• Crypto prices have pulled back in September, but activity ongoing
  • BTC Markets CEO Caroline Bowler cites key developments in regulation, new products
  • Overall, 2020 still represents something of a ‘tipping point’ for the sector.

A standard rule of thumb in crypto markets is that there’s rarely a dull moment.

Bitcoin (BTC) has slipped back from its August highs above $US11,000 (~$15,490), and most major alt-coins have followed suit in recent weeks.

But as ever in the space, the daily price action is taking place within a broad mix of regulatory updates and new tech developments.

To sum it up, Stockhead got an update this week from Caroline Bowler, CEO of Aussie crypto exchange BTC Markets about the state of play in the sector.

Even before Covid, Bowler said she viewed 2020 as something of a “tipping point” for BTC markets

“I think we cleared that point in July. And there’s nothing I’ve seen in the last couple of months to waver me from that.”

While the tradable value of digital assets will continue to dominate the narrative in the near term, Bowler flagged ongoing regulatory developments as further evidence of the sector’s maturity.

That includes a deep-dive by European regulators to determine the value add from a regulated crypto-asset sector (estimated at around $US830bn).

“If you look at that report it talks about financial innovation, but more importantly what crypto assets can do to benefit the broader European economy.”

“So I think that’s a good indicator of how far we’ve come as an industry,” Bowler said.

Back on the operational side, BTC has recently added six new staff and remains busy building partnerships within traditional networks in financial services.

For example, “we’ve got a number of SMSF (self-managed super fund) clients on our exchange”, Bowler said. “And I think as a trend across our industry there’s an education play there with professional services.”

“There’s some services firms which are on that learning curve, and we’ve decided to take matters into our own hands to an extent and engage those firms for the benefit of our clients — SMSFs in particular because they’ve got specific rules in terms of how they can operate,” Bowler said.

BTC leads trading flow – still

In terms of a trading update, Bowler noted some heat has come out of the alt-coin market based on decentralised finance (DeFi) applications.

But in crypto markets that’s “kind of standard”, Bowler said.

“Pullbacks are going to happen. But DeFi is still a big part of the conversation and I think there’s a space for it, it’s just a question of market maturity.”

“2020 really marks the first year for that field so it still has a long road ahead to find its roots.”

For August and September, Bowler said trading activity was still comfortably led by the “big three” – Bitcoin, Ethereum and Ripple (XRP, for which BTC markets also acts as the On-Demand Liquidity partner in the local market).

“We do have a couple of DeFi tokens on the platform, and volumes have been pretty significant for a new launch but they’re not catching up with the big three,” Bowler said.

“I think that’s perhaps indicative of the appetite on our exchange, in that so much of DeFi is linked to the Ethereum network.”

Citing up forthcoming launch of Ethereum’s long awaited network upgrade (ETH 2.0), Bowler said she still feels the space is “pushing forward. I don’t feel any complacency or a sense of ‘jeez we’ve peaked’”.

“So there’s appetite there and there’s a lot more to be explored in terms of the potential utility – that would be my view.”

Next Gen

Speaking of new rollouts, ETH isn’t the only crypto platform to flag a new upgrade, with competitor Ripple also slating an upgraded network of its own – due for rollout on December 12.

Bowler said the prototype Flare network aims to expand the ecosystem around smart contract protocols, whereby Ripple will partner with Flare to build out a platform using XRP tokens.

“Why that’s important is that currently, smart contacts are a feature of the ETH network, but that feature isn’t transferable (onto other networks),” Bowler said.

“So where Flare networks come in is you can take an existing XRP holding and convert it for use as part of smart contract protocols.”

But it will effectively be open source, where “other coins can access that smart contract feature”.

“That’s really important if you’re trying to build a digital economy. I think you want a range of networks rather than just one (Ethereum),” Bowler said.

Ultimately, Bowler said effectively flying blind is a feature, not a bug when it comes to working at the forefront of crypto in 2020.

Whether that’s keeping up with regulation and technology or assessing which coins can be included on the BTC Markets platform, it’s “indicative of the youth of the industry that a lot of the things we look to do simply haven’t been done before”, Bowler said.

“So I think in this sector you’ve got to be curious, because every day we’re navigating problems there’s no guidebook for. It’s challenging, but it’s also tremendous fun.”