Nasdaq to Launch Digital Asset Custody Services

The global securities marketplace known as Nasdaq is planning to join the cryptocurrency business by the end of the second quarter of 2022 when it will provide its custody services for digital assets. Ira Auerbach, Senior Vice President of the exchange operator, is in charge of the digital assets division, which has submitted an application to the New York Department of Financial Services for a limited-purpose trust company charter. This charter would allow the department to monitor the new business.

The initiative, which was unveiled for the first time in September, will begin with the storage of Bitcoin and Ether, with the intention of ultimately offering a whole suite of services for the division, including the execution of transactions for financial institutions. Before the launch, Auerbach stressed the group’s commitment to ensuring that all of the essential governmental permissions and technological infrastructure are in place.

It is possible that Nasdaq’s introduction into the cryptocurrency market will be a big step forward for the industry. This comes at a time when conventional financial institutions are increasingly filling the void left by industry bankruptcies. The reputation of the exchange and its presence in the worldwide market might help enhance institutional investor trust in the cryptocurrency market, which would pave the road for more conventional financial institutions to follow suit in the future.

The decision by Nasdaq is similar to those taken by other prominent financial institutions, such as BNY Mellon and Fidelity, who provide services related to the storage of cryptocurrencies. These offers are a reflection of the increased demand from institutional investors for exposure to digital assets. Digital assets are considered by some as an alternative asset class that may bring advantages of diversification when included in a portfolio.

Traditional financial institutions have been hesitant to provide these types of services despite the rising interest in digital assets; this reluctance may be attributed to worries over the regulatory clarity and security risks connected with digital assets. But, with Nasdaq’s introduction into the market, it is feasible that more institutions may follow suit, as they attempt to profit on the potential development prospects that exist within the cryptocurrency business.


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Robinhood Receives Investigative Subpoena from SEC Over Crypto Business

Robinhood Markets, the popular brokerage known for its commission-free trading, has recently disclosed that it received an investigative subpoena from the United States Securities Exchange Commission (SEC) in December 2022. The subpoena was related to its cryptocurrency listings, custody services, and platform operations. This came after several major cryptocurrency trading venues and lending platforms filed for bankruptcy earlier in the year, including FTX, Three Arrows Capital, Voyager Digital Holdings, and Celsius Network. The SEC’s inquiry into Robinhood’s crypto business is aimed at obtaining information necessary to decide whether to pursue legal action against the company.

This is not the first time Robinhood has been under scrutiny for its crypto business. In April 2021, the California Attorney General’s Office issued subpoenas seeking information about Robinhood’s crypto trading platform, business and operations, custody of customer assets, and coin listings. In August 2021, the New York District of Financial Services fined Robinhood’s crypto division $30 million for failing to invest the proper resources and attention to develop and maintain a culture of compliance. Additionally, the Massachusetts Securities Division scrutinized Robinhood in August 2021 for allegedly targeting inexperienced investors.

The investigative subpoena from the SEC highlights the regulatory challenges faced by the crypto industry, as regulators seek to clamp down on fraud and protect investors. The SEC has been increasingly active in pursuing companies that violate securities laws in the crypto industry. For example, in December 2021, the SEC filed a lawsuit against Ripple Labs, alleging that its XRP token was an unregistered security.

Robinhood’s crypto business has been growing rapidly, and the company has added several new cryptocurrencies to its platform in recent years. However, the regulatory scrutiny and fines imposed on the company have raised concerns about the company’s compliance culture and its ability to navigate the regulatory landscape. The company has stated that it is committed to complying with all applicable laws and regulations and is working to improve its compliance infrastructure.

In conclusion, the recent investigative subpoena from the SEC is a reminder of the challenges faced by the crypto industry and the importance of compliance in the sector. Robinhood’s crypto business is under scrutiny, and the company must continue to invest in compliance infrastructure to ensure that it is meeting regulatory requirements. As the crypto industry continues to evolve, regulatory scrutiny is likely to increase, and companies must be prepared to navigate this complex landscape.


