Katherine Ross

Bernstein estimates the crypto fund management industry to be around $45-50 billion currently, though it has the ability to be worth over $500 billion of assets in the next five years.  



Analysts said in a research note on Monday they believe the crypto industry is on track to “transition from a cottage industry ($50 billion of managed assets) to a formal, regulated asset management industry with $500-650 billion of assets over the next 5 years.”



The demand, Bernstein said, would come from investment advisors, wealth and private banking products as well as the ability to easily access bitcoin ETFs in direct broker accounts.&nbsp;



“This would imply a 10% ETF share for bitcoin and ETH market cap, and 5-6% share for liquid crypto hedge funds,” they wrote.



The bitcoin ETF filings from traditional heavyweights Blackrock, Fidelity, and others, have significantly improved chances for a bitcoin ETF, and two courts have sided — or <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security">partially sided, in the case of Ripple</a> — with crypto companies.&nbsp;



Thanks to the Grayscale case, <a href="https://blockworks.co/news/judges-grayscale-sec-ruling">in which a panel of judges asked the SEC to review Grayscale’s application</a> to convert its Bitcoin Trust (GBTC) to a bitcoin ETF, Bernstein now says it believes that “the chances of an approval by early 2024 has significantly increased, and thus [they] like the risk-reward setup from here…”



The <a href="https://blockworks.co/tag/sec">SEC</a>, in late August, <a href="https://blockworks.co/news/sec-delay-decision-bitcoin-etf-blackrock">delayed a set</a> of bitcoin ETF decisions to October. 



Rather than “inventing another reason for refusal,” analysts believe the SEC will go the “middle route” and get comfortable with the <a href="https://blockworks.co/news/cboe-reached-agreement-coinbase">surveillance sharing agreement with Coinbase</a> since the proposals are being made by traditional fund managers and the agreements are with regulated exchanges, such as Nasdaq.&nbsp;



“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” the <a href="https://blockworks.co/news/sec-delay-bitcoin-etf-decision-wisdomtree-valkyrie">SEC said at the time</a>. It delayed decisions on Blackrock, Fidelity, Ark, Bitwise and VanEck, among others.



Following the delay, <a href="https://blockworks.co/news/franklin-templeton-bitcoin-etf">Franklin Templeton announced</a> its bid for a <a href="https://blockworks.co/tag/spot-bitcoin-etf">spot bitcoin ETF</a>.



Additionally, analysts at Bernstein noted that stablecoins have led tokenization opportunities with payments adoption.&nbsp;



“&#8230;The use case has been largely crypto trading and DeFi markets, with no major integration with mainstream payments platforms and networks. We believe the real opportunity in stablecoins today is in its transformation from offshore-unregulated-crypto to onshore, regulated and more direct utility around mainstream payments and global settlement,” analysts wrote.



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Bernstein analysts eye potential bitcoin ETF approval by ‘early 2024’

Bessie Liu

Institutional MPC wallet company Fordefi will integrate its native wallet solution with applications and protocols built on Solana.



Unlike wallets owned by individual accounts, institutional wallets must be able to provide access to multiple different stakeholders.&nbsp;&nbsp;



MPC stands for multi-party computation and is a type of wallet security that allows multiple parties to have access to the same wallet without revealing any personal information to one another.&nbsp;



“As tokenization continues to proliferate and mature, it will be imperative to have infrastructure products like the Fordefi platform that enable institutions to efficiently and intuitively manage their assets,&#8221; Ben Sparango, head of business development at Solana Foundation, said in a press release reviewed by Blockworks.



Although Solana already has different types of MPC wallets integrated with its ecosystem, Dima Kogan, Fordefi co-founder and chief technology officer, told Blockworks that simply being an MPC wallet is not enough.&nbsp;&nbsp;



Fordefi has advanced security features designed specifically for institutions, he explains. An example of this is Fordefi’s ability to simulate transactions and independently verify contract addresses.



“Whenever an institution does a transaction, we simulate the transactions and show the different effects that happen as a result of this transaction,” he said.&nbsp;



This means that before signing off on a transaction, the signer will know exactly which smart contract the transaction is going to, the vault, the person who is transacting, the value of the token, and its associated gas fees. Risks for each transaction will also be displayed during a transaction simulation.&nbsp;



“We use all these bits and pieces about the transaction in our policy engine to define the approval process, which is a basis for institutional wallets,” Kogan said.



Another feature that differentiates Fordefi’s wallet is the product’s policy management tool, which gives institutions the ability to set permissions and approvers, Crest Saechao, the vice president of marketing at Fordefi, told Blockworks.&nbsp;



“The native solution — which all other wallets implement — has a very short timeout for transactions from the moment the dapp creates them, which is incompatible with an often-lengthy institutional approval process,” Saechao said.



