Michael Bodley

CoinShares, the European crypto ETP specialist, is making a first-time push into actively managed digital asset products — including a hedge fund targeting US institutions.&nbsp;



Headquartered in Jersey, the publicly traded company has built its financial reputation by issuing liquid ETPs that encompass a diverse range of spot cryptocurrencies. Alongside this, the company has gained recognition for its valuable industry research. The firm operates a venture capital arm that accepts external investments, including contributions from US investors.



But an <a href="https://blockworks.co/tag/sec">SEC</a> filing on Wednesday indicated that CoinsShares has laid the groundwork for, and is nearing the launch of, what appears to be its first hedge fund open to accredited US investors. As of the most recent close in Europe, the company&#8217;s asset management arm, including assets held within its ETP products, amounted to approximately $3 billion.



The fund, CoinShares Bitcoin US Feeder Fund appears set to start trading in the coming weeks. Further details regarding its investment strategy weren’t immediately available. 



The feeder fund structure indicates that the vehicle is set to funnel limited partner capital into a master fund. This could in turn serve as a conduit for incoming capital from European investors. A spokesperson for CoinShares declined to comment.



The move comes as industry participants say launches of institutional-grade, liquid vehicles concentrating on cryptocurrencies have slowed, even as venture capital and private equity raises have picked up from lows notched in the fourth quarter of 2022.&nbsp;



Many traditional finance firms that delved into cryptocurrency trading last year have chosen to put a hold on their expansion plans. Many have adopted a wait-and-see approach, likely due to the regulatory challenges posed by the SEC and CFTC in the United States.



The move, for CoinShares, follows a rocky end of 2022, including <a href="https://blockworks.co/news/coinshares-unsure-it-can-recover-any-of-31-million-ftx-exposure">booking a 29% drop in combined income during the fourth quarter.</a> The company had significant exposure to FTX.&nbsp;&nbsp;



<h2 class="wp-block-heading">Asset management plans brewing&nbsp;</h2>



CoinShares said in its first quarter earnings <a href="https://s3.amazonaws.com/a.storyblok.com/f/155294/x/97c813bc14/coinshares_q1_23_report.pdf" target="_blank" rel="noreferrer noopener">report</a> that the company’s leadership sees opportunity in a shift from large investors toward active, alternative investment products. 



“Today’s investors seek more than passive exposure to digital assets and are demanding increasingly sophisticated investment alternatives,” the company wrote in its report.&nbsp;



It then lifted the curtain on the company’s plans for a significant shift from its core ETP products. ETPs are the rough equivalent of ETFs in the US, where no spot bitcoin or crypto product has ever been approved.&nbsp;



CoinShares said it would outline plans for an “alternative asset management business,” which would bring that division more in line with US crypto firms that engage in research, trading and asset management, including hedge funds.



The company wrote that it was in the process of vetting external talent and making hires to support the initiative, which would represent a shift from its long time proprietary trading strategies. New strategies open to external investors would be seeded by CoinShares, according to the company.&nbsp;



For first-time runners of external capital, getting off the ground with seed money can provide an outlet to build up a track record before actively fundraising. It’s not clear how much external capital CoinShares would like to drum up for the new venture, which would likely include other strategies in addition to the bitcoin-focused hedge fund.&nbsp;



The new business, like most hedge fund products, plans to impose performance fees on top of management fees. ETPs did not impose performance fees.&nbsp;



The professed plan of CoinShares, led by CEO Jean-Marie Mognetti, is to “transform from a pure proprietary model with no external investors to a traditional active asset manager platform.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

CoinShares courting US investors in first asset management push

Shalini Nagarajan

A newly-registered investment fund from Spanish private bank A&amp;G will soon be trading crypto including bitcoin (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>).



A&amp;G, with 12.4 billion euros ($13.7 billion) in assets under management, touts the actively-managed fund as the first of its kind in Europe.



Its managers will have the freedom to allocate the fund&#8217;s weight in any manner they deem fit, with at least 70% exposure to physical crypto at all times.



The fund will be overseen by Román González Torres and Rubén Ayuso, both of whom have prior experience managing other funds at A&amp;G.



Torres told Blockworks there will be a focus on “the main cryptocurrencies in terms of market cap and liquidity.” <a href="https://www.ayg.es/home" target="_blank" rel="noreferrer noopener">A&amp;G</a> registered the fund with Spain’s financial regulatory authority on July 21, and it is slated to <a href="https://www.ayg.es/sala-de-prensa/detalle-noticia/6560/a-and-g-lanza-el-primer-fondo-de-derecho-espanol-de-criptomonedas" target="_blank" rel="noreferrer noopener">launch</a> by the end of September this year. 



