Financial Times reported on June 15. While no restrictions hold Hong Kong banks back from accepting crypto clients, banks are wary of drawing regulatory scrutiny. Under the circumstances, HKMA is trying to motivate banks to take on crypto clients to further its aim of turning Hong Kong into a global crypto hub.
• A U.S. district judge ordered Binance’s American exchange to keep all assets in the U.S. and limit spending to expenses needed for regular operations. The order falls short of the Securities and Exchange Commission’s original request for a broad asset freeze. Earlier this week, a federal court judge questioned what evidence the agency had to support claims that customer funds were leaving the country. Binance.US had said that a broad asset freeze would cripple its business.
• United States senator Cynthia Lummis said that the “fight is far from over” as she re-dedicated herself to pushing for a positive regulatory framework for crypto over the weekend. The Republican from Wyoming reassured followers on Twitter that she is still working on proposed regulation, a revamped version of which had been expected to circulate in April. Her bill, co-sponsored by New York Democrat Kirsten Gillibrand, was first put forward last year, but is set to do the rounds again this year after some revisions. But the proposed legislation, known as the Responsible Financial Innovation Act, comes at a time of increasingly tense relations between regulators and crypto firms in the U.S.

Disclaimer: The views and opinions expressed herein are those of the author alone and do not represent Wave Digital Assets LLC or any of its affiliates (collectively, “Wave”). The author and/or Wave may hold investment positions in some of the assets discussed. Nothing in this material or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. This material is not intended to provide accounting, legal or tax advice. Certain information contained herein has been obtained from third-party sources, has not been independently verified and should not be viewed as being endorsed by Wave. Such information is believed to be accurate as of the date of its publication. No representation or warranty is made, express or implied, with respect to the accuracy or completeness, and readers should not place undue reliance on the information contained or linked to herein. Certain statements in this material provide predictions and there is no guarantee that such predictions are currently accurate or will ultimately be realized. Past performance is not indicative of future results.

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