MicroStrategy, Hang Seng and HSBC make waves amid rising adoption, FTX recovers $7b

During this week, the crypto industry observed a consistent increase in institutional adoption. Prominent entities such as HSBC, MicroStrategy, and Hang Seng garnered attention through notable advancements. Concurrently, the spotlight was on FTX, with the new management impressively recuperating a substantial $7 billion, instilling optimism for creditor reimbursement and fortifying prospects for a relaunch.

Similar to previous weeks, there was a persistent emphasis on regulatory matters within the United States, as the country sought to establish effective oversight mechanisms for the burgeoning crypto industry. 

HSBC and MicroStrategy dive deeper

Against the backdrop of escalating interest in investment products centered around cryptocurrencies among private institutions, HSBC, the largest bank in Hong Kong, made a notable entrance into this domain during the past week.

In a momentous development, HSBC introduced a novel service that empowers its clients to engage in trading activities involving exchange-traded funds (ETFs) linked to bitcoin and ethereum. This groundbreaking initiative marks the first instance of a bank in the city extending such an offering.

This strategic move aligns with the surging demand for cryptocurrency investments and the government’s backing of the digital assets sector. HSBC aims to enhance accessibility and diversify the crypto market by facilitating the availability of ETFs from esteemed crypto asset managers.

Shortly after the HSBC news, reports revealed that MicroStrategy had augmented its bitcoin holdings, demonstrating a commitment to increasing its presence in the digital currency market.

As disclosed in a filing submitted to the Securities and Exchange Commission (SEC), MicroStrategy, under the leadership of Michael Saylor, acquired an additional 12,333 bitcoins between April 29 and June 27. These acquisitions were made at an average price of approximately $28,136 per coin.

With this latest acquisition, MicroStrategy’s total bitcoin holdings now amount to 152,333 BTC, equivalent to nearly $4.6 billion based on the prevailing market price of approximately $30,300 per coin.

Hang Seng seeks to partake as adoption skyrockets

Reports from June 29 revealed that Hang Seng Investment Management Co., a prominent asset management firm in Hong Kong, is currently evaluating the potential of entering the cryptocurrency space. 

This strategic consideration follows the recent launch of bitcoin and ethereum ETFs by HSBC on June 26. The bank pioneering introduction of these ETFs has brought cryptocurrencies closer to the region, prompting Hang Seng Investment Management to explore their integration into its existing investment products.

While the company does not currently have concrete plans to develop a crypto ETF, it is actively assessing the feasibility of incorporating digital assets into its offerings. 

Meanwhile, Mastercard unveiled its Multi-Token Network (MTN) platform this week, with the objective of improving compatibility among diverse blockchain systems. The primary objective of MTN is to facilitate secure and scalable transactions across various digital assets and blockchains. 

Notably, the initial focus of the platform will be on tokenized bank deposits and regulated payment tokens, rather than the more widely recognized crypto assets like bitcoin or ethereum.

Lacoste revealed its plans to expand the UNDW3 NFT ecosystem by introducing new features that offer rewards and promote co-creation within the community. 

The fashion brand had previously introduced the UNDW3 Genesis passes NFT collection in June 2022, which provided holders with unique tokens enabling access to exclusive merchandise and events. 

Now, Genesis Pass holders have the opportunity to convert their NFTs into UNDW3 cards, unlocking access to creative sessions, contests, and interactive conversations. 

A marked uptick in adoption

As these large corporations delve deeper into the crypto ecosystem, studies emerging this week reflect the marked uptick in adoption rate. 

A survey carried out by Binance shed light on the confidence of institutional investors in the cryptocurrency market, particularly their long-term perspective.

The poll, comprising responses from 208 Binance institutional clients and VIP users, indicates that 63.5% hold an optimistic view of the crypto market in the coming year, while 88.0% express positivity for the next decade. 

According to a separate study conducted by Coinbase, a significant majority of Fortune 500 companies in the United States have recognized the potential of crypto, blockchain, and web3 technologies. 

The study reveals that more than 50% of Fortune 100 companies have actively embraced these technologies as part of their modernization efforts and to stay relevant on a global scale. 

Additionally, the research highlights the substantial investments made by Fortune 100 companies, totaling over $8 billion in 109 private venture capital rounds supporting startups in the crypto and blockchain space. 

An influx in institutional capital 

CoinShares, a leading digital asset manager, disclosed a surge in institutional capital flowing into the crypto markets. This indicates a renewal of favorable sentiments by institutional investors, as highlighted in CoinShares’ Digital Asset Fund Flows Weekly Report. 

The influx of institutional capital follows BlackRock’s application for a bitcoin ETF with the SEC.

The report also mentions that the week witnessed the highest inflows since July 2022, totaling $199 million. Bitcoin products accounted for the majority of the inflows, while other digital assets like ethereum, XRP, and solana also saw notable increases in inflows.