“If the market becomes overly optimistic (reaches exuberance), up to 30% of the fund may be held in cash. However, the core of the fund will always be invested in cryptocurrencies, making it a 100% crypto fund,” he said.



Some passively-managed crypto funds like <a href="https://blockworks.co/news/blackrock-bitcoin-etf-grayscale" target="_blank" rel="noreferrer noopener">Grayscale&#8217;s</a> Digital Large Cap Fund (GDLC) and Bitwise&#8217;s 10 Crypto Index Fund (BITW) track specific crypto indexes. GDLC is up 8.6% over the past year while BITW has gained 26.1%.



A&amp;G&#8217;s fund will not follow such an approach. Its managers will decide crypto exposure based on market conditions — liquidity and the like — and indicators from data providers such as Glassnode. Product updates and market adoption will also be factored in.



According to Torres, the fund will be an exchange-traded product. Investing through the fund provides tax benefits compared to direct investments in cryptocurrencies, especially when swaps are involved, he added.



Torres said the bank has been working on the fund&#8217;s launch for over two years, and the <a href="https://blockworks.co/news/mica-could-get-crypto-banked" target="_blank" rel="noreferrer noopener">introduction of MiCA</a> has been helpful in making it happen. There is no initial target size for the fund, a spokesperson told Blockworks.



A&amp;G has appointed CACEIS Bank, the asset servicing arm of Crédit Agricole, as the depositary of the fund and enlisted PwC as the auditor.



“The volatility will be high. We expect to beat the crypto market in the long run,” Torres said.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

$14B Spanish bank wants to beat market with actively-managed crypto fund

Macauley Peterson

In traditional finance, asset management is a huge and still-growing market segment, but it has yet to take off in the crypto space. A new cross-chain platform, launching today, is focused on tackling the technical challenges holding decentralized asset management back.



Playing to crypto’s inherent strengths of transparency and self-custody, Valio.xyz — which bills itself as “a talent discovery marketplace connecting traders to capital” — set out to solve problems both from the perspective of prospective investors and asset managers.



Investors on the platform are able to allocate capital to traders without trusting them, while traders have access to the myriad chains supported by <a href="https://blockworks.co/tag/layerzero">LayerZero</a>, to craft flexible strategies that can include long-tail crypto assets, derivatives and, eventually, the full gamut of DeFi decentralized apps (dapps) available.



The concept is developed by venture studio Openhedge, which previously contributed to options protocol Premia Finance. The six-member core team goes by first names or pseudonyms to preserve their privacy in a bid to avoid becoming the target of scammers. All team members claim to hail from backgrounds in software engineering, investment banking and DeFi.



Openhedge and Valio founder Karlis believes the unfilled market need that has kept the asset management vertical from developing in crypto boils down to a lack of flexible trader tools, coupled with depositor safeguards.



“We&#8217;re tackling this entire thing bottom up,” Karlis told Blockworks. “We are sticking to the ethos of decentralization, saying, ‘we&#8217;re not forcing any opinions on the market.’ We&#8217;re simply creating the marketplace where the next generation of asset managers and capital allocators can be discovered.”



A gated initial launch will give whitelisted managers access to trading via GMX on Arbitrum and 0x on Optimism, via Valio’s vault system. Users will manage their positions over LayerZero’s cross-chain messaging protocol.



By enforcing a deposit cap of $500 and a maximum vault size of $10,000, Valio hopes to iron out any bugs and limit risk to users of the new protocol, ahead of a public launch on Aug. 7. The use of Ethereum layer-2 <a href="https://blockworks.co/tag/rollups">rollups</a> will cut down on transaction fees, enabling small position sizes.



Depositors can select vaults to enter, and follow the manager’s actions in real-time. Aside from an initial 24-hour lockup period, deposited funds can be withdrawn at any time, or programmatically when certain conditions are met, such as a stop-loss or profit-taking based on percentage change.



<h2 class="wp-block-heading">Minimizing trust</h2>



A key design innovation is Valio’s mechanism for preventing asset managers from trading against the funds they manage — essentially manipulating the price of small illiquid assets.



When a manager creates a vault, they have to define a daily limit on the price impact they can have as a percentage of their assets under management (AUM). Called CPIT (Cumulative Price Impact Tolerance), Karlis expects this will quickly converge to an “acceptable market level,” of around 3-4% that is “just high enough to prevent the nefarious managers from participating in the first place.”



Part of the gamified investing experience is social, and each Valio vault is accompanied by a private Discord instance for managers and their backers to keep in touch. But they can remain pseudonymous.



“A person is characterized by their performance, nothing else. If they so choose, nobody needs to know who they are unless they explicitly and willingly want to do otherwise,” Karlis said.



Managers can opt to be compensated via a mixture of management fees based on AUM and performance fees, triggered by their vault’s success above a certain threshold.



