During this week, the crypto industry has noticed a steady increase in institutional adoption. Prominent entities such as HSBC, MicroStrategy and Hang Seng have garnered attention with remarkable developments. At the same time, the spotlight was on FTX, as new management impressively recovered a whopping $7 billion, fueling optimism about creditors being paid off and boosting prospects for a restart.
Similar to previous weeks, there has been a continued focus on regulatory matters within the United States, as the country has sought to establish effective oversight mechanisms over the booming crypto industry.
HSBC and MicroStrategy go deeper
On the back of growing interest in cryptocurrency-centric investment products among private institutions, HSBC, Hong Kong’s largest bank, made a notable entry into the space over the past week.
In a momentous development, HSBC has introduced a new service that enables its clients to engage in trading activities involving exchange-traded funds (ETFs) pegged to Bitcoin and Ethereum. This pioneering initiative marks the first time that a bank in the city has made such an offer.
This strategic move is in line with the growing demand for cryptocurrency investments and government support for the digital asset sector. HSBC aims to enhance the accessibility and diversification of the crypto market by facilitating the availability of ETFs from respected crypto asset managers.
Shortly after the HSBC news broke, reports revealed that MicroStrategy had consolidated its bitcoin holdings, demonstrating its commitment to increasing its presence in the cryptocurrency market.
As revealed in a filing with the Securities and Exchange Commission (SEC), MicroStrategy, under the leadership of Michael Saylor, acquired an additional 12,333 bitcoins between April 29 and June 27. These acquisitions were made at an average price of about $28,136 per coin.
With this latest acquisition, MicroStrategy’s total Bitcoin holdings are now 152,333 BTC, which equates to about $4.6 billion based on a prevailing market price of approximately $30,300 per coin.
Hang Seng strives to participate in the rise in adoption rates
Reports released on June 29 revealed that Hang Seng Investment Management Co. , a prominent asset management company in Hong Kong, is currently evaluating the possibility of entering the cryptocurrency field.
This strategic consideration follows HSBC’s recent launch of its Bitcoin and Ethereum ETF on June 26. The bank’s flagship offering of these ETFs has brought cryptocurrencies closer to the region, prompting Hang Seng’s investment department to explore integrating them into its existing investment products.
Although the company currently has no concrete plans to develop a crypto ETF, it is actively evaluating the feasibility of incorporating digital assets into its offering.
Meanwhile, Mastercard unveiled its Multi-Token Network (MTN) platform this week, aiming to improve compatibility between various blockchain platforms. MTN’s primary goal is to facilitate secure and scalable transactions across diverse digital assets and blockchains.
Notably, the initial focus of the platform will be on tokenized bank deposits and regulated payment tokens, rather than widely recognized crypto-assets like bitcoin or ethereum.
Lacoste has revealed its plans to expand the UNDW3 NFT ecosystem by introducing new features that offer rewards and encourage co-creation within the community.
The fashion brand had previously introduced the UNDW3 Genesis pass NFT kit in June 2022, which provided holders with unique tokens enabling them to access exclusive merchandise and events.
Now, Genesis Pass holders have the opportunity to convert their NFTs into UNDW3 cards, unlocking access to creative sessions, contests, and interactive talks.
Significant rise in adoption
As these large companies dig deeper into the cryptocurrency ecosystem, studies emerging this week reflect a significant rise in adoption.
A survey conducted by Binance sheds light on institutional investors’ confidence in the cryptocurrency market, especially their long-term perspective.
The survey, which included responses from 208 Binance institutional clients and VIP users, indicates that 63.5% have an optimistic view of the crypto market in the coming year, while 88.0% express a positive view of the upcoming decade.
According to a separate study by Coinbase, the vast majority of Fortune 500 companies in the US have recognized the potential of crypto, blockchain, and web3 technologies.
The study reveals that more than 50% of Fortune 100 companies have actively adopted these technologies as part of their efforts to modernize and stay relevant on a global scale.
Additionally, the research highlights significant investments made by Fortune 100 companies, totaling more than $8 billion in 109 private venture capital rounds to support crypto and blockchain startups.
institutional capital flow
CoinShares, a leading digital asset management firm, has revealed an increase in institutional capital flowing into the cryptocurrency markets. This indicates a renewed positive sentiment by institutional investors, as indicated by the CoinShares Digital Asset Fund Weekly Report.
The influx of institutional capital follows BlackRock’s application for a bitcoin ETF with the SEC.
The report also indicated that the week witnessed the highest inflows since July 2022, with a total value of $199 million. Bitcoin products accounted for the majority of inbound flows, while other digital assets such as Ethereum, XRP, and solana also saw significant increases in inbound flows.
