BTSE Blockchain Brief - January 19

Welcome to our latest Market Roundup, where we delve into a spectrum of events that highlight the dynamic and ever-evolving nature of the cryptocurrency sector, alongside traditional financial movements. From governmental interventions in Asia to unique trends in the NFT market, and significant shifts in Bitcoin's value, these developments provide a comprehensive picture of the current state of digital finance.

In South Korea, a significant development unfolded as the Presidential Office intervened in the cryptocurrency regulatory sphere. Urging the Financial Services Commission to reconsider the possibility of a local spot Bitcoin ETF, the move signals a potential shift in the nation's approach to cryptocurrency regulation. This could pave the way for greater mainstream acceptance and integration of digital assets in one of the world's most technologically advanced countries.

Meanwhile, in the NFT space, we observed a curious juxtaposition of trends. On one hand, Donald Trump's foray into NFTs using Bitcoin Ordinals has sparked interest, particularly with his "Mugshot Edition" NFTs. This indicates a growing intersection of mainstream public figures and the digital asset world. On the other hand, the overall NFT market has seen a downturn in trading volumes, reflecting the market's inherent volatility and sensitivity to broader economic trends.

The world of Bitcoin and ETFs has also seen notable activity. The launch of new spot Bitcoin ETFs initially brought a wave of enthusiasm, but this was quickly tempered as Bitcoin's price plummeted below $41,000, its lowest in a month. This price movement is indicative of the complex interactions between new financial products and traditional market dynamics. It highlights the influence of investor sentiment and the evolving landscape of financial products in the cryptocurrency market.

For more comprehensive analyses and in-depth insights into the latest market movements, visit the BTSE blog for regular updates.

Web3 News

• Bitcoin ETFs Surpass Silver in the Market: The newly launched Bitcoin ETFs have instantly surpassed silver ETFs in the U.S. exchange-traded fund (ETF) market, now ranking second only to gold among commodities. With the conversion of the Grayscale Bitcoin Trust into an ETF, Bitcoin ETFs hold nearly $30 billion in assets, eclipsing silver's $11 billion, and trail only behind gold's $95 billion. This milestone reflects Bitcoin's rising status as a major player in financial markets, demonstrating significant investor demand for Bitcoin exposure.

• Thailand Eases Restrictions on Digital Tokens: Thailand's Securities and Exchange Commission has liberalized its regulations on retail investments in digital tokens backed by real estate or infrastructure. The new rules eliminate the previous investment cap of 300,000 baht ($8,500), allowing retail investors greater freedom in the real estate and infrastructure-backed digital token market. This regulatory change aligns with Thailand's growing acceptance of digital assets, as evidenced by the country's largest bank, KBank, acquiring a crypto exchange business, and the government's initiative to distribute funds via digital wallets to citizens.

• SEC Delays Decision on Ethereum ETF: The U.S. Securities and Exchange Commission (SEC) has delayed its decision on Fidelity's proposed Ethereum ETF. This move follows a pattern observed with other pending funds, suggesting a comprehensive review process by the SEC. Despite the delay, the SEC is expected to make a final decision on various spot Ethereum ETFs by late May, including Fidelity's and VanEck's proposals. This decision is eagerly anticipated, especially following the recent approval of spot Bitcoin ETFs, underscoring the growing significance of cryptocurrency in mainstream financial markets.

Stories You May Have Missed

• U.S. Treasury Advocates for Crypto Regulation: U.S. Treasury officials are urging American policymakers to proactively regulate the cryptocurrency market before the emergence of a potential financial crisis. Drawing parallels with past financial crises that led to the implementation of new regulations like the Dodd-Frank Act, Assistant Secretary for Financial Institutions Graham Steele highlighted the opportunity to establish higher standards for crypto assets, promoting responsible innovation while maintaining robust regulations for financial institutions and capital markets. The focus on crypto regulation also aligns with President Biden's executive order to address the risks and harness the benefits of digital assets.

• Flowdesk Raises $50M for Crypto Trading: Flowdesk, a cryptocurrency market-making and over-the-counter trading service, has successfully raised $50 million in Series B funding. This investment, led by Cathay Capital's venture arm, positions Flowdesk as a key liquidity provider for Grayscale's recently approved spot Bitcoin ETF. Flowdesk's role is critical in regulating the buying and selling of Bitcoin, aligning with the structured approach of traditional financial markets. The fundraising signifies the growing institutional interest in cryptocurrency markets and the importance of liquidity providers in the evolving landscape of digital asset trading.

• Trump Opposes U.S. CBDC: Former U.S. President Donald Trump, during a campaign speech in New Hampshire, vowed to "never allow" the creation of a U.S. central bank digital currency (CBDC) if reelected. Trump described CBDCs as a "dangerous threat to freedom," asserting that such a currency would grant the federal government total control over citizens' money. His stance against CBDCs represents an attempt to appeal to the pro-crypto constituency, reflecting the rising prominence of cryptocurrency and digital currency policy in political discussions and election campaigns.