“For traders it’s a no-brainer value proposition to participate,” Karlis said, because traders effectively get free leverage and the chance to build their personal brand.



Upon withdrawal, depositors can choose between in-kind tokens — receiving a proportionate share of each asset in the portfolio — or automatically convert their funds to a single token, like <a href="https://blockworks.co/price/usdc">USDC</a>.



While in a vault, depositor positions are represented as ERC-721 <a href="https://blockworks.co/tag/nfts">NFTs</a>.



<h2 class="wp-block-heading">Active vs. passive investing</h2>



Valio can be used to construct an index fund, putting it in competition with platforms such as <a href="https://blockworks.co/tag/index-coop">Index Coop</a>, TokenSets and <a href="https://domani.finance/">Domani Protocol</a>, but Karlis points to several differences: An index token represents a set methodology, or a manager’s views at a fixed point in time, and they are limited to spot markets. They also can’t necessarily be rebalanced trustlessly.



“What we really need to break through as an industry is the ability to have these experienced Web3 people act as <a href="https://www.sherpaadventuregear.com/blog/who-are-the-sherpa-people-of-nepal">Sherpas</a> to the novel entrants looking to get in, so they can consistently convey their views on the market and let their backers follow them,” Karlis said.



He pegs “complexity” as the “number one limiting factor in Web3 adoption — whether it&#8217;s gaming, finance, whatever,” and looks forward to developments in account abstraction and cross-chain communication that will make DeFi more accessible to newcomers.



<h2 class="wp-block-heading">Future plans</h2>



Valio has not yet undergone third-party audits, and the team is going for an incremental approach using a restricted launch and bug bounties, with third-party audits to come later after the platform has added more features, dapps and chains to its offering.



“One of the things that we&#8217;ve learned, throughout the audit process, is that audits tend to mostly be just reputational risk hedges,” Karlis said.



The aim is to remove investment caps in the fourth quarter this year, alongside adding additional protocols to the vault system.



“​​It&#8217;s not just sufficient to give someone the code and say, hey, can you find bugs?” Karlis said. “We pioneered the standard where first we have the initial technical audit, then we have the system behavioral audit, and then we have another follow-up audit either in the form of formal verification or some other form before we release the system in an unrestricted fashion to our users.”



The platform does not have a token, but it is incentivizing participants through a competitive points system and “loot box” giveaways.



It’s not yet clear what the impact of regulations of DeFi will be for a product like this, but Karlis isn’t worried, saying, “we welcome regulation.”



The consumer protection aims of regulation is ultimately about dealing with the problem of asymmetric information, he noted. DeFi’s transparency tackles that head on.



“What we do is we provide infrastructure to ensure that the economics of backing these new managers simply makes sense,” he said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

This startup is putting a DeFi spin on asset management

Ben Strack

<div id="highlights-block_62e448c2af366" class="highlights">
 <ul>
 <li>WisdomTree has started beta testing its consumer financial app </li>
 <li>The firm expects to begin seeing revenues from its digital assets initiatives in 2023 </li>
 </ul>
 
</div>



Digital asset-focused investment manager WisdomTree sees opportunities to profit from crypto’s recent churns — including expanding the company’s regulatory prowess in a bid to gain additional clients.&nbsp;



WisdomTree, which offers a range of ETFs, ETPs, indexes and model portfolios, ended the second quarter with $74 billion assets under management — down 6.4% from the prior quarter due to market depreciation.&nbsp;



The company’s assets dip came despite net inflows of $3.9 billion, primarily due to flows into WisdomTree’s fixed-income products. Assets under management within the firm’s crypto products plummeted about 60% from $383 million to $151 million despite net inflows of $3 million into those offerings.



WisdomTree’s operating revenues decreased about 1% quarter over quarter to $77 million. Its net income jumped from a loss of about $10 million in the first quarter to a gain of $8 million in the second quarter. The company’s stock price was $5.20 at 4pm ET, down 1.7% for the day.



<h3 class="wp-block-heading">A continued focus on digital assets</h3>



Though the industry saw robust funding, ads during the Super Bowl and crypto firms promising “too-good-to-be-true” offerings over the past year, CEO Jonathan Steinberg said on an earnings call Friday, the landscape has shifted dramatically in recent months.&nbsp;



“While some companies have struggled with the realities of regulation and risk management, and other companies have lost the trust of their customers and investors completely, for WisdomTree, the timing of this crypto winter is very constructive and brings lots of opportunity,” Steinberg said.&nbsp;



Bitcoin and ether are each down about 65% from their all-time highs reached last November amid higher-than-normal inflation and turmoil for certain crypto companies.&nbsp;



