Institutional Investor Flows With Crypto Finance Group
Rupertus Rothenhaeuser, CEO of Crypto Broker AG in the Crypto Finance Group, joined host Paul Gordon to discuss institutional investor demand for bitcoin. Rupertus discussed the recent market activity in which bitcoin pulled back, taking the broader crypto markets with it. On the Crypto Finance…
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Rupertus Rothenhaeuser, CEO of Crypto Broker AG in the Crypto Finance Group, joined host Paul Gordon to discuss institutional investor demand for bitcoin. Rupertus discussed the recent market activity in which bitcoin pulled back, taking the broader crypto markets with it. On the Crypto Finance Group platform, which services business-to-business clients, a lot of limits were set right in or about the regions where the all-time-high hit.
(1:14) “Suddenly a lot of take-profit limit orders in the system were triggered, and guess what? The market never pruned a new high. So from that perspective, it seems a couple of guys read the market pretty well, especially in ether,” said Rupertus.
Meanwhile, Crypto Finance Group is seeing growth by the day in their customer base and has been onboarding between six and 10 new clients per day. It may be different from the 10,000s on retail platforms, but the Crypto Finance Group platform is for substantial clients — institutions — which are more cumbersome to onboard. They have more requirements surrounding compliance with KYC/AML procedures. But once they are onboarded, they are pretty active as well, Rupertus noted.
Crypto Finance Group’s clients are increasingly being nudged by their own clients to do something on bitcoin. Clients come to them and say, “We needed to do it because our clients asked us within the private banking and wealth management space, how can I access the space? Do I need to look for a new bank?” And so they say no, relax, we’ll make it happen. So client demand and institutional allocation to the crypto space is growing, Rupertus noted.
(4:41) Crypto Finance Group is one of the few regulated entities under the first-world regulatory umbrella. For many banks, it’s already a large step for them to enter the crypto space at all. So when they do so, they want to stay in the EU zone, the U.S., Singapore, or Switzerland. This has created an extraordinary opportunity for Crypto Finance Group to grow its business.
CME Basis Trade & 21Shares ETP
(6:24) Bitcoin is moving between USD 45,000 and USD 52,000. And this is 100% reflected in the basis rate. This is because the premium in the basis rate has come down, which means there’s lesser demand in the derivatives space from the high-end market makers and institutional players who are connected to CME futures.
(9:00) 21Shares launched a Polkadot ETP. It was created out of Switzerland because the regulatory umbrella is clean. It was the first ETP listed on the Swiss exchange because they allow ETPs on crypto underlyings. They were also able to list the product in many other markets, including Stockholm and Frankfurt. This proves once again that many banks don’t want to get involved with the blockchain in terms of wallet and key management, said Rupertus, but they can still benefit from the price performance of the derivative underlyings.
(11:14) In Zurich, 40 ETPs and ETCs are listed on the SIX exchange.
Bitcoin ETF
VanEck has filed an application for a bitcoin ETF with State Street as the custodian. The U.S. SEC has repeatedly pushed back on a bitcoin ETF, blaming a lack of liquidity in the BTC market. But we’ve seen companies like Tesla and MicroStrategy make billion-dollar purchases of bitcoin.
(13:30) “I don’t see the reason why it’s so complicated to approve such a product. It doesn’t hurt, and if it’s investors’ demand, why not? What’s wrong with it?,” said Rupertus.
What’s perplexing is that on one side, U.S. regulators are providing the only reputable futures exchange for crypto in the CME. But on the other side, they are extremely reluctant to open the gate for an ETF. There are other markets, environments and regulatory bodies that are very much looking into it. If it’s not the U.S., it could be Switzerland or Germany.
(14:30) “I honestly cannot believe that it’s going to take much, much longer until a full-fledged ETF is going to be available,” said Rupertus.
IPOs and M&A
(16:00) Coinbase is headed for an IPO, and its private market valuation is USD 100 billion. PayPal is looking to acquire Curv after trying to buy BitGo. Kraken is exploring IPO opportunities. There will be much more of these kinds of transactions, said Rupertus.
As it stands, High Street banks in London and Wall Street banks in New York are basically uninvolved at this point. One day they’re going to wake up and they’ll have two options: either they can build it up from scratch or they can ask how much it is going to cost to buy something meaningful.
(18:30) “All of these initiatives, PayPal with Curv if it happens, Coinbase, Kraken — we always see it as a crypto play. But there’s much, much more behind it. This is the first part of a long journey because it’s the easiest part. This is like a currency journey. But if you add security tokens, initial digital offerings, the tokenization of companies and corporates, this is something that is going to take…a few years until it hits the market with liquidity until banks and financial organizations have set up their internal workflows and core banking systems to operate in such products,” explained Rupertus.
Regulation
As the size of the cryptocurrency market has ballooned, central bankers like Christine Lagarde and Janet Yellen have been responding with negative comments. This is not surprising, said Rupertus, adding:
(22:25) “I do not belong to the group of people who believe blockchain and digital assets and cryptocurrencies will replace central banks. I think this is an asset class — it has its value, it has its benefits, it has its risks. We are not going to replace the money market policy for Germany, Europe, Italy, France, or the U.S. The Fed will remain the Fed,” he said.
There is a world where both parties can live in peace together.
As the size of the cryptocurrency market has ballooned, central bankers like Christine Lagarde and Janet Yellen have been responding with negative comments. This is not surprising, said Rupertus, adding:
(22:25) “I do not belong to the group of people who believe blockchain and digital assets and cryptocurrencies will replace central banks. I think this is an asset class — it has its value, it has its benefits, it has its risks. We are not going to replace the money market policy for Germany, Europe, Italy, France, or the U.S. The Fed will remain the Fed,” he said.
There is a world where both parties can live in peace together.
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