However, industry leaders expect a greater influx of capital from institutions, especially into the BTC market. According to a CryptoQuant report, there is an expected increase in institutional adoption of bitcoin in the coming months.
Despite the prevailing bear market conditions and regulatory uncertainties, notable financial technology companies such as Microstrategy, Tesla, Block (formerly Square), and Galaxy Digital Holding have accumulated significant amounts of BTC.
The increased adoption of Bitcoin by institutions not only directly benefits the companies involved, but also has the potential to have a positive impact on their customers and the market as a whole.
FTX recovers $7 billion and seeks to relaunch
FTX got a lot of attention this week as new management successfully recovered a significant portion of the debt owed to creditors and announced further plans to relaunch FTX.com, the international exchange platform for the ecosystem.
Under the guidance of its new CEO John J. Ray, FTX has made remarkable strides in paying off its creditors, recovering $7 billion of the initial $8.7 billion in debt. This achievement marks a significant milestone in the company’s ongoing efforts to restore financial stability.
Moreover, the new management has acknowledged previous practices involving commingling of customer funds and providing misleading information to banks regarding the commingling of funds. This disclosure sheds light on the factors that contributed to the company’s previous collapse.
Shortly thereafter, CEO John Ray III confirmed that FTX is actively participating in efforts to revive the primary international cryptocurrency exchange, FTX.com.
According to Ray, the company has begun discussions with potential partners and investors to explore the feasibility of relaunching the platform, including the possibility of joint initiatives. The goal is to restore FTX.com’s presence in the cryptocurrency market and regain its former position.
Bankman-Fried faces a legal setback
Despite the gradual shift into positive territory for FTX, former chairman Sam Bankman-Fried faced some setbacks this week. Petitions by Pinkman-Fried’s legal team to dismiss most of the criminal charges against him were dismissed by a federal judge, leaving only three.
As a result of the dismissal, Bankman-Fried will face all 13 criminal charges in two separate trials scheduled for October 2023 and March 2024.
The judge carefully considered the motion to drop ten counts but rejected it largely because of the relevant precedents. The court concluded that the other points raised by the Bankman-Fried team either lacked the necessary substance or were not relevant. This separated them.
The Federal Reserve warns of the risks associated with cryptocurrency
The US regulatory landscape also took center stage this week, with significant developments involving the Securities and Exchange Commission and other agencies.
Speaking at the Salzburg Global Symposium on Banking Regulation and Supervision, Governor Michelle Bowman of the Federal Reserve expressed concerns about regulatory loopholes in the supervision of digital assets and their potential impact on financial institutions.
Bowman stressed the importance of international regulators paying greater attention to addressing the regulatory hurdles posed by emerging technologies in the banking industry. She stressed the uncertainty surrounding digital asset operations, and warned against banks’ reliance on non-binding statements issued by officials.
The IRS requests user data from Kraken
As regulatory efforts intensify, this week Kraken received a court order from the Internal Revenue Service (IRS) requiring customer data to be provided, including account details and transaction information.
The order, issued on June 30, specifically targets Kraken users who traded at least $20,000 worth of cryptocurrency between 2016 and 2020.
The IRS filed a petition against Kraken in February, and this latest development comes after the exchange settled with the Securities and Exchange Commission for violating securities law with its staking service.
SEC rejects BlackRock’s BTC ETF amid Coinbase lawsuit
Despite the hype surrounding BlackRock’s instant bitcoin exchange-traded fund (ETF), the SEC has not changed its stance on BTC exchange-traded funds. The SEC found that recent applications for spot BTC ETFs lacked detail, including filings from BlackRock and Fidelity.
The SEC is particularly concerned about the lack of appropriate strategies for dealing with the Watch Share Agreement intended to prevent fraudulent and manipulative practices. None of the Bitcoin ETF applications received so far have met this condition, according to the agency.
According to a court order issued on June 29, the SEC is expected to file its response to Coinbase’s initial legal defense on July 13. Coinbase’s legal team has confirmed that the SEC case falls outside its jurisdiction and has sought a ruling on the pleadings.
A conference is scheduled for July 13 to determine whether Coinbase will receive permission to proceed with its move. By providing a comprehensive response early on, Coinbase aims to strategically strengthen its position on the issue.
Amid the SEC’s crackdown on exchanges like Coinbase and Binance, ethereum founder Vitalik Buterin shared his concerns about the potential repercussions of cryptocurrency regulations in the United States on projects like Solana.
In a tweet, Buterin expressed sympathy for the affected projects and stressed the importance of adopting a more comprehensive approach that does not exclude other blockchains from listing on exchanges.
Solana, along with several other tokens, has been designated as a security in the SEC lawsuits against Binance and Coinbase. Buterin wished for a “fair outcome” in the case of the damaged projects.