The crypto market is back firmly in focus this week amid bullish Ethereum ETF approval vibes. Stockhead caught up with BTC Markets CEO Caroline Bowler to discuss the current crypto state of play.

 

Firstly, though, before we dive into the interview with the Irish-born Aussie exchange boss (below), for context here are some of the main news items causing a positive stir in the crypto market this week:

• The approval by the Securities and Exchange Commission (SEC) of key regulatory filings related to spot Ethereum exchange traded funds (ETFs) in the US – with the caveat of removal of staking options from the products of each applicant. Actual trading of the ETFs is still yet to get the official green light, but that surely looks like happening before too long.

• The decision was announced overnight AEST, and it comes after Bloomberg’s ETF experts flipped earlier in the week from a 25% chance of approval to 75% likelihood.

• Huge names in finance are, as with the Bitcoin ETFs approved earlier this year, gunning to be Ethereum ETF issuers. These include BlackRock, Fidelity, VanEck, Franklin Templeton, Ark/21Shares, Invesco/Galaxy and Grayscale.

• Donald Trump has announced that his US presidential campaign will officially be accepting crypto donations.

• A crypto-friendly bill – dubbed FIT21 – has now just passed in the US House of Reps, that previously President Joe Biden was thought more than likely to veto. It still does have a slight grey area about how to handle decentralisation, however, and is also yet to be voted on in the Senate.

• The talking heads are talking (see below) – even about Solana ETF potential now. Steady on, let’s get the ETH ones up and running first to go with the recent spot BTC ETFs…

 

‘It was inevitable’ says BTC Markets CEO

Hi Caroline. It’s been quite a week for crypto news so far. Just about all seems to be going according to bullish plan (okay maybe not certain macroeconomics this week), with the market now gifted  the news of spot Ethereum ETF approvals in the US. What’s your perception of all this? 

Caroline Bowler: I think it was always inevitable, and it’s inevitable worldwide, too. So it’s certainly no surprise to me.

It will happen here in Australia, too, and it’s going to happen in the other major markets around the world.

So that that much we know, but what I think is interesting in this instance is the greater story happening behind the scenes, because the signs and indications were that this wasn’t going to come through in this batch.

Regarding the greater story behind the scenes, do you mean the potential US political motivations behind this? 

Yes, I think that’s of more interest – the speculation about whether the Biden administration’s view on crypto has evolved and whether there has there been pressure applied.

Institutional pressure? 

Well there is a certain degree of pressure given the players that are involved and the scale of these businesses that we’re talking about at play in crypto now.

It’s becoming no longer acceptable to just broadly disparage the cryptocurrency industry when BlackRock is so heavily into it – you can’t get more institutional and establishment than that.

All these powers and factors combined is the most telling part of the shift that I think we’re seeing happening within the United States.

I’m not surprised the US establishment has had some issues with it, given its geopolitical role and gaining momentum outside its borders.

It’s a subject where they have long been able to use it almost like as a punching bag. So I wouldn’t count my chickens regarding a full turnaround in sentiment just yet.

But the industry is continuing and it’s now that much older. It’s gone through another bear cycle. And it’s seen FTX implode, SBF and CZ sent to prison and it still hasn’t fallen over. In fact, those events, in my view have take the sting out of the anti-crypto declarations made by the likes of Senator Elizabeth Warren.

And that’s because the system is working with these guys in prison, the industry is still here, and people are still interested in it.

And it can no longer just be ignored or put in the “it’s just for criminals” box. That doesn’t fly any more. BlackRock didn’t come to the table because it wanted to deal with criminals or lose money. It did it because it knew its clients wanted these ETF products.

There’s money in this and there’s demand, and I think the presidential candidates have woken up to that.

 

A classic, massive, post-halving crypto bull run to ensue?

How bullish then, do all these factors you’re talking about make you feel about the crypto market as we inch closer to H2? 

Obviously, we’re bullish for the long term anyway, given the industry that we work in, but I think that the recovery that we’ve seen that started in 2023, gathering pace this year, indicates the next 12 months are going to be particularly interesting and exciting in cryptocurrency – amid the US election, too.