Terra’s algorithmic stablecoin TerraUSD (UST) and its LUNA token <a href="https://cms.blockworks.co/tag/terra">crashed</a> in May, rattling crypto markets beyond those assets. <a href="https://cms.blockworks.co/3ac-files-for-bankruptcy-as-co-founders-location-unknown/" target="_blank" rel="noreferrer noopener">Three Arrows Capital</a>, <a href="https://cms.blockworks.co/voyager-files-for-bankruptcy-days-after-freezing-withdrawals/" target="_blank" rel="noreferrer noopener">Voyager Digital</a> and <a href="https://cms.blockworks.co/celsius-to-file-for-bankruptcy-imminently-report/" target="_blank" rel="noreferrer noopener">Celsius</a> all filed for bankruptcy over the past month as they dealt with liquidity and insolvency issues.&nbsp;



“With these bankruptcies and these client losses, I think a lot of people don’t trust their counterparts in the crypto space the same way,” Will Peck, WisdomTree’s head of digital assets, told Blockworks in an email. “WisdomTree has a great brand, reputation and culture of risk management and regulation, and we’re going to be well-served to pick up a lot of customers for both ETPs, indexes and WisdomTree Prime.”&nbsp;



Many of the firm’s clients in the US and Europe view the current market environment as a good entry point to get involved in digital assets, Peck noted.



WisdomTree Prime, a consumer financial app that the firm <a href="https://cms.blockworks.co/wisdomtree-launching-crypto-app/" target="_blank" rel="noreferrer noopener">first revealed plans for</a> in January, is in its initial stages of beta testing. It is designed to allow users to save, spend and invest in cryptoassets such as bitcoin and ether, blockchain-enabled funds and tokenized versions of physical assets, such as gold and US Treasurys.&nbsp;



The fund group has minted a dollar token, Steinberg said, adding that the minting of a gold token is “imminent.”



Initial beta users will be invited from the company’s<a href="https://streaklinks.com/BJHRMh5d3e_p8ZD_SwLn4ckr/https%3A%2F%2Fnam10.safelinks.protection.outlook.com%2F%3Furl%3Dhttps%253A%252F%252Fstreaklinks.com%252FBJHA-dJqqrN7rsMGZgH7m8hu%252Fhttps%25253A%25252F%25252Fwww.wisdomtreeprime.com%25252F%26data%3D05%257C01%257Cwpeck%2540wisdomtree.com%257C548e518b447143d5b26f08da7168e7e2%257C5796cd723ef74a7fbec65b295bc49fe3%257C1%257C1%257C637946992647393586%257CUnknown%257CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%253D%257C2000%257C%257C%257C%26sdata%3DSy%252BwbfcLdbCYjrG62PDP9pgp%252FRcS1EmsaNs294jk2ZI%253D%26reserved%3D0" target="_blank" rel="noreferrer noopener"> waitlist</a>, Peck said, adding that there will be “a measured rollout” in the coming months as the firm continues to get user feedback.



Executives said on the call that WisdomTree expects to see revenues from its digital assets initiatives beginning in 2023, but declined to comment on specific projections.&nbsp;&nbsp;&nbsp;



“The end goal is to deliver financial services to customers faster, cheaper and with better outcomes than exist today,” the CEO said. “Over time we expect all financial assets to eventually move onto the blockchain infrastructure.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

WisdomTree CEO: Crypto Winter Brings ‘Lots of Opportunity’

<div id="highlights-block_62bf684bc45fe" class="highlights">
 <ul>
 <li>Valkyrie CEO said Grayscale&#8217;s suit against the SEC is not likely to succeed</li>
 <li>Osprey Funds leader believes a spot bitcoin ETF will not be approved during SEC Chair Gary Gensler’s administration</li>
 </ul>
 
</div>



Grayscale Investments is crafting its initial arguments against the SEC following the agency’s denial of the company’s bitcoin ETF proposal, although some are unconvinced the decision will be overturned.



“Right now we’re just laser-focused on working with the court, setting up briefing schedules and going from there,” Grayscale Chief Legal Officer Craig Salm told Blockworks. “We think that we have very common-sense and compelling arguments here and we think the court will be able to see that as well.”



<a href="https://cms.blockworks.co/grayscale-sues-sec-over-rejection-of-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">Grayscale filed</a> a <a href="https://www.docdroid.net/73OjnW4/dc-circuit-petition-for-review-as-filed-pdf" target="_blank" rel="noreferrer noopener">petition for review</a> with the US Court of Appeals for the District of Columbia Circuit Wednesday evening when the SEC rejected the conversion of its bitcoin trust (GBTC) to an ETF.&nbsp;



The firm expects to submit written arguments over the next couple months, Salm said. Grayscale’s attorneys estimate that the suit could take between nine and 12 months at the appellate level.&nbsp;



The company argues the SEC is acting “arbitrarily and capriciously” under the Administrative Procedures Act (APA), Salm said. The agency, he added, is also discriminating against issuers by <a href="https://cms.blockworks.co/proshares-bitcoin-futures-based-etf-to-begin-trading-tuesday/" target="_blank" rel="noreferrer noopener">approving futures-based bitcoin ETFs</a> but denying proposed spot-based bitcoin products.



