TradFi is Warming Up to Crypto

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By A D

TradFIs, known for their dominance in traditional financial services, have recognised the tremendous potential and disruptive power of cryptocurrencies. By launching their own dedicated exchanges and backing crypto firms, they are signaling their intent to actively participate in the digital assets ecosystem.

Deutsche Bank’s pursuit of crypto custody services

Deutsche Bank, Germany’s largest bank with over $1.4 trillion in total assets and millions of customers, has taken significant steps towards embracing digital assets. The bank has submitted an application to the Federal Financial Supervisory Authority (BaFin) seeking regulatory permission to establish a custody service for digital assets, including cryptocurrencies.

headquarters of the Deutsche Bank in Frankfurt, Germany,
The headquarters of Deutsche Bank in Germany. Image Source

This strategic move aligns with Deutsche Bank’s objective of increasing fee income and follows the lead of its asset management arm, DWS Group. As part of its broader digital asset strategy, DWS Group, the bank’s asset management arm, has expressed its intention to invest in two cryptocurrency firms: Deutsche Digital Assets (DDA) and Tradias.

Deutsche Bank’s aspirations in the digital asset domain align with the developments within the industry in Germany. DZ Bank, another prominent financial institution in the country and the central institution of the Volksbanken Raiffeisenbanken Cooperative Financial Network, has already made progress in the field of digital asset custody. In collaboration with Swiss firm Metaco and the orchestration platform Harmonize, DZ Bank began offering crypto custody services to institutional clients in February of this year.

TP ICAP’s Fusion Crypto marketplace

The Fusion Digital Assets marketplace for spot crypto trading was recently launched by TP ICAP, the world’s largest interdealer-broker. The platform is designed to offer institutional investors an infrastructure that is more familiar to them compared to vertically-integrated crypto exchanges that combine various businesses, potentially leading to conflicts of interest.

Within the Fusion Digital Assets marketplace, TP ICAP’s Fusion electronic trading platform serves as the non-custodial crypto exchange, providing institutional investors with a recognisable interface. Client assets are securely held and settled by Fidelity’s Digital Assets SM, acting as the custodian. Additionally, the marketplace aggregates liquidity from multiple sources, including Flow Traders and XBTO Global. In the future, TP ICAP plans to introduce more custodians to expand the available options for investors.

The inaugural trade on the Fusion Digital Assets marketplace involved a bitcoin-U.S. dollar (XBTUSD) pair. Presently, the platform supports trading in bitcoin and ether (ETH) against the USD. However, TP ICAP remains open to expanding the range of supported assets based on client demand, ensuring flexibility to accommodate evolving market preferences.

TP ICAP’s Digital Assets arm was established in 2019, and recently, the company announced its intention to enable clients to trade crypto-linked exchange-traded products (ETPs). In December, TP ICAP obtained a crypto license in the United Kingdom after registering with the Financial Conduct Authority (FCA). This regulatory approval allows traders in the region to access the new Fusion Digital Assets marketplace. TP ICAP aims to expand its supported regions as further regulatory approvals are obtained.

Valkyrie Bitcoin Fund (BRRR) filing

Following Blackrock, the largest asset management firm globally, filing for a spot Bitcoin trading exchange-traded fund (ETF), major financial institutions have shown a heightened interest in the crypto market. Notably, Citadel Securities, Charles Schwab, and Fidelity Digital Assets have backed the launch of EDX Markets, a crypto exchange focusing exclusively on SEC-approved cryptocurrencies.

Read: BlackRock Files Application for Bitcoin ETF

The US Securities and Exchange Commission (SEC) has now received a filing from Valkyrie Investments, a financial services firm, for the Valkyrie Bitcoin Fund. This initiative aims to provide institutional investors with exposure to Bitcoin and bridge the gap between the traditional finance sector and the world of cryptocurrencies.

Read: Valkyrie brings Leveraged Bitcoin Investment with BTFD ETF

The SEC’s lawsuits against prominent players like Binance and Coinbase have prompted competing exchanges such as Robinhood, eToro, and Bakkt to delist tokens considered securities by the regulatory body. Gemini and Genesis were sued by the SEC earlier this year for alleged mishandling of customer funds, while Coinbase received a Wells notice signaling an impending lawsuit.

EDX Markets, a crypto exchange tailored for institutional investors, has recently launched with the support of Citadel Securities, Charles Schwab, and Fidelity Digital Assets. This SEC-compliant exchange offers a select range of assets, including bitcoin (BTC), ether (ETH), litecoin (LTC), and bitcoin cash (BCH), catering to the needs of institutional investors.

Bitcoin Breaks $30,000 Amid TradFi Expansion

Bitcoin has crossed the $30,000 mark for the second time this year, fueled by bullish market sentiment and the entrance of traditional finance (TradFi) players into the crypto space. The market-leading cryptocurrency has not reached levels above $30,000 since April. The rally in Bitcoin’s price is a result of several TradFi giants, including BlackRock, Invesco, and WisdomTree, filing applications for spot bitcoin ETFs, indicating their growing interest and belief in the potential of cryptocurrencies.

bitcoin price chart
BTC is trading at $30,634.45, at the time of writing. Image Source

Additionally, the recent launch of the EDX crypto exchange, supported by major TradFi players such as Fidelity Digital Assets, Charles Schwab, and Citadel Securities, has further bolstered market optimism. The exchange offers four tokens for trading in the U.S.: bitcoin, ether, bitcoin cash, and litecoin. Bitcoin cash (BCH) has experienced a 25% surge following this news.

A positive sentiment towards the digital asset class has been revealed in a recent survey conducted among professional investors managing approximately $5 trillion in assets. The survey findings indicate that 82% of respondents hold a favorable view of digital assets, with a particular focus on the performance of bitcoin and ether over the next 12 months.

The positive sentiment expressed by professional investors aligns with the impressive performance of bitcoin and ether in recent years. Both cryptocurrencies have experienced significant price appreciation and market capitalization growth, attracting interest and investment from diverse participants. Looking ahead, the performance of these digital assets will be influenced by various factors, including market trends, regulatory developments, technological advancements, and broader economic conditions.

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