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Fidelity’s Tom Jessop says crypto has hit a ‘tipping point’

Executives at investment giant Fidelity are confident that cryptocurrency market momentum will continue for the foreseeable future.

Speaking to MarketWatch on April 8, Tom Jessop who heads the investment firm’s crypto division said that he believes crypto has opened a new chapter in traditional finance circles and things have reached a tipping point for the industry.

Jessop stated that the maturation and adoption of crypto assets as an investment class will continue at a rapid pace in the coming years. There are a number of reasons according to the finance manager, one of which is extremely low interest rates in traditional finance.

This, coupled with an environment stimulated by monetary policies, has driven momentum for crypto markets. The Fidelity executive said that this environment is unlikely to change any time soon:

“I think we’ve reached a tipping point. I think you’ve had the accumulated experience of now roughly 12 years of the Bitcoin blockchain being operative since the genesis block in early 2009. And the pandemic, quite frankly, was a catalyst for institutional adoption, and specifically Bitcoin and the narrative, or use-case, around digital gold,”

Jessop added the narrative has been exacerbated by the unprecedented monetary stimulus from central banks and governments in response to the pandemic.

Since the pandemic began, U.S. stimulus packages have topped $6 trillion with much of that money being freshly minted by the Federal Reserve.

Jessop is not the only finance executive to believe that Bitcoin and crypto has reached a tipping point. In early March, Galaxy Digital CEO Mike Novogratz used the same phrase while commenting on the CI Galaxy Bitcoin ETF on Bloomberg:

“Bitcoin adoption has hit a tipping point and investors don’t want to sit on the sidelines,”

On March 24, Fidelity filed paperwork with the U.S. Securities and Exchange Commission to list a new Bitcoin exchange traded fund (ETF). The Wise Origin Bitcoin Trust aims to track the asset’s daily performance using the Fidelity Bitcoin Index PR, an index derived from several price feeds.

Analyst at CFRA Research, VanEck, and Fidelity Investments, Todd Rosenbluth, opined that the SEC is likely to approve an ETF in the coming year or two.

Fidelity created the digital asset unit in 2019 and has been integrating digital assets into traditional investment portfolios ever since.

Fidelity’s Tom Jessop says crypto has hit a ‘tipping point’

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Digital Asset Custody Provider Hex Trust Finalizes $6M Round led by QBN Capital

Hong Kong-headquartered crypto-asset custody service provider Hex Trust reveals that it has secured $6 million in capital via a Series A round that was led by QBN Capital.

As part of its latest investment round, Hex Trust also received contributions from Cell Rising, Radiant Tech Ventures, Kenetic Capital, HashKey, MD Labs, Fenbushi Capital, Borderless Capital, Genesis Block Ventures and Henri Arslanian.

Hex Trust’s management noted that the funds raised would allow it to further scale its business operations while being able to recruit new talent to work at its Hong Kong and Singapore offices.

Hex Trust further noted that during 2021, they’ll make plans to  expand operations into the European market, where the company has teamed up with SIA, an established provider of banking tech infrastructure.

Hex Trust said the capital secured will also be directed towards making enhancements to its proprietary, bank-grade custody solution, called Hex Safe™. The technology-driven service provides a wide range of custody and treasury management solutions for digital assets, security tokens, and non-fungible tokens (NFTs) as well.

Alessio Quaglini, CEO and Co-founder at Hex Trust, stated:

“We are past the inflection point, as blockchain has established itself as the next financial markets infrastructure. Financial institutions are quickly making their moves, and the next 12 months will be critical to define the structure of the overall market. Hex Trust is now perfectly positioned to accelerate its growth and play a leading role in this space, enabling digital assets adoption for a broad range of regulated financial institutions. We are thrilled to be accompanied in this journey by such established investors.”

As noted by its management team, Hex Trust claims to be one of Asia’s leading digital asset custodians. The company says it’s “fully licensed, insured, and provides bank-grade custody for digital assets.”

Hex Trust is reportedly led by experienced banking technologists and “award-winning” financial markets. The company has developed a proprietary platform – Hex Safe™ – that “delivers a flexible custody solution for banks, financial institutions, asset managers, exchanges, and corporations to safely, securely, and efficiently operate in the digital asset ecosystem.”

As explained by Hex Trust:

‘”Through Hex Safe™, clients can access liquidity providers, exchanges and lending & staking platforms, enabling seamless access to services while assets are held in our highly-secure and regulated platform. Hex Trust has offices in Hong Kong and Singapore.”

As covered in April 2020, Hex Trust became the very first licensed crypto-asset custodian in Hong Kong to integrate its services with R3’s Corda platform.

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ECB’s Christine Lagarde Discusses Timeline for Digital Euro

European Central Bank’s (ECB) chief Christine Lagarde said that the possibility of a digital Euro, known more technically as central bank digital currencies (CBDCs), coming into circulation is growing given the change in digital priorities.

But it could still take the European Union sometime before it decides on moving forward with the idea.

CBDC Roll-out Process Is Complicated

In an interview with Bloomberg TV, Lagarde pointed to the intricate processes needed for a decision to be made towards launching a digital Euro. According to her, there is a possibility that a state-backed digital currency could come into existence in the next couple of years once the Governing Council gives the go-ahead.

The ECB would first release an analysis of eight thousand responses it received following its digital Euro consultation exercise. According to the French business guru, these responses would first be communicated to the European Parliament, a key player. Then the ECB’s decision-making Governing Council would decide whether to proceed with the fiat replica experimentation.