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Swiss’ SEBA Bank Launches Regulated Custody Services for Blue Chip NFTs

SEBA bank, a crypto-friendly bank in Zug, Switzerland, on Wednesday, announced the launch of an NFT custody solution that gives customers the ability to hold Non-Fungible Tokens (NFTs) without the hassle of managing private keys themselves.

The Swiss bank said the new service is set to enable customers to store any Ethereum-based NFTs, especially blue-chip NFTs – those that are best-known and have consistently maintained a high market value such as CryptoPunks, Bored Apes, and Clone X.

SEBA Bank said the custody solution provides its clients with absolute confidence in the security of their NFTs, managed like any other digital asset.

Although the NFT market remains down from its peak in late 2021 and early this year, the assets are still attracting buyers.

Blue chip NFTs, which are often considered a good long-term investment, marked their best performance in April while May and June were their worst-performing periods in blue chip NFT history.

Sales of NFTs declined sharply in the third quarter, as crypto investors’ purchasing actions have been cooled down by crypto winter while central bank rate hikes prompt investors to ditch risky assets.

According to blockchain tracker DappRadar, the third quarter of this year recorded $3.4 billion in NFT sales, down from $8.4 billion the previous quarter and $12.5 billion at the market’s peak in the first quarter of the year.

Despite many NFT investors making losses on sale trades currently, the number of investors that hold their NFT investments continues to rise. In June and July alone, nearly 500,000 users joined the growing pool of NFT investors who intend to hold for the long term, taking the number of holders above 3 million at that time.

SEBA’s NFT custody service is a response to the increase in institutional investors looking to invest in the NFT landscape. A spokesperson from SEBA Bank further disclosed that major market participants also need a regulated custodian to ensure the security and integrity of NFTs.

At first, SEBA said its custody offering is open for existing and new customers who must be institutional or professional investors.

Image source: Shutterstock


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Anchorage Becomes the First Digital Bank to Function As a Traditional Bank

Cryptocurrency startup Anchorage Hold LLC has received conditional approval from the US currency control office to become an official federal government bank.

Qualified Custodian for Institutional Investors

Anchorage, now officially known as the National Association of Anchorage Digital Bank, was the first cryptocurrency company to receive the Bundesbank charter. It is an essential milestone in cryptocurrency history adoption. The accord means that Anchorage is now the first authorized digital asset bank in the US to meet the same standards and approvals as traditional banks.

A national banking charter forms the Anchorage Digital Bank based on the same regulations as other national banks. The fastest way to get monitored services is a first for any traditional financial institution looking to provide its customers with digital assets access.

Although Anchorage does not seek to set up offices in the local environment, the charter allows the company to provide services such as trading and loans.

OCC said that in awarding this charter, OCC applies rigorous review and the same standards applicable to all charter applications. By introducing these candidates into the federal banking system, banks and industry will benefit from the OCC’s rich experience and expertise.

Anchorage was founded in 2017 and offered institutional investors a crypto native custody service for digital assets. The custodian holds client property or money on their behalf and is responsible for its financial products’ security. The company’s proposals have a design to help institutions better protect their investments while extracting more of their assets.

Future Partnerships With Anchorage

Crypto firms have long struggled to become qualified trustees in terms of how digital asset service providers can comply with aspects of the Securities Investor Protection Act of 1970 – specifically how brokers can demonstrate that no other entity can access them their own and have a private key.

In an interview with Forbes, McCauley said the charter would force hundreds of banks to partner with Anchorage to join the cryptocurrency boom. McCauley said that Anchorage allows all kinds of people to come to the table, even those who were reluctant to come. It represents a massive change in the availability of crypto assets.

Anchorage is co-founded by Diogo Mónica, and Nathan McCauley, former director of security at Docker Inc. It launched from stealth mode in January 2019 with a funding of $ 17 million.

The Anchorage Charter comes as the price for the Bitcoin-led cryptocurrency continues to move up, albeit at a cost that it would never have achieved a month ago. Bitcoin was trading at $ 37,489.81 at 9:55 p.m. EST after falling to $ 30,525.39 on January 11, after hitting a high of $ 41,528.79 on January 8.