However, industry leaders expect a greater influx of capital from institutions, especially into the BTC market. Per a CryptoQuant report, there is an anticipated increase in institutional adoption of bitcoin in the coming months. 

Despite the prevailing bearish market conditions and regulatory uncertainties, prominent fintech companies such as Microstrategy, Tesla, Block (formerly Square), and Galaxy Digital Holding have amassed substantial amounts of BTC. 

The growing adoption of bitcoin by institutions not only benefits the companies directly involved but also has the potential to have a positive impact on their clients and the overall market.

FTX recovers $7 billion, seeks to relaunch

FTX garnered significant attention this week as the new management successfully recovered a substantial portion of the outstanding debts owed to creditors and announced further plans for the relaunch of FTX.com, the ecosystem’s international exchange platform.

Under the guidance of its new CEO John J. Ray, FTX achieved remarkable strides in repaying its creditors, recovering a substantial $7 billion out of the initial $8.7 billion debt. This achievement represents a significant milestone in the company’s ongoing efforts to regain financial stability. 

Furthermore, the new management acknowledged past practices involving the mingling of client funds and providing misleading information to banks regarding fund mingling. This disclosure shed light on the factors that contributed to the company’s previous downfall.

Shortly after this, CEO John Ray III confirmed that FTX is actively engaged in efforts to revive its primary international cryptocurrency exchange, FTX.com. 

According to Ray, the company has initiated discussions with potential partners and investors to explore the feasibility of relaunching the platform, including the possibility of joint initiatives. The objective is to restore FTX.com’s presence in the crypto market and regain its former standing.

Bankman-Fried faces legal setback

Despite the gradual shift into positive territories for FTX, former boss Sam Bankman-Fried faced some setbacks this week. A federal judge rejected the motions presented by Bankman-Fried’s legal team to dismiss most of the criminal charges against him, leaving only three.

As a result of the dismissal, Bankman-Fried will face all 13 criminal counts in two separate trials scheduled for October 2023 and March 2024. 

The judge carefully considered the motion to dismiss ten of the charges but largely rejected them due to relevant precedents. The court concluded that the other points raised by Bankman-Fried’s team either lacked necessary substance or were not relevant. This led to their dismissal.

The Fed warns of risks associated with crypto

The US regulatory landscape also took center stage this week, with significant developments involving the SEC and other agencies.

Speaking at the Salzburg Global Seminar on banking regulation and oversight, Governor Michelle Bowman of the Federal Reserve System voiced her apprehensions regarding regulatory gaps in the oversight of digital assets and their potential impact on financial institutions.

Bowman stressed the importance of international regulators paying closer attention to tackle the regulatory hurdles presented by emerging technologies in the banking industry. She underscored the uncertainty surrounding the operations of digital assets and cautioned against banks relying on non-binding statements issued by officials.

IRS requests user data from Kraken

As regulatory efforts intensified, this week, Kraken received a court order from the Internal Revenue Service (IRS) requiring the submission of customer data, including account details and transaction information. 

The order, issued on June 30, specifically targets Kraken users who have traded at least $20,000 worth of cryptocurrency between 2016 and 2020. 

The IRS filed a petition against Kraken in February, and this recent development follows the exchange’s settlement with the SEC for violating securities law through its staking service.

SEC rejects BlackRock’s BTC ETF amid Coinbase lawsuit

Despite the hype surrounding BlackRock’s spot bitcoin exchange-traded fund (ETF) filing, the SEC did not change its stance on spot-based BTC ETFs. The SEC found recent applications for spot BTC ETFs lacking in detail, including the filings from BlackRock and Fidelity. 

The SEC is particularly concerned about the absence of adequate strategies for handling a “surveillance-sharing agreement” aimed at preventing fraudulent practices and manipulation. None of the Bitcoin ETF applications received so far have satisfied this condition, per the agency.

Per a court order from June 29, the SEC is expected to provide its response to Coinbase’s initial legal defense on July 13. Coinbase’s legal team has contended that the SEC’s case falls outside its jurisdiction and has sought a judgment on the pleadings. 

A conference is set for July 13 to determine if Coinbase will receive permission to proceed with its motion. By submitting a comprehensive response early on, Coinbase aims to strategically bolster its position in the case.

Amid the SEC’s crackdown on exchanges such as Coinbase and Binance, Vitalik Buterin, the founder of ethereum, shared his concerns regarding the potential repercussions of cryptocurrency regulations in the United States on projects such as Solana. 

In a tweet, Buterin expressed empathy for the affected projects and underscored the importance of adopting a more inclusive approach that doesn’t exclude other blockchains from being listed on exchanges. 

Solana, along with several other tokens, was classified as a security in the Securities and Exchange Commission’s (SEC) lawsuits against Binance and Coinbase. Buterin wished for a “fair outcome” in the case for affected projects.

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