Bitcoin exchange-traded funds (ETFs) have prompted major banks to expand their crypto involvement. Major banks and financial institutions in the United States are ramping up efforts to expand their role in the crypto market, particularly in the wake of the recent approval of spot Bitcoin ETFs. The move comes as a coalition of trade groups, including the Bank Policy Institute and the American Bankers Association, urged the Securities and Exchange Commission (SEC) to revise its definition of crypto assets, aiming to enable banks to serve as custodians for these ETFs.
In a letter addressed to SEC Chair Gary Gensler on Feb. 14, the coalition underscored the absence of banking organizations as custodians in the recently approved Bitcoin ETFs. They called for modifications to the SEC’s guidance on accounting for crypto asset custody obligations, arguing that current regulations impose significant costs and operational hurdles for banks seeking to offer crypto custody services at scale.
Specifically, the coalition proposed narrowing the definition of crypto assets to exclude traditional assets recorded on the blockchain, such as tokenized deposits. Additionally, they requested exemptions from on-balance sheet requirements for banks engaging in crypto activities, while still advocating for transparency through disclosure requirements.
Industry experts interpret this push as a pivotal moment signaling the evolving stance of traditional financial institutions towards cryptocurrencies. Bitwise’s Matt Hougan sees it as a shift in the regulatory landscape, while Bloomberg’s ETF analyst Eric Balchunas views it as a clear indication of banks’ growing interest in embracing digital finance opportunities.
The outcome of these efforts could pave the way for greater participation of banks in the burgeoning crypto market, potentially reshaping the dynamics of digital asset custody and investment.
Bitcoin ETF Achieve Heights
Bitcoin ETFs surged to unprecedented heights on February 13th, boasting a staggering $631.23 million net inflow, marking the thirteenth consecutive day of investor interest.
With a cumulative net inflow of $3.89 billion and $1.58 billion in total value traded, the allure of Bitcoin ETFs remains strong. Despite Grayscale’s GBTC seeing a one-day outflow of $72.83 million, other ETFs, like BlackRock’s IBIT, flourished with a $493 million inflow.
As reported by TWJ, Twitter buzzed with insights, with Lookonchain highlighting major Bitcoin purchases, while Bloomberg’s Eric Balchunas praised IBIT’s meteoric rise. The swift evolution of cryptocurrency investments underscores the dynamic nature of the market.