Wall Street Might Be Crypto’s Biggest Supporter

    Cryptocurrencies have experienced tremendous growth over the years, reaching a level of importance and influence in the global financial system that no one could have predicted in the beginning. The Bitcoin and Ethereum price today is a reflection of the staggering development of this nascent industry and the huge potential it holds. And yet, for all the innovation and benefits that digital currencies bring to the table, they still haven’t been able to break into the financial mainstream. 

    According to experts and analysts, there are various factors blocking crypto’s path to widespread acceptance, but lack of legitimacy appears to be one of the biggest deterrents. Unlike traditional assets, cryptos don’t have a long history behind them to prove their long-term value and utility. Let’s not forget that until not so long ago, digital currencies were regarded as some sort of an experiment that no one really paid much attention to, and it’s only recently that the large public has become more open to the concept they propose. Furthermore, their decentralized nature, as well as their lack of regulation, although considered crypto’s greatest strengths, don’t help much in terms of building trust and confidence among users. As expected, this had direct consequences on crypto’s value, volatility and rate of adoption. 

    But all that might change now that some of the biggest players in the world of high finance and investment are coming to crypto’s aid in what seems to be a critical time for this emerging asset class. On the one hand, we have the Securities and Exchange Commission (SEC) increasing regulatory scrutiny of the booming crypto industry, and on the other we have Wall Street heavyweights taking a special interest in crypto. With more big names entering the crypto sphere, traders, investors and the rest of the world might start looking at crypto with different eyes. 

    Wall Street to the rescue 

    BlackRock, the American multi-national financial institution and leading provider of investment, advisory and risk management solutions, has already applied to the SEC to start a Bitcoin exchange-traded fund (ETF). And this prestigious firm is not the only one that wants to get in on the crypto action. Two other prominent companies in the financial space, Fidelity Investments, one of the largest mutual fund companies in the U.S., and Charles Schwab, one of the largest discount brokerages in the world, are backing a new non-custodial crypto exchange along with Citadel Securities. 

    What’s more, banking giant Deutsche Bank has recently applied for Digital Asset License in Germany to open a crypto asset custody platform that would allow them to provide institutional-grade hot/cold storage solutions with insurance-grade protection for their customers. This means that users will be able to purchase and sell digital assets with the support of prime brokers and enjoy a range of other services such as taxation, valuation, lending, staking and more. 

    The heightened interest from major Wall Street players can be seen as a sign that the industry is finally gaining the legitimacy it needs to stand on par with fiat money and other traditional assets. And most importantly, this support could translate into higher crypto prices, especially for leading coins such as Bitcoin and Ethereum which have also suffered a painful downfall during the latest crypto winter. 

    Things seem to be looking up for the two biggest cryptocurrencies in the market. Bitcoin rose more than 80% since the beginning of the year, reaching $ 30,624 at the time of writing, while Ethereum has also been on an upward trajectory lately, trading for $ 1,962 at the moment of writing. The king of crypto and the leader of the altcoin pack are not alone on their recovery journey. Other coins such as BNB, AVAX or Galxe have also experienced significant appreciation recently. And the market as a whole is doing far better compared to the previous months, with a 14% increase in market cap registered over the past week. 

    Treading on shaky ground 

    Financial institutions have decided to step in during a very difficult time for digital currencies. Not only is the industry trying to recover after the 2022 crypto winter which saw crypto prices plummeting across the board and numerous companies going out of business, but the market is also currently facing an unprecedented regulatory crackdown as lawmakers are looking to impose stricter regulations for digital assets. 

    While the purpose is to make the crypto space safer and instill consumer confidence by preventing money laundering and reducing overall risks, a lot of traders and investors fear that future restrictions could make it more difficult for users to gain access to certain assets. Over the past few months, the SEC has taken action against 15 crypto providers that don’t comply with securities laws and it is likely that many more will be hit with similar charges. 

    In all this torment and turmoil, the news that BlackRock, a reputable and respected asset management company, has filed paperwork with the SEC for the formation of a spot bitcoin ETF with Coinbase as a custodian, signaled a change of sentiment in the market. Joseph Chalom, BlackRock’s head of strategic partnerships, talked about the decision at the Coinbase State of Crypto Summit, saying that the digital assets market requires more involvement from institutional custodians right now. Shortly after the news broke, the Bitcoin price spiked and in a domino effect, other financial institutions rushed to file new EFT applications with the SEC. 

    The SEC has maintained a strict approach to reviewing spot bitcoin ETF applications and denied 27 of them on the ground that the companies cannot guarantee adequate protection against market manipulation. There’s a lot of back and forth in the industry at the moment regarding the participation of major financial players in the crypto market and the introduction of digital assets alongside traditional financial services. Still, there’s a clear trend showing that the industry is moving forward despite the hurdles.

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