“Both types of ETFs are priced based on the underlying bitcoin markets, and so if you’re OK with one for an ETF, then you also should be OK with the other,” Salm said Friday. “They’re two like investment vehicles that are just being treated [differently] in this situation.”&nbsp;&nbsp;



<h3 class="wp-block-heading">Will Grayscale win?</h3>



Dave Nadig, financial futurist at VettaFi, told Blockworks that the SEC’s congress-approved mandate gives the agency “extremely clear authority” to regulate rule-making about the activities of securities exchanges.&nbsp;



“I think it’s a very tough case for [Grayscale] to win,” he said. “The SEC explicitly is allowed to approve and deny exchange rules based, essentially, on whatever they like.”



To rule in Grayscale’s favor, Nadig added, the SEC would essentially have to decide that because it allowed derivatives products, it must allow a product focused on the underlying asset.&nbsp;&nbsp;



“This seems pretty stretchy to me,” he said. “By that logic, they’d have to allow all sorts of really unworkable products, like a physical oil product.”



Leah Wald, CEO of Valkyrie Funds, said in <a href="https://twitter.com/LeahWald/status/1542545687228940289" target="_blank" rel="noreferrer noopener">a series of Twitter posts</a> Thursday that suing the SEC is not likely to succeed, noting that regulators could potentially approve a spot<a href="https://twitter.com/hashtag/BTC?src=hashtag_click"> </a>bitcoin ETF before Grayscale’s lawsuit ends.



“Not many people expect this suit to go in favor of Grayscale and there isn’t much precedent for such an outcome to occur,” Wald tweeted. “But in order to keep assets flowing in and ensure institutions remain engaged, this is the only real move they have left.”



The SEC also rejected Bitwise Asset Management’s spot bitcoin ETF application this week.&nbsp; The San Francisco-based company <a href="https://cms.blockworks.co/bitwise-tries-once-more-for-spot-bitcoin-etp/" target="_blank" rel="noreferrer noopener">refiled its proposal last October</a>, attaching roughly 150 pages of research focused on price discovery in the crypto markets.



No spot bitcoin ETF has ever been approved in the US, and a number of industry watchers have said they <a href="https://cms.blockworks.co/crypto-execs-read-the-tea-leaves-on-spot-bitcoin-etf-approval/" target="_blank" rel="noreferrer noopener">do not expect one to launch</a> until 2023 at the earliest.



Greg King, CEO of crypto fund issuer Osprey Funds, said the SEC’s decisions on the Grayscale and Bitwise applications were what he expected.



“We believe the SEC’s concerns around offshore trading of bitcoin have not been sufficiently addressed,” King told Blockworks in an email. “This rejection confirms our belief that no spot bitcoin ETF will be approved in [SEC Chair Gary] Gensler’s administration.”



Gensler’s current five-year term expires in 2026.



Some issuers continue to try to launch a product though, as asset manager VanEck <a href="https://cdn.cboe.com/resources/regulation/rule_filings/pending/2022/SR-CboeBZX-2022-035.pdf" target="_blank" rel="noreferrer noopener">filed</a> a new application for a spot bitcoin ETF. The firm’s previous application for such an offering <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">was denied</a> last November.&nbsp;



A VanEck spokesperson declined to comment on the filing. 



GBTC had about $12 billion in assets on Friday. The investment vehicle was <a href="https://ycharts.com/companies/GBTC/discount_or_premium_to_nav" target="_blank" rel="noreferrer noopener">trading at a 31% discount</a> to its net asset value (NAV) on Thursday, which was about 2 percentage points more than the day before the SEC’s decision.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Grayscale Faces Uphill Battle With Lawsuit Against SEC

Jack Kubinec

<div id="highlights-block_62bb63dc34cd4" class="highlights">
 <ul>
 <li>27 million CVX tokens unlock Wednesday night at 8 pm ET</li>
 <li>A significant decline in CVX’s price could indicate the crypto market is not done falling</li>
 </ul>
 
</div>



Crypto investor <a href="https://cms.blockworks.co/which-crypto-firms-are-on-defense-during-market-uncertainty/" target="_blank" rel="noreferrer noopener">sentiment</a> faces a new test as $100 million worth of tokens for Convex Finance will unlock simultaneously Wednesday night.&nbsp;



Token holders of the asset management cryptocurrency, CVX, face a dilemma: sell their coins at a steep loss or hold in the hope the token’s price will rebound.