There are still regulatory headwinds to be faced over there, but I really think you ultimately can’t stop cryptocurrency as a sector and industry – it’s become a juggernaut.

 

‘Wen’ Aussie crypto industry regulations?

What about the Aussie regulatory landscape? Do you think the more accepting turnaround we’re seeing from the US powers that be towards crypto could spur on the Australian government to, at long last, provide some regulatory clarity for the industry here any time soon? 

The short answer to that is… no.

The more detailed version of that is, I think that we’re likely see some movement in the next government, whether it’s a Labor government or a Liberal government, whoever it is, I think it’s likely the timeframe for regulatory clarity in Australia will be in the next government cycle.

That’s my take on it. There just isn’t enough impetus behind it yet, and the impact of the United States and the ETF discussions – it’s just not a big enough story yet to apply additional pressure here.

I know they’re working on it – this is what we’ve been told.

But in the meantime, and while we’ll always keep our Aussie operation open – it’s the mothership – we are looking overseas, too, at other opportunities outside of the Australian border where we can get regulatory clarity and where I know I can grow the business. Where I don’t have to be worried about you know, some of the goalposts changing – I’ll have a license and be good to go.

BTC Markets CEO Caroline Bowler. Image supplied

 

Potential Middle Eastern expansion for BTC Markets?

Interesting. Whereabouts overseas are you looking to grow the business? 

So I’ve had a couple of trips up to the UAE already this year for a few different meetings and conversations and that’s been very interesting. Very interesting.

I’ve been asked why the UAE as potential as opposed to Southeast Asia, which I know well having spent 10 years in Singapore and understanding the cultural landscape there well.

The answer is, it seems as though both Abu Dhabi and Dubai have decided that they want to create an ecosystem out of their countries and a base to are attract and bring in global players. It reminds me London post Big Bang, just everybody flocked into London and it transformed the city as a financial capital.

And I can see that that’s what Dubai and Abu Dhabi are trying to do, and their traditional regulators seem to have done a pretty good job so far in tackling the thorny subject of regulating crypto.

Also, when it comes to the UAE, you’ve got all of that entire MENA region as well as going into Europe. Whereas Southeast Asia, for example – you’re still more restricted to within that geography. It’s harder to transport it across.

 

Staying competitive amid an expanding exchange market

Back to the local market for a sec. The crypto exchange space is getting pretty crowded in Australia. We just saw another big company launch here in Sydney the other week – OKX. How do you guys plan to stay at the forefront here and competitive amid growing noise from some large global crypto entities? 

It’s a good question. For us, firstly, we’ve got an 11-year track record in Australia and our clients trust us and trust that track record.

We have always held ourselves accountable to the highest standards that we can and when we’ve made errors, we’ve held ourselves accountable in those areas, too.

But we’ve also been consistent, reliable and our technology’s cracking good, too. But also, and this is important – we’re in Australia. We custody in Australia.

So I can’t know where the custody is on the international exchanges. And that’s not to disparage them at all, but we don’t know and there’s no transparency – there’s really no way of knowing where your cryptocurrency is with them.

But with BTC markets, you know exactly where it is. I think people respond to that.

I mean, certainly, we saw post the FTX exchange implosion – remarkable net inflows of Aussies who just repatriated all of their assets back us as an Australian exchange. We’re here, we can be found. There is some recourse in a worst-case scenario!

But also, Aussies back Aussies – I think that they look at this platform and want to back the home team.

We’re not just relying on that to be the differentiator. We’re expanding our product range and increasing our platform’s assets [for example two brand new token pairings in Render (RNDR) and Pendle Finance (PENDLE)]. And we actually hold an Australian Financial Services Licence (AFSL) from the Australian Securities and Investments Commission (ASIC).

 

Token listings set to increase

Why is it that BTC Markets has a relatively small list of token pairings compared with some other exchanges? Is it caution and risk-mitgation reasoning?

It is largely to do with risk and that’s risk to us as a business primarily. When we list an asset, