The emergence of a new asset is a once-in-a-life-lifetime
opportunity for investors. After the first meltdown, crypto is hot again.
TradFi has big plans for it.
The unexpectedly swift approval of Ethereum ETFs by the SEC,
marks a new wave of institutional adoption of digital assets. It amplified the
effect on the market from the BTC rally and debut of its ETF, launched by
TradFi heavyweights like Grayscale and Blackrock.
Renewed optimism is fostering increased cross-flows between
institutions and the digital asset sector. BNY Mellon is expanding its digital
assets team. State Street has launched new ETFs that provide exposure to
digital assets, in partnership with Galaxy Digital. Franklin Templeton is
considering launching a new crypto fund targeting tokens beyond Bitcoin and
Ethereum.
Franklin Templeton Weighs New Crypto Fund Investing in Tokens Beyond Bitcoin, Ether: Report https://t.co/I8xVuqEplm via @coindesk
— Siciliano38 (@Sicilliano38) June 22, 2024
Paradoxically, a shift in mainstream acceptance of crypto as
a legitimate asset class has been propelled by institutions that were supposed
to be replaced by innovations stemming from the crypto industry. If ‘don’t fix
what isn’t broken’ were a case for crypto, the flood of VC would continue its
flow, but it has altered significantly.
Annual VC investments fell from $14.6 billion in 2021 to
$9.6 billion in 2022. It plummeted even further to $1.6 billion in 2023, an 83%
drop YoY. So what are the new directions?
CeFi Re-Focusing
In Q1 2024 the crypto industry showed signs of recovery.
Total VC funding surged by 40% to Q4 2023, reaching $2.4 billion. For the first
time since 2022, it exceeded $1 billion for two straight months. In contrast,
crypto CeFi funding does not fall in the same bucket. In total, startups
attracted $232m, a 58% YoY drop to Q1 ‘23 ($553 million) and 59% less than in
Q4 ‘23 ($572.21m).
Historically, VC flagship projects were indicators of market
trends. Funding patterns indicate that crypto CeFi is undergoing a refocus. In
Q1 2024, investors funded 13 types of projects, a sharp decline from 31 in 2023
and 54 in 2022.
In 2022 and 2023, CeFi funding diversified across multiple
areas, covering widely recognized categories like social trading and extending
into analytics
Analytics
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Read this Term, taxes, and accounting.
In 2024 funding was curtailed to digital asset management,
exchanges, trading, liquidity, payments, and custody. Promising or hype-wheeled
projects are no longer prioritized for the A-list.
In other words, the center of gravity for venture capital is
shifting towards projects that integrate crypto-native financial environments
with TradFi frameworks that have been shaped by the financial industry’s
experiences with crashes, bubbles, and over-promises.
Who are the survivors in crypto-drought?
Clearing, Custody, and Regulatory-compliance
Securitize raised $47m in a strategic round, involving
BlackRock, to further develop a regulatory-compliant platform for issuing and
trading digital asset securities.
In Q1 2024, ClearToken attracted $10m in seed round. It
intends to be fully regulated in the UK and has initiated the process of
obtaining clearing house
Clearing House
A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e
A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e
Read this Term recognition from the Bank of England. Seed-round was
co-led by FlowTraders, a crypto-trading firm with strong ties to TradFi.
Though the details of funding for FireBlocks, BitGo, HQLAX,
and EDX Markets are undisclosed, among their investors are Haun Ventures, HSBC,
BNP Paribas Securities, BNY Mellon, and other prominent TradFi veterans.
#Binance teams up with @Mastercard to launch a new prepaid card in Argentina, bringing crypto payments into the region 🇦🇷
Users can enjoy:
🔸 Making purchases in crypto (#BTC, #BNB & more)
🔸 Up to 8% in crypto cashback
🔸 Zero fees on ATM withdrawals
— Binance (@binance) August 4, 2022
This trend is reinforced by the ongoing expansion of
traditional finance players into the digital assets realm. PayPal is preparing
to launch its own on-chain stablecoin, while Mastercard begins its foray into
peer-to-peer crypto payments in Argentina, Brazil, Chile, France, Guatemala,
Mexico, Panama, Paraguay, Portugal, Spain, Switzerland, and Uruguay.
Bridging the Trust Gap
The greenlight for crypto-related vehicles marked two strong
trends, whetting institutions' appetite to embrace crypto for the long term.
Firstly, crypto-based ETFs became the fastest-growing ETF
sector in history. While it generally takes 6-12 months to measure
institutional demand the current trend showed definite interest from the
traditional finance community.
#Bitcoin ETFs were (finally) just approved for trading tomorrow, after ten years. Maybe the politics in Congress around cryptocurrency will get better once they realize it's backstopping pension funds and retirement accounts.
— Edward Snowden (@Snowden) January 10, 2024
Secondly, and more importantly, the SEC approval of the BTC
and ETH ETFs has boosted the legitimacy of digital assets, presenting a
once-in-a- generation opportunity of a new asset class to investors. Some argue
that FX derivatives over 20 years ago were the last innovation market witnessed
in this space.
Market participants have learned a painful lesson during FTX
collapse and now favor unbundled services with qualified custody to better
manage counterparty risks.
The crypto market structure is quickly evolving to
match traditional finance with dedicated execution, clearing, and settlement
services emerging to serve the growing number of players and assets in the
space. Rebundling these services through thoughtful collaboration and
integrations will bring capital and operational efficiencies to the digital asset
industry.
