By Michael Scott
CoinShares recent report demonstrates that eight top-ranked financial institutions managing a combined assets value of $27 trillion are embracing cryptocurrencies. The report indicates that most US-based financial institutions are interested in providing their clients’ communities with exposure to cryptos.
Top-Ranking Financial Institutions Express Interest in Digital Assets
The revelation surfaced in Coinshares’ chief strategy executive Meltem Demirors in a Monday, June 26 communication that eight institutions signaled a shift towards the digital assets space. He acknowledges that the financial institutions are replicating the move by BlackRock to seek registration of spot Bitcoin exchange-traded funds (ETF). It coincides with Fidelity filing for approval to offer crypto wealth management services.
Demirors observes that other financial players recently declared crypto interest are JPMorgan, Goldman Sachs, Bank of America, Morgan Stanley, Invesco, and BNY Mellon. He notes that BlackRock’s filing for spot Bitcoin ETF became big news welcomed by other financial institutions actively seeking crypto exposure.
The largest institutions have decried the absence of regulatory clarity to embrace crypto citing their susceptibility to volatility and rogue operators. The recent purge on various crypto projects portrays the commitment by regulators to weed out rogue crypto operators as interest in institutional investment in crypto rises.
BlackRock Filing for Bitcoin ETFs Prompts Similar Applications Pending SEC Approval
Demirors highlighted the eight financial giants that command under their management $27 trillion in assets. She noted that the move by BlackRock to seek approval for a spot Bitcoin ETF triggered filings for similar offerings. It fosters the narrative that more institutions plan to embrace Bitcoin.
Institutional interest in crypto is unsurprising as executives in digital assets exude confidence that BlackRock filing will secure approval. The firm, whose assets under management are estimated at $9 trillion, applied 576 ETFs, a decision that propelled the bitcoin price to its highest while triggering a similar application.
While the filings made to the US Securities and Exchange Commission (SEC) are pending approval, the application boosted confidence. A review of CoinGecko data shows the renewed confidence fuelled the bitcoin price rally to realize a 2023-high level of $31185 on Saturday, June 24.
Real-time Bridges Established to Integrate Institutions Embracing Bitcoin
Demirors holds that while the US financial institutions are breaking free from previous reluctance to embrace Bitcoin, the trend signals an industry trickle rather than a short-lived wave. She observes that the move is delivering real-time bridges.
The chief strategy officer at CoinShares considers that the $27 million constitutes an estimation of assets managed by the eight entities. Demiror confesses that perhaps the institutions would only allocate a portion of the multi-dollar assets to crypto investments.
Reflexivity Research executive Will Clemente supported Demirors pronouncement that Bitcoin commands market capitalization that ranges slightly below $600 billion. He notes that Blackrock, Fidelity, HSBC, and Schwab manage assets estimated at $25 trillion. Approving the pending filings by the Gary Gensler-led securities watchdog would enable them to scrabble for bitcoins valued at hundreds of billions.
Revisiting Weekly Investment Inflow Shows Higher Activity
Meanwhile, institutional investors are expressing their desire to invest in Bitcoin-affiliated derivatives. A recent incident involves the ProShares Bitcoin Strategy ETF (BITO) registering the US largest weekly inflow in 2023. The $60.4 million inflow pushed the assets it manages above $1 billion.
CoinShares estimated that the weekly inflows involving crypto-based investment realized $199 million. Bitcoin-focused inflows are estimated at $187 million. London-headquartered ETC issuance GmbG Bitcoin exchange-traded product (BTCE) realized $77.3 million.
The move by institutional investors to embrace cryptos is pegged on the US regulators and legislators establishing a crypto-specific regulatory framework. Michelle Bowman, who sits on the Federal Reserve Board, laments that the absence yields uncertainty and a supervisory void that fuels reluctance by institutional investors to embrace crypto.