The consultation results would determine whether the ECB would commence experimentation on a digital fiat in the next six months or a year.

“It’s a technical endeavor as well as a fundamental change,” Lagarde said. “We need to make sure that we’re not going to break any system, but to enhance the system,” she added.

Lagarde’s enhancement speech echoes the Bank for International Settlements (BIS) report, which noted that over 20% of national banks globally actively considered rolling out a state-sanctioned digital currency. The report published in late 2020 recommended that any efforts in this direction should not usurp the fundamental role that fiat plays in the economy. According to the BIS, CBDCs should be integrated into the extant settlement framework.

Four Years At Most

But despite this supposed positive outlook for CBDCs, Lagarde has said it may take up to four years before anything meaningful comes out.

The CBDC race is led by China, which is currently fast-tracking the digital yuan pilot tests to meet up to the Winter Olympics in Beijing. But China is not the only country that has made efforts to revolutionize the way people spend cash. The Bahamas is the first recognized economy using a state-backed digital currency called Sands Dollar, and Lagarde says she is keenly interested in this project.

According to her, any decision on CBDCs would be targeted at providing Europeans with a fairly stable, safe, and secure digital currency, given the immense shift it would bring to the European financial scape.

Lagarde is a well-known critic of Bitcoin being perceived as a medium of exchange.

Noting the potential harm the digital asset may bring to the financial system, Lagarde said the pseudonymous nature of Bitcoin could serve criminal intents like money laundering and terrorist financing.

To many like her, the CBDC is a concept to regain the financial system disruptively usurped by decentralization.

ECB’s Christine Lagarde Discusses Timeline for Digital Euro

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Former SEC chair Jay Clayton tips new Bitcoin regulations are coming

Former US Securities and Exchange Commission Chair Jay Clayton has stated that Bitcoin has not been classified as a security for a long time.

But speaking on CNBC’s Squawk Box on March 31, Clayton warned that its status as a non-security still does not protect it from the imposition of new regulations which, he warned, could be coming soon.

Host Andrew Ross Sorkin pointed out that under Clayton’s watch the SEC did not take a position on Bitcoin regulation. Clayton responded that was because the asset was declared not to be a security before he even took up his position as the head of the regulatory body.

“Bitcoin was decided to be not a security before the time I got to the SEC. Therefore, the SEC’s jurisdiction over Bitcoin was rather indirect.”

Clayton has remained in the industry following his departure from the SEC in December 2020 and currently advises One River Asset Management on cryptocurrencies.

Although he professes not to have any special insights into what new laws are coming from his time heading up the SEC, he believes the regulatory environment is due for a shake up.

“Where digital assets land at the end of the day […] will be driven in part by regulation—both domestic and international—and I expect, and I’m speaking as a citizen now, that regulation will come in this area both directly and indirectly whether it’s through how these are held at banks, security accounts, taxation and the like. We will see this regulatory environment evolve.”

Clayton’s comments come just a week after billionaire hedge fund manager Ray Dalio warned that the U.S. may ban Bitcoin outright just as they did with gold in the 1930s.

His comments about Bitcoin’s status as a non-security are also interesting in light of Ripple’s appeals to the SEC for documents from the agency to determine how exactly it came to the conclusion that Bitcoin and Ethereum were not securities.

The company and its backers have repeatedly argued that XRP is not a security however the SEC believes it is markedly different due to being morcentralized. Former SEC attorney Marc Powers told Cointelegraph that the agency is executing significant overreach in its case against Ripple and its executives.

Former SEC chair Jay Clayton tips new Bitcoin regulations are coming

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Digital Banking: Reserve Bank in the Philippines Is working on Virtual Bank Framework to Enable Greater Financial Inclusion

The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, is reportedly looking into adopting a virtual banking framework so that it may be leveraged to enable greater financial inclusion.

The new digital banking guidelines are being developed to support a regulatory environment that promotes responsible innovation. The new rules will also aim to support cyber or online resilience while enabling the ongoing digital transformation of the financial services industry.

Introduced in December 2020, BSP’s “Guidelines on Establishment of Digital Banks” states that a virtual bank is a financial organization or entity that may be categorized as a bank, providing financial products that are delivered end-to-end via an all-digital platform with no physical branch locations.

Digital banking platforms are expected or required to maintain proper digital governance while offering secure, robust, and resilient tech infrastructure, according to the announcement. Proper data management strategies and related best practices are also expected of these new financial services providers.

Digital banks must also adhere to the same set of applicable requirements as other banking solution providers. These guidelines include maintaining proper corporate governance structures, appropriate risk management policies, compliance, internal control and audit procedures, and reporting governance practices.

During his speech at the recently-held SAP Virtual Roundtable discussion, Benjamin E. Diokno, Governor of BSP, said that for the Philippines, “digital banking or digital finance in general as a strategy is not so much about being ahead of the curve.” Instead, it’s “more about capitalizing on its gains to bring about a more inclusive financial ecosystem.” he added.

It’s worth noting that other Asian countries like Pakistan are working on their own digital banking regulatory guidelines. In a manner that’s somewhat similar to the Philippines, Pakistan is also looking to leverage virtual banking solutions in order to enable financial inclusion and bring more people into the formal economy.

The Southeast Asia region, in general, has been increasingly adopting digital banking and modern Fintech solutions, which is a trend that has really accelerated following the COVID-19 outbreak.

Countries throughout Southeast Asia such as Malaysia, Indonesia, Singapore, and Vietnam are investing considerable resources into their financial services sector.

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