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Crypto Long & Short: Traditional and Crypto Markets are Starting to Converge

One of the fun things about jigsaw puzzles, for those of you that haven’t tried them, is the satisfying snap of pieces fitting together to reveal part of a picture. Another is watching the whole picture emerge as more pieces join.

In July of last year, the U.S. Office of the Comptroller of the Currency (OCC) said that national banks could custody crypto assets. That was a pretty big deal, as, should national banks start to offer this service, investors could in theory ask their habitual institution to custody all their holdings, be they stocks, bonds or crypto. So much easier. A major barrier to crypto investment removed.

In September, the OCC said that they could provide services to stablecoin issuers, such as holding reserves. Banks had been doing this for some time, but in an uncertain regulatory environment. Now they had official approval to do so. Stablecoins backed one-to-one by fiat held in bank reserves are not deemed a risk in one of the most regulated industries in the U.S.

And then this week, the federal banking regulator published an interpretive letter saying that national banks and federal savings associations can use public blockchains to store and validate payments. It effectively awards blockchains the status of “payment network.”

Do you see the picture emerging? It’s not just about expanding the range of products banks can offer clients. It’s not just about offering better payment services. It’s about the convergence between traditional and crypto markets. It’s also about the role of the dollar in the economies of tomorrow.

Look closer

Let’s look at why this emerging picture is worth paying attention to:

  1. It is good news for crypto markets: a nudge to traditional banks to offer support for blockchain infrastructure and even facilitate crypto transactions. This makes crypto investments easier for traditional investors, which will bring more money into the industry, which will encourage more infrastructure development, and so on in a virtuous circle that will end up offering opportunity to an ever-wider user base. If investors can pay for crypto assets with stablecoins issued by their bank, through their bank, and have the assets automatically dropped into their bank custody account, then why not put part of your portfolio in a systemic hedge instrument? Barriers are removed.
  2. It is good for traditional markets, as it is likely to encourage the emergence of a new type of lower-cost and more transparent settlement system. In spite of substantial improvement over the past decade or so, traditional settlement is still hampered by reconciliation needs. Using stablecoins does not necessarily fix this (the issues are more legal than technological), but it does open the door to an alternative process which may be worth deeper investigation and which may tie in with a future market of tokenized traditional assets, new types of assets that we have not yet even begun to design, and everything in between.
  3. It is good for the banking sector, potentially opening the door to new types of financial products as well as payment and collateral services. With banking margins squeezed by ever-onerous compliance costs and low interest rates which are unlikely to increase any time soon, the need to diversify revenue streams and extract more value from existing clients is becoming increasingly imperative for a systemically important part of our economy.
  4. It is good for financial innovation. Banks can use stablecoins, but they can also issue them, potentially with bells and whistles and functionalities attached. JPM Coin, issued by investment bank JPMorgan, is now live and used to make global wholesale payments. Others will follow, each with its own functionality and target customer base. And if they become interoperable, we’ll have a swarm of programmable tokens that can boost liquidity in previously overlooked economic segments while lowering costs for, as well as encouraging, new types of transactions.
  5. It is good for liquidity. Apart from the potential diversity within and use cases for programmable stablecoins mentioned above, more crypto dollars sloshing around a system that allows for interchangeable settlement tokens is likely to allow for better optimization of capital.
  6. It is good for the global economy. More efficient cross-border settlements will be good for trade, lowering the costs of documentation and compliance and maybe finally giving blockchain supply chain and trade finance apps the transactional piece they’ve been missing. Better payment systems boost economic activity.
  7. It is good for the dollar. With the U.S. leading the charge on this, it is likely that dollar-backed stablecoins will become the de facto global settlement token, further consolidating the dollar’s hegemony. More dependence on the dollar could make the global economy more vulnerable, especially with a limitless supply of the currency flooding the market. But blockchain-based systems allow for the rapid iteration of payment token innovation, and human ingenuity is likely to find a way to compensate for weaknesses and vulnerabilities when necessary.

A quiet transformation

The jigsaw puzzle metaphor I introduced at the beginning reminds me of one of my favorite philosophies: “Just when you think you have life’s puzzle all figured out, someone hands you another piece.”

