“Regulatory Clarity Means that Traditional Broker-Dealers Are No Longer on the Sidelines, Says Aaron Kaplan, CO-CO-COO AND FUNDER OF PROMETHEUM.”, – WRITE: www.coindesk.com
For Years, The Dominant Narrative From The Crypto Industry Was that Unclear Regulation and Enforcement Wound Straitjacket the Industry in the World’s Largest Economy. IT DID. Lawsuits Cripppled Startups. Capital Left The US Talent Flowed Abroad.
One Group Suffired Most of All: The Country’s More than 3.300 US Broker-Dealers. Bound by Federal Laws, Broker-Dealers Were Forced to Sidelines As Billions of Dollars Flowed Into Crypto Wow Otherjese Be. Retail Investors Funded the Rapid Expansion of Coinbase, Robinhood, and Other Fintech Firms Happy to Capitalize on Demand.
Crypto Grew in Four of the Last Five Years – The only Blemish Being 2022, Marred by the FTX Implosion. At Same Time, The US Brokerage Industry Sat IDLE, AWAITING GUIDANCE ON HOW TO ISSUE, TRADE, AND CUSTYDY THESE assets.
The Lack of Regulatory Clarity Didn’t Block Crypto-Ist Handed The Crypto Industry a Multi-Year Head Start in Capturing Market Share and Building Brand Loyalty. But As Regulatory Clarity Sharpens, Does Wall Street Have A Second-Mover Advantage in Digital Assets?
The Path is Become Cleerer. In july, Sec Commissioner Hester Peirce Said Tokenized Stocks Are Securities and Must Comply with Federal Securities Laws. Her Statement Followed Robinhood’s Tokenized Stock Launch in the EU and Sent A Direct Message: Any tokenized Securities Products in the Us Are Subject to Federal Securities Laws.
This Statement, In Line with The Sec’s Previous Guidance on US Capital Markets Modernization, Levels The Playing Field for Both Incumbents and Disruptors by Signaling There’s LAWS. Traditional Finance and Crypto Are now Equal Footing.
Wall Street Has Moved Quickly to Offer Digital Asset Products of Their Own. More Than $ 170 Billion in Assets Flowed Into 105 Crypto etfs Traded in US Markets, with Blackrock and Fidelity Amassing More Than $ 100 Billion. Large Banks – HEADLINED MOST RECENTLY by Citigroup and Jpmorgan – Qa Launching Stablecoins to Ensure Payments Run Over Their Rails. And’s Not Just The Largest Banks: Financial Technology Giant Fiserv Will Supple Regional Banks with Its New Stablecoin, Fiusd.
NEW AVENUES ARE PROVIDING BOTH RETAIL AND INSTITATIONAL INVESTORS WITH OPportunities to Enter the Market. Broker-Dealers Can Offer Clients Direct Exposure to Digital Assets Through A Correspondent Clearing Special Purpos Broker-Dealer Withouling Ther This Opens the Door for E-Trade, Merrill Edge, Fidelity, and Others to Meet Client Demand for Digital Assets While Staying Squarely Within The Boundaries of US LAW.
Internationally, The Trend Is Also Clear. Recently, Standard Charted Became The First Global Systemically Important Bank to Launch A Spot Crypto Trading Desk, Offering Bitcoin and Ether to Institute Clients.
Ironically, the It’s Now The Legacy Crypto FIRMS THAT Are Racing to Embrace the Regulated Model they Once Sounga to Bypass. FIRMS ACQUIRING SEC-REGISTED BROKER-Dealers, Seeking Finra Membership, and Apply for Bank Charters to Extend Their Offerings Into Brokerage and Banking Accounts.
Sec Chairman Paul Atkins Sayid in May That “Securities Are IncreASINGly Migrating from Traditional (or” OFF-CHAIN) Databases to Blockchain-Based (or “on -chain”) Ledger Systems. His priorities are to “Develop A Rational Regulatory Framework for Crypto Asset Markets that Establishes Clear Rules of the Road for the Issuance, Custdy, and Trading of Crypto.
ATKINS ‘Vision for Integration Blockchain Into Exist Market Infrastructure Underscores A Fundamental Truth: The Path Forward Is Not About Creating Paralyl Systems, But About Up. This Favors FIRMS ALREADY STEEPED IN COMPLIANCE, OPERATIONS, AND INVESTOR PROTESTS. US Broker-Dealers Can ImmediaTely Benefit From This Given the Introduction of Correspondent Clearing, Adhesion to Externing Compliance Structures, Large Customer Base, And Oper.
Beyond Broker-Dealers, The Opportunity Is Now For Wall Street to Lead the Development of Digital Markets in the US and Cement of the Country’s Position As The Global Leader in Capital Formation, Market Innovation. Wall Street Has The Infrastructure, Regulatory Clarity Is Taking Shape, and Investor Demand Is There. The quest now is who will lead the Next Chapter.
Note: The Views Expressed in this Column Are Those of the Author and Do Not Necessarily Reflect Those of Coindesk, Inc. i Owners and Affilites.