The tokens were locked in March after a bug was discovered.&nbsp;



Convex’s price is likely to slip as unlocked tokens hit the market, industry participants said. Experts say the extent of the slippage will reflect investor sentiment — and perhaps even indicate whether the crypto market is nearing a nadir at last.



Convex Finance launched its smart contract for the second time in March after the bug was patched. A mass of investors immediately locked their CVX tokens in the new contracts for a coded-in 16 weeks, and a sizable tranche of tokens — around 30% of total supply — will unlock Wednesday at 8 pm ET.&nbsp;



The price of CVX has cratered from nearly $40 in April to under $4. The flood of tokens ought to make it fall further.&nbsp;



“Anytime you have a decent unlock, not every investor is going to liquidate, but enough are that the price performance is generally negative,” David Martin, product manager at the crypto trading platform FalconX, told Blockworks.



Even a small amount of selling pressure or short interest could tank CVX’s price. The hedge fund Ouroboros Capital, for example, said on Twitter that if just 250,000 of the 27 million CVX being unlocked are sold, the price would likely dive 10%.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">8/N: CVX is so illiquid right now. Thanks for whales like Analytico unstaking his LP and then locking it (more on this later). Just $1mn of CVX sell will pummel price by 10%. How keen would you be to sell if you are already down 80% and have to take 10-30% slippages? <a href="https://t.co/tZ1nn5yo7B">pic.twitter.com/tZ1nn5yo7B</a>&mdash; Ouroboros Capital (@0xroborosCap) <a href="https://twitter.com/0xroborosCap/status/1541601020413095936?ref_src=twsrc%5Etfw">June 28, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But selling interest appears limited ahead of the unlockening. Martin points out Convex’s funding rate is much smaller than the NFT-focused blockchain Flow’s was ahead of its own unlock event last year, indicating investors do not believe CVX’s price can fall much further.



As actors throughout the crypto industry face liquidity crunches, however, some may sell their newly unlocked CVX out of necessity.



“If [a fund] is in a credit crunch internally…[it] might sell something that just became liquid to continue with operating expenses,” Martin said.



CVX is popular among decentralized autonomous organizations (DAOs), with six DeFi organizations each holding more than a million tokens.&nbsp;



With a market cap of $230 million, Convex alone is unlikely to shift the crypto market. But the unlockening could indicate whether investors hope to exit their crypto positions at all costs or plan to stay for the long haul.&nbsp;



“If Convex trades up or flat or only slightly down, it shows that capitulation may have stopped. If the price significantly declines, people are puking, for lack of a better word,” Martin said. 



After <a href="https://coinmarketcap.com/currencies/convex-finance/" target="_blank" rel="noreferrer noopener">dipping</a> immediately following the unlock, CVX&#8217;s price rose to around $3.85 Thursday morning.



Major Convex unlocks will continue throughout the summer, with an additional 15 million tokens unlocking in July and August. Tokens belonging to embattled DeFi (decentralized finance) projects Wonderland and Terra unlock August 4.&nbsp;



Convex did not immediately return a request for comment.&nbsp;



This is a developing story and will be updated as new information becomes available.


[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#7D26D6&#8243; assets=&#8221;CVX-USD&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;1mo&#8221; chart_interval=&#8221;1d&#8221;]





<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Convex Finance ‘Unlockening’ a Bellwether for Crypto Investor Attitudes

<div id="highlights-block_62b4bb3d9c631" class="highlights">
 <ul>
 <li>Boundaries between traditional and digital markets “will only continue to blur over time,” says Justin Chapman, the new unit’s leader</li>
 <li>Algorand executive calls the move by “a renowned financial institution” an important step for blockchain industry</li>
 </ul>
 
</div>



Northern Trust has formed a digital assets and financial markets division, citing increased interest from clients in the development of digital markets.



The new group combines the existing teams responsible for digital asset markets and those focused on market access and insights across traditional securities — such as equities, fixed income, alternatives and private assets.



“Rather than create separate business lines, by aligning our focus on digital and traditional markets together, we can continue to develop services and capabilities that truly reflect and enable our clients’ evolving investment strategies,” Pete Cherecwich, the firm’s president of asset servicing, said in a statement.



Justin Chapman, the company’s global head of market advocacy innovation and research, is set to lead the newly formed unit.



“Traditional and digital markets already co-exist,” Chapman said in a statement. “And the boundaries between the two will only continue to blur over time.”&nbsp;



A Northern Trust spokesperson did not immediately return a request for comment.



Founded in Chicago in 1889, Northern Trust offers wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. In addition to its $1.5 trillion in assets under management, as of March 31, the company had $15.5 trillion in assets under administration and custody.