Some of Fordefi’s existing institutional clients include Keyrock and DeFiance Capital, who have chosen the product for its additional safety layers.&nbsp;



“Fordefi stands out in the industry with its strong focus on innovation, DeFi security, and education,” Arthur Cheong, chief information officer and founder at DeFiance Capital, told Blockworks. “They actively work to enhance the ecosystem, drive institutional adoption, and ensure participant safety.”



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Solana welcomes institutional MPC wallet

Darren Kleine

Institutional-scale bitcoin investment in America — the dream of many early digital gold asset backers — is becoming a distinct possibility.&nbsp;



But for some, an institutional move into bitcoin is nothing more than a dystopian nightmare, where a noble battle against the corruption of the fiat monetary system ends with the rich, once again, getting richer.



<a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval" target="_blank" rel="noreferrer noopener">The application for an ETF</a> by the largest asset manager in the world, <a href="https://blockworks.co/tag/blackrock" target="_blank" rel="noreferrer noopener">BlackRock</a>, could not have happened at a stranger time in cryptocurrency’s regulatory history.&nbsp;



Just as the <a href="https://blockworks.co/tag/sec" target="_blank" rel="noreferrer noopener">SEC</a> is hunting down Coinbase for <a href="https://blockworks.co/news/sec-coinbase-exchange-definition" target="_blank" rel="noreferrer noopener">allegedly flouting securities laws</a>, BlackRock is requesting the SEC’s approval for a spot bitcoin ETF — with Coinbase as its custodial partner.



It should be no surprise that BlackRock would choose to work with Coinbase for its ETF, as they have long been <a href="https://blockworks.co/news/blackrock-to-offer-institutional-clients-crypto-via-coinbase" target="_blank" rel="noreferrer noopener">strategic partners</a>. Still, the entry of old-world wealth into the bitcoin realm is raising red flags in the community.&nbsp;



On a recent On the Margin podcast (<a href="https://open.spotify.com/episode/4dgf4d1rW0dCb0XQimyOqH?si=QJjrWe9nQH2tnFX-pkcH-Q" target="_blank" rel="noreferrer noopener">Spotify</a>/<a href="https://podcasts.apple.com/ca/podcast/is-global-liquidity-beginning-to-resurge-weekly-round-up/id1558223079?i=1000617360556" target="_blank" rel="noreferrer noopener">Apple</a>), Mark Yusko expresses some of the fears of handing over the keys — both figuratively and cryptographically — to the institutions.&nbsp;



<h2 class="wp-block-heading">Bitcoin community seems unenthused</h2>



While the notion of large-scale, heavily regulated investment entering bitcoin appears on the surface to be highly bullish for the industry, not everyone is enthused. Concerns about some sort of hostile takeover are swirling in the community.



The founder of Morgan Creek Capital Management says Xapo, the institutional-scale crypto custody tool that Coinbase acquired in 2019, could come into regulatory play.



“What if,” he asks, BlackRock can “take over this storage unit?”



BlackRock would then hold a significant portion of crypto assets in America, he says. “And if they have the bulk of it,” regulators could then shut down the Coinbase exchange as an SEC-alleged “unlicensed casino” and hand the Xapo unit over to BlackRock.



Host Ippolito adds that the response from the Bitcoin community has been “pretty roundly negative” regarding the ETF application.



“In the filing, there&#8217;s a little paragraph about what BlackRock would do in the event of a hard fork,” Ippolito says. “BlackRock is going to have to make a decision.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">A hidden gem in the BlackRock ETF filing.<a href="https://twitter.com/hashtag/GetForked?src=hash&amp;ref_src=twsrc%5Etfw">#GetForked</a> <a href="https://t.co/tER6xxZPui">https://t.co/tER6xxZPui</a> <a href="https://t.co/Qdt8BZ2OEZ">pic.twitter.com/Qdt8BZ2OEZ</a>&mdash; Anil ⚡ (@anilsaidso) <a href="https://twitter.com/anilsaidso/status/1669475269244235776?ref_src=twsrc%5Etfw">June 15, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“In the event of a hard fork,” Ippolito explains, “there will be two different copies of Bitcoin.” As has happened in previous forks, one of the two will be selected as the canonical chain.&nbsp;



“And BlackRock&#8217;s gonna have to make a decision about that.”



Fears swirl around the possibilities of BlackRock closing off access to what some would perceive as the preferred fork, but Ippolito is concerned with “the Bitcoin community&#8217;s pushback.”