The crypto markets are like that. Just when you think you understand the potential impact of bitcoin and other decentralized value tokens, you find out that this story is not just about a new type of market. It’s also about traditional markets and how they evolve.

While there are many hurdles yet to overcome, and many more pieces of legislation and regulatory guidance needed, we are getting a glimpse of what the finance of tomorrow could look like. And blockchains and crypto assets play a meaningful role in the emerging picture, which depicts so much more than rising prices and portfolio allocations – it sketches a new way of transacting, something that eventually will affect all of us. 

Anyone know what’s going on yet?

Everyone knows that all bubbles pop when a needle appears on the scene. It’s hard to imagine anything as messy and noisy as an insurrection being compared to something as small and sharp as a needle, so let’s mix metaphors and go with the sudden appearance of a “bump in the road.”

But that didn’t happen – the main U.S. stock markets continued to go up, and call options saw their fourth highest volume day on record. So, either traditional U.S. markets are not in a bubble, or we have not yet had that bump.

Yet, if it’s not 10-year yields edging over 1% for the first time since March … If it’s not a greater likelihood of corporate tax increases or antitrust legislation … If it’s not, heck, the realization that political polarization has pushed faith in the democratic process to a generational low, then what will that bump look like? I shudder to think.

The optimist in me likes to think that the strength of the market in the face of greater political turmoil than I’ve ever seen, demonstrates unbending trust that the U.S. democratic institutions will hold, no matter what. That’s touching. But it doesn’t feel true.

To confuse things further, crypto assets also had an extraordinary week, with BTC and ETH throwing up returns of over 34% and 60% respectively.

(Yes, I know that all three columns in the above chart are the same – it’s the way the dates worked out. This coincidence is just yet another detail that makes this week particularly weird.)

What makes this confusing from a traditional investment point of view is that bitcoin is a good hedge against “crazy,” and things were definitely crazy this week. But the stock market is telling us that everything is fine.

And it’s not that crypto assets and stocks are becoming more correlated. The 30-day correlation (not useful from an investment point of view, but a handy narrative device) between BTC and the S&P 500 has turned negative for the first time since last February.

As I type, the BTC price is again flirting with $40,000, double what it was three weeks ago. Could this also be a bubble?

The difference between the movements in BTC and ETH is that they have strong fundamental drivers behind them. These include the multiple “bumps in the road” that we referred to above, and the growing awareness from institutional investors that these assets were designed to operate separately from the traditional economy, with different incentives and accounting mechanisms.

That said, a short-term correction from these levels would not be surprising (although demand may be such that it doesn’t happen). And if traditional markets crash, it is likely we will see crypto assets head down as well in the rush to liquidity. But, looking further ahead, the underlying fundamentals have never been stronger.

(Now is a good time to remind you that nothing in this newsletter is ever investment advice.)


Investors talking:

· The Stone Ridge investor letter is a must-read – one of the most eloquent and insightful (not to mention amusing and moving) pieces I’ve read in a long time, on the nature of money and why bitcoin matters.

· Investor Bill Miller, whose flagship mutual fund in 2020 beat the S&P 500 Index for the straight second year, said he believes bitcoin could replace cash and markets are underpricing inflation risk. And then there’s this: “Warren Buffett famously called bitcoin rat poison. He may well be right. Bitcoin could be rat poison, and the rat could be cash.”

· He also pointed out, in a separate interview, that bitcoin “gets less risky the higher it goes.”

· Skybridge Capital, the hedge-fund investing firm headed by Anthony Scaramucci, confirmed its launch of a new bitcoin fund Monday and said its exposure to bitcoin has already reached $310 million.

· According to Michael Sonnenshein, former Managing Director and now CEO of digital asset manager Grayscale Investments (owned by DCG, also the parent of CoinDesk), a broader range of institutional investors, including pensions and endowments, is starting to participate in the company’s crypto asset funds.