The new unit comes amid a crypto market sell-off that has left bitcoin’s price down 30% in the past two weeks and roughly 70% down from the asset’s all-time high last November.&nbsp;



It also follows several moves in recent years by Northern Trust to dive deeper in the blockchain space.&nbsp;



The company partnered with IBM in 2017 to build a blockchain based on the Hyperledger Fabric. The technology was made available to Switzerland-based asset manager Unigestion to manage the administration of its private equity fund. In 2020, Northern Trust and BondEvalue completed the first trade of a fractionalized blockchain-based bond.



More recently, Northern Trust collaborated with the venture arm of Standard Chartered <a href="https://www.northerntrust.com/united-states/pr/2020/standard-chartered-northern-trust-launch-zodia" target="_blank" rel="noreferrer noopener">to launch Zodia Custody</a>, a crypto custody solution for institutions. 



Nina Tannenbaum, head of business operations at Algorand, called Northern Trust “a renowned financial institution,” noting that its new unit is an important step for the industry.



“Blockchain technology has the power to fuse traditional finance with the future of finance in a way that&#8217;s secure, scalable, and efficient,” Tannenbaum told Blockworks. “We&#8217;re happy to welcome Northern Trust to the Web3 ecosystem.&#8221;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

New Northern Trust Unit Merges Crypto, TradFi Teams

<div id="highlights-block_6261cfa696fa6" class="highlights">
 <ul>
 <li>Simplify Asset Management CEO Paul Kim says bitcoin is increasingly becoming an “important exposure”</li>
 <li>The company last year launched an ETF that includes a 10% allocation to the Grayscale Bitcoin Trust and filed in January to launch a Web3 fund</li>
 </ul>
 
</div>



ETF firm Simplify Asset Management is looking to expand its crypto-related offerings.



The New York-based firm proposed to launch the Simplify Bitcoin Strategy Risk-Managed Income ETF (MAXI), according to a Wednesday <a href="https://www.sec.gov/Archives/edgar/data/1810747/000182912622008428/simplifyexchange_485apos.htm" target="_blank" rel="noreferrer noopener">regulatory disclosure</a>. It would carry an expense ratio of 97 basis points, the filing notes.



The fund would invest in standardized, cash-settled bitcoin futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission, such as the Chicago Mercantile Exchange (CME).



The planned offering’s option overlay strategy consists of purchasing exchange-traded protective put options and writing exchange-traded call options on bitcoin futures or bitcoin-related ETFs.



MAXI would also invest in US Treasury securities and ETFs that invest in them.



Paul Kim, Simplify’s co-founder and CEO, called bitcoin and crypto “important exposures.”&nbsp;



“If people are investing time, resources and careers into building an industry or a market, de facto it’s an important industry or market,” he told Blockworks. “Even a purely passive market investor may want to at least get off zero and have a little bit of a position in there.”



Though personally not very invested in crypto, he said, he believes investors should be “cautiously optimistic” about the space.&nbsp;



“Given all the geopolitical and macro reasons why things like bitcoin and crypto can be important, I think it’s a call option on something that could become very big,” he said.



Simplify Asset Management specializes in options-based investment strategies for advisers. It has 22 ETFs trading in the US with combined assets of roughly $1.4 billion, according to ETF.com.



The latest filing would not be Simplify’s first foray into crypto.&nbsp;



Simplify <a href="https://cms.blockworks.co/simplify-reveals-plans-to-launch-web3-etf/" target="_blank" rel="noreferrer noopener">filed in January</a> to launch an ETF focused on Web3 and metaverse companies in the US and abroad.  



The company in May 2021 launched its US Equity PLUS GBTC ETF (SPBC), which primarily invests in US equities while also offering investors a 10% exposure to bitcoin through the Grayscale Bitcoin Trust (GBTC).



Grayscale has proposed converting GBTC to an ETF, and the SEC is expected to rule on that proposal in July. The agency greenlit bitcoin futures ETFs to hit the US market last October but has continuously denied applications for spot bitcoin ETFs. 



Kim said it may take a change in administration before the SEC approves a spot bitcoin ETF.&nbsp;



“Once [the SEC] provided the bitcoin futures exposure, is the value-add so massive to approve a spot conversion or a spot ETF?” he said. “Inside the crypto industry you would say of course there is. But outside, is there really a massive difference from an investor perspective? Maybe not.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Simplify CEO: Investors Should Be ‘Cautiously Optimistic’ About Crypto

Casey Wagner

<div id="highlights-block_62571c66e7bc6" class="highlights">
 <ul>
 <li>FIS clients will now use Fireblocks’ platform for crypto trading and investment exposure</li>
 <li>Fireblocks hit a valuation of $8 billion earlier this year</li>
 </ul>
 
</div>



Payment giant Fidelity National Information Services (FIS) Wednesday partnered with cryptocurrency custody firm Fireblocks to provide an institutional solution for safeguarding digital assets.