“It makes me think that they don&#8217;t really understand social consensus,” he says. “If you want Bitcoin to keep going up and be widely adopted you need larger and larger buyers.”



Yusko responds to the community’s backlash against undesirable money entering the scene, “You want any and all fiat of any kind in any variety to convert to bitcoin because the bigger the network, the bigger the safety, security, the more adoption.”&nbsp;



“That&#8217;s the only way the value of a network goes up.”



<h2 class="wp-block-heading">Short the future, long the physical</h2>



Having said that, Yusko admits it’s “hypothetically possible that since November of last year, when the futures-based ETF was issued,” that large institutions like JPMorgan and Blackrock have been “shorting the shit out of bitcoin.”



“In fact, it&#8217;s highly likely,” he says. “We have <a href="https://www.reuters.com/article/jp-morgan-spoofing-penalty-idUSKBN26K325" target="_blank" rel="noreferrer noopener">proof</a> in the gold market that they do. Every year, they make billions of dollars shorting the future and going long the physical.”



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JPMorgan can pay a billion dollar fine for market manipulation, Yusko says, but make $20 billion in the process. “So that&#8217;s 5%. Who cares? It’s the cost of doing business.”



Still, it’s not all dark clouds for Yusko. He sees the BlackRock filing as a potential turning point in the market from bearish to bullish. “We said on this show that <a href="https://blockworks.co/news/crypto-optimists-summer-horizon" target="_blank" rel="noreferrer noopener">crypto summer would start on June 15</a>.”



“And BlackRock files the papers on June 15. That is just dumb luck. And it&#8217;s possible we made the bottom.”



Yusko remains confident in bitcoin’s future, although he expects things to be messy for a while.&nbsp;



“JPMorgan, BlackRock and all of the controllers of the money and power felt threatened — as they should have — by a disruptive innovation that will replace them. The infrastructure of trust will be replaced by the infrastructure of truth.”



“But man, the war is gonna be bloody.”



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BlackRock bitcoin ETF: The wolf enters the henhouse?

Shalini Nagarajan

Several major lenders across South Korea have reportedly joined a bank consortium dedicated to security token offerings (STOs).



In April, Seoul-based NongHyup established the consortium with the aim of creating an ecosystem centered around security tokens. 



In the context of South Korea, these are blockchain- or DLT-powered versions of traditional investments such as stocks or bonds, but could also confer share ownership or other rights in real estate, investment funds and even artwork.



The Korea Herald <a href="https://www.koreaherald.com/view.php?ud=20230615000547" target="_blank" rel="noreferrer noopener">reported</a> Thursday that Hana Bank, Shinhan Bank and Woori Bank have now joined the NongHyup&#8217;s consortium.



The group includes other fintech companies like Funble, Trackchain (a subsidiary of fintech Aton) and Artipio, bringing the total number of members to 18. Blockworks has reached out to NongKyup for comment.



South Korea <a href="https://blockworks.co/news/koreas-second-largest-city-pushes-for-crypto-hub" target="_blank" rel="noreferrer noopener">legalized security token offerings</a> earlier this year, responding to the rising demand and popularity of digital assets domestically and abroad. 



South Korea’s Financial Services Commission <a href="https://www.fsc.go.kr/no010101/79386?srchCtgry=&amp;curPage=&amp;srchKey=&amp;srchText=&amp;srchBeginDt=&amp;srchEndDt=" target="_blank" rel="noreferrer noopener">published guidelines</a> on these tokens in February, saying they fall under the country’s capital markets law.



<h2 class="wp-block-heading">South Korean banks push for tokenized corporate bonds</h2>



STOs first appeared around 2019, and although the associated South Korean market is still in its early stages, it’s projected to hit 34 trillion won ($26.6 billion) by 2024, the Korea Herald noted.



NongHyup teamed up with two other banks Suhyup and Jeonbuk, along with six security token-related firms including Seoul Auction Blue, Galaxy Money Tree and JB Investment, to create the consortium.



NongHyup reportedly said that members of the consortium will explore ways for banks to enter the STO market while adhering to regulatory guidelines.&nbsp;



They also plan to collaborate on developing platforms for issuing token securities. Ultimately, the goal is to establish a tokenized securities ecosystem where companies can issue tradable corporate bonds as security tokens.



Tokenization is <a href="https://blockworks.co/news/2023-year-of-asset-tokenization" target="_blank" rel="noreferrer noopener">becoming increasingly popular</a> across various blockchain ecosystems. In 2023, prominent institutions including Goldman Sachs and Siemens have embraced tokenized assets in some form.



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Institutions