· This is the best quote I’ve seen on why even skeptics should be investing in bitcoin, via Lionel Laurent and Mark Gilbert in Bloomberg: “Bitcoin is the perfect vehicle for exploiting mankind’s infinite stupidity,” says Julian Rimmer, a sales trader at Investec Plc. “A small percentage of one’s portfolio must be held in this ‘asset’ because gullibility never goes out of fashion.”

· JPMorgan’s Global Markets Strategy team has published a note that puts a long-term theoretical price target on BTC of $146,000, assuming BTC’s volatility converges to that of gold.

· Merryn Somerset Webb, editor-in-chief of MoneyWeek, said in an op-ed for the Financial Times that she will put some money into bitcoin, but confesses that her “go-to inflation hedge will remain gold for the simple reason that it isn’t new.”


The CFA Institute Research Foundation, part of the global association for investment professionals, has published a 64-page guide to crypto asset investing. “Cryptoassets: The Guide to Bitcoin, Blockchain, and Cryptocurrency for Investment Professionals” was written by Matt Hougan and David Lawant, respectively CIO and analyst at crypto fund manager Bitwise. TAKEAWAY: This publication is significant since the CFA Institute is a respected source of continuing fund management education. Their promotion of a guide not only validates cryptocurrencies and tokens as worth considering for portfolios; it also puts a well-written and thorough information document in front of the association’s almost 200,000 members.

Cryptocurrency exchange Bakkt, backed by NYSE parent Intercontinental Exchange (ICE), is in advanced talks to go public via a merger with special purpose acquisition company (SPAC) VPC Impact Acquisition Holdings, according to Bloomberg. TAKEAWAY: That the first large crypto SPAC is an infrastructure play highlights the difference between now and 2017. Back then it was about shiny new tokens and “decentralized protocols.” Now infrastructure dominates new funding.

The Chicago Mercantile Exchange (CME) is now the largest bitcoin futures exchange in terms of open interest in the world. TAKEAWAY: This is indicative of the growth of institutional interest in crypto markets – the CME is one of the few U.S.-regulated crypto derivatives exchanges, and is therefore the venue for most U.S. institutional activity in bitcoin futures. The growth is spectacular, given that the exchange started Q4 in fifth place (see our Quarterly Review for more on this.)


Bitwise Asset Management revealed that its AUM has increased five-fold to $500 million, up from $100 million reported in late Octobers. TAKEAWAY: More evidence, if any was needed, of growing institutional interest. Most of the increase came from the multi-asset fund, which shows that investors are starting to think beyond bitcoin.

Crypto custodian BitGo has expanded its Wrapped Bitcoin (WBTC) project, which converts bitcoin into an Ethereum-based token, to the Tron network. Previously only available on the Ethereum network, WBTC converts bitcoin into a bitcoin-backed token on a different blockchain. BitGo has also enabled Wrapped Ether (WETH) on Tron. TAKEAWAY: This expands the yield potential of BTC, as well as its potential attractiveness to professional investors. WBTC tracks the value of BTC, but can also be used in decentralized finance applications, some of which offer yields of over 10%.

The ban announced in October by the U.K’s Financial Conduct Authority (FCA) on the sale of derivatives and exchange-traded notes (ETNs) to retail investors went into effect this week. TAKEAWAY: This is unlikely to have a material impact initially as professional investors can still access these products, and retail investors can still buy crypto assets. It is a clear indication, however, of how much investment independence the FCA thinks retail investors should have, even with ample information.

The spread between the six-month implied volatility for ETH and BTC has risen to a record high of 46%. TAKEAWAY: This tells us that the market is expecting higher volatility for ETH relative to BTC, which in a bull market implies higher returns.


You might have seen that CoinDesk (yes, us) has acquired TradeBlock, the industry’s leading crypto index provider. TAKEAWAY: This gives us access to deeper data sets on market movements, as well as robust indices for crypto asset prices. It will also allow us to better serve the professional investor audience, combining information, insight and data.



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Bitcoin (BTC) $ 27,395.34 0.96%
Ethereum (ETH) $ 1,639.87 1.83%
Litecoin (LTC) $ 64.37 3.74%
Bitcoin Cash (BCH) $ 229.25 5.92%