FIS’ capital markets clients will now move, store and issue digital assets through Fireblocks’ services and wallet platform. FIS clients will also be able to access stacking and lending tools, DeFi assets and “other more advanced forms of digital asset exposure,” the companies said in a <a href="https://www.businesswire.com/news/home/20220413005068/en/FIS-Teams-with-Fireblocks-to-Accelerate-Crypto-Adoption-within-Capital-Markets-Industry-Globally" target="_blank" rel="noreferrer noopener">statement</a>.



“As digital currencies become more mainstream, capital markets firms will greatly benefit from a single destination that helps them manage many classes of digital assets,” Nasser Khodri, head of capital markets at FIS, said. “This exciting new agreement is a proof point of our commitment to invest in growing our digital asset capabilities for our global client base.”



The move comes shortly after Fireblocks hit a valuation of more than $8 billion, following a $550 million <a href="https://cms.blockworks.co/fireblocks-raises-550-million/" target="_blank" rel="noreferrer noopener">Series E funding round</a> in January. Fireblocks’ investors include Fidelity-backed venture capital firms Eight Roads and MState. 



It is “inevitable that every business will need to work with crypto or digital assets,” Fireblocks CEO Michael Shaulov told Blockworks at the time.



FIS’ interest in expanding its digital asset offerings comes as more institutional investors and asset managers are starting to take a closer look at the industry. The vast majority — <a href="https://cms.blockworks.co/fidelity-most-institutional-investors-open-to-crypto-want-an-etf/" target="_blank" rel="noreferrer noopener">84%</a> — of American and European big-money investors are interested in investment vehicles with exposure to digital assets, according to <a href="https://www.fidelitydigitalassets.com/articles/digital-asset-study-2021?sf249449858=1" target="_blank" rel="noreferrer noopener">Fidelity Digital Assets’ 2021 Institutional Investor Digital Assets Study</a>.



“Data continues to show institutional investors expect the digital assets industry to more closely mirror that of other asset classes – whether that’s multiple product types covering a variety of investment strategies or the ability to access digital asset investments through traditional financial firms,” Peter Jubber, a managing director at Fidelity Digital Funds, said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Institutional Asset Manager Enlists Fireblocks To Help With Crypto Security

<div id="highlights-block_624e0099500ec" class="highlights">
 <ul>
 <li>The platform will offer a Bitcoin Tracker, which will track bitcoin’s price versus USD, and the Bitcoin Smart Beta, a tool designed to reduce volatility and drawdowns</li>
 <li>The launch of BCAM comes shortly after Blockchain.com closed a funding round of an undisclosed amount and raised its valuation to $14 billion</li>
 </ul>
 
</div>



Cryptocurrency financial services company Blockchain.com has teamed up with veteran investment manager Altis Partners to launch an asset management platform, the companies announced Wednesday.



Blockchain.com Asset Management (BCAM) will provide asset management resources, crypto trading infrastructure, research and security software services to institutional investors, high networth individuals and family offices.



Through the partnership, Altis will manage investments and Blockchain.com will provide the research, security and software services and trading infrastructure.



“The advent of distributed ledger technologies and crypto assets has the potential to change the structure of global capital markets while presenting new opportunities for investors,” Blockchain.com Chief Strategy Officer Charles McGarraugh wrote in a <a href="https://medium.com/blockchain/blockchain-com-and-altis-partners-launch-asset-management-platform-bcam-671ef5d7179f" target="_blank" rel="noreferrer noopener">blog post</a> Wednesday. “We are pleased to offer our risk management and operational expertise in this exciting sector to an even broader range of clients.”



The platform will offer a Bitcoin Tracker, which will track bitcoin’s price versus USD, and the Bitcoin Smart Beta, a tool designed to reduce volatility and drawdowns, McGarraugh said.



The launch of BCAM comes shortly after Blockchain.com closed a funding round of an undisclosed amount and raised its valuation to $14 billion. The firm also recently acquired <a href="https://medium.com/blockchain/accelerating-institutional-growth-through-the-acquisition-of-altonomy-3a2ebd4e351a" target="_blank" rel="noreferrer noopener">Altonomy</a>, a Singapore-based over-the-counter trading and executions company, in order to expand institutional offerings.



“To make good on our mission to build a financial system for the internet that empowers anyone anywhere to control their money, we need to accelerate institutional adoption,” Blockchain.com said in a blog post at the time of the announcement. “I can’t wait to see what our teams accomplish together.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.