The emergence of a new asset is a once-in-a-life-lifetime
opportunity for investors. After the first meltdown, crypto is hot again.
TradFi has big plans for it.
The unexpectedly swift approval of Ethereum ETFs by the SEC,
marks a new wave of institutional adoption of digital assets. It amplified the
effect on the market from the BTC rally and debut of its ETF, launched by
TradFi heavyweights like Grayscale and Blackrock.
Renewed optimism is fostering increased cross-flows between
institutions and the digital asset sector. BNY Mellon is expanding its digital
assets team. State Street has launched new ETFs that provide exposure to
digital assets, in partnership with Galaxy Digital. Franklin Templeton is
considering launching a new crypto fund targeting tokens beyond Bitcoin and
Ethereum.
Franklin Templeton Weighs New Crypto Fund Investing in Tokens Beyond Bitcoin, Ether: Report https://t.co/I8xVuqEplm via @coindesk
— Siciliano38 (@Sicilliano38) June 22, 2024
Paradoxically, a shift in mainstream acceptance of crypto as
a legitimate asset class has been propelled by institutions that were supposed
to be replaced by innovations stemming from the crypto industry. If ‘don’t fix
what isn’t broken’ were a case for crypto, the flood of VC would continue its
flow, but it has altered significantly.
Annual VC investments fell from $14.6 billion in 2021 to
$9.6 billion in 2022. It plummeted even further to $1.6 billion in 2023, an 83%
drop YoY. So what are the new directions?
CeFi Re-Focusing
In Q1 2024 the crypto industry showed signs of recovery.
Total VC funding surged by 40% to Q4 2023, reaching $2.4 billion. For the first
time since 2022, it exceeded $1 billion for two straight months. In contrast,
crypto CeFi funding does not fall in the same bucket. In total, startups
attracted $232m, a 58% YoY drop to Q1 ‘23 ($553 million) and 59% less than in
Q4 ‘23 ($572.21m).
Historically, VC flagship projects were indicators of market
trends. Funding patterns indicate that crypto CeFi is undergoing a refocus. In
Q1 2024, investors funded 13 types of projects, a sharp decline from 31 in 2023
and 54 in 2022.
In 2022 and 2023, CeFi funding diversified across multiple
areas, covering widely recognized categories like social trading and extending
into analytics
Analytics
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Read this Term, taxes, and accounting.
In 2024 funding was curtailed to digital asset management,
exchanges, trading, liquidity, payments, and custody. Promising or hype-wheeled
projects are no longer prioritized for the A-list.
In other words, the center of gravity for venture capital is
shifting towards projects that integrate crypto-native financial environments
with TradFi frameworks that have been shaped by the financial industry’s
experiences with crashes, bubbles, and over-promises.
Who are the survivors in crypto-drought?
Clearing, Custody, and Regulatory-compliance
Securitize raised $47m in a strategic round, involving
BlackRock, to further develop a regulatory-compliant platform for issuing and
trading digital asset securities.
In Q1 2024, ClearToken attracted $10m in seed round. It
intends to be fully regulated in the UK and has initiated the process of
obtaining clearing house
Clearing House
A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e
A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e
Read this Term recognition from the Bank of England. Seed-round was
co-led by FlowTraders, a crypto-trading firm with strong ties to TradFi.
Though the details of funding for FireBlocks, BitGo, HQLAX,
and EDX Markets are undisclosed, among their investors are Haun Ventures, HSBC,
BNP Paribas Securities, BNY Mellon, and other prominent TradFi veterans.
#Binance teams up with @Mastercard to launch a new prepaid card in Argentina, bringing crypto payments into the region 🇦🇷
Users can enjoy:
🔸 Making purchases in crypto (#BTC, #BNB & more)
🔸 Up to 8% in crypto cashback
🔸 Zero fees on ATM withdrawals
— Binance (@binance) August 4, 2022
This trend is reinforced by the ongoing expansion of
traditional finance players into the digital assets realm. PayPal is preparing
to launch its own on-chain stablecoin, while Mastercard begins its foray into
peer-to-peer crypto payments in Argentina, Brazil, Chile, France, Guatemala,
Mexico, Panama, Paraguay, Portugal, Spain, Switzerland, and Uruguay.
Bridging the Trust Gap
The greenlight for crypto-related vehicles marked two strong
trends, whetting institutions' appetite to embrace crypto for the long term.
Firstly, crypto-based ETFs became the fastest-growing ETF
sector in history. While it generally takes 6-12 months to measure
institutional demand the current trend showed definite interest from the
traditional finance community.
#Bitcoin ETFs were (finally) just approved for trading tomorrow, after ten years. Maybe the politics in Congress around cryptocurrency will get better once they realize it's backstopping pension funds and retirement accounts.
— Edward Snowden (@Snowden) January 10, 2024
Secondly, and more importantly, the SEC approval of the BTC
and ETH ETFs has boosted the legitimacy of digital assets, presenting a
once-in-a- generation opportunity of a new asset class to investors. Some argue
that FX derivatives over 20 years ago were the last innovation market witnessed
in this space.
Market participants have learned a painful lesson during FTX
collapse and now favor unbundled services with qualified custody to better
manage counterparty risks.
The crypto market structure is quickly evolving to
match traditional finance with dedicated execution, clearing, and settlement
services emerging to serve the growing number of players and assets in the
space. Rebundling these services through thoughtful collaboration and
integrations will bring capital and operational efficiencies to the digital asset
industry.
