Elise Soucie‘s monthly column will cover policy and consultation updates from around the world, as well as the latest digital innovations in institutional markets.
The surge of institutional interest in digital assets and blockchain technology over recent months shocked many after last year’s crypto meltdowns. But the U.S. Securities and Exchange Commission’s (SEC) January approval of bitcoin exchange traded products (ETPs), the FCA’s recent update and approval of cryptoasset-backed Exchange Traded Notes (cETNs) for professional investors, BlackRock’s bitcoin exchange traded fund (ETF) hitting the $10 billion mark faster than any other in history, and now their SEC filing last week for the USD Institutional Digital Liquidity Fund to invest in tokenised assets, all mark a milestone in the evolution and wider adoption of Web3 technology across financial services.
But why does this alphabet soup of “ETs” matter from a policy and regulatory perspective? While much lauded by the industry, SEC Chair Gensler was clear that while they approved the trading of ETPs, they remain neutral on Bitcoin, and approval of an ETP or ETF is not an endorsement of the underlying asset itself. The industry could create an ETP for Cadbury Eggs, that doesn’t make the SEC a fan of chocolate consumption.
With good reason, regulators implement more protections for retail clients, which is why some of these products are not available in retail markets or in all jurisdictions. Yet the initial access to ETFs, ETPs, MMFs and cETNs can be a catalyst for the broader technological transformation of financial markets. The end goal isn’t “crypto” alone, but the delivery of existing products in smarter and more diverse ways. Regulators are demonstrating their support for responsible innovation through this first wave of offerings, laying a foundation of new trusted financial products for a bright digital future.
Read more