The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published its first consultation package under the Markets in Crypto-Assets Regulation and invited comments from stakeholders by September 20, 2023.
The consultation aims to aggregate views on how to appropriately implement MiCA. Among other things, it covers the provison of crypto-asset services by financial entities, complaints handling procedures, and identification issues.
Blackrock investment
After saying last week bitcoin is the “new gold” and that it could “revolutionize finance”, BlackRock CEO Larry Fink said crypto in general, and specifically bitcoin, could revolutionize the financial system.
The firm then went a step further, announcing it wanted to launch a bitcoin ETF. Commenting on the proposal, a piece in Blockworks said: “BlackRock has an impressive history for ETF approvals. Based on that track record, the outlook for the asset manager’s spot bitcoin ETF application looks bright.”
Former SEC Chair Jay Clayton called the plan an “incredible development”, telling CNBC that if BlackRock can prove to the SEC that the spot bitcoin market has the same protections as the futures market, it would be hard to resist approval.
Crypto exchange woes
But things aren’t looking so rosy for the exchanges. Back in June, Coinbase responded to the SEC: “The assets trading on Coinbase’s secondary market platform are not within the SEC’s authority because, contrary to the SEC’s assertion, they are not ‘investment contracts’ and therefore not ‘securities’.”
But in the ongoing spat, the regulator said on Friday the exchange was aware of its legal obligations. “Coinbase, a multi-billion-dollar entity advised by sophisticated legal counsel, argues it was unaware that its conduct risked violating the federal securities laws, and suggests that by approving Coinbase’s registration statement in 2021 the SEC confirmed the legality of Coinbase’s underlying business activities – at that time and for all time.
“But Coinbase’s own actions belie these grievances,” the SEC letter continued. “In other words, Coinbase adopted the very legal framework as a basis for making listing decisions that it now claims has no applicability to its activities.”
“Coinbase attempts to construct its own test for what constitutes an investment contract from pre-1933 Blue Sky laws based on common law contracts principles,” the letter added.
Meanwhile, a report from Fortune revealed that a number of top executives at Binance left the firm due to CEO Chris Zhao’s handling of a Department of Justice investigation.
HNW investment
Despite these high-profile setbacks, the majority of high-net-worth (HNW) investors are still all-in on crypto. A survey by independent financial advisory deVere group found 85% of HNW clients have considered, or currently already are, investing in cryptocurrencies such as bitcoin so far in 2023.
“The half year crypto poll reveals that, despite the crypto market delivering its worst performance since 2018 last year, 2023 has seen a remarkable turnaround for digital currencies,” Nigel Green, chief executive and founder of deVere Group, said.
“This sustained market bounce is quite incredible considering just how dark the 2022 crypto market was, with a string of serious headline-grabbing events triggering a domino effect of financial losses that led to a shattering of investor confidence in cryptocurrencies. Last year’s price drops also came as investors reduced their exposure to risk-on assets, including stocks and crypto, due to heightened concerns about inflation and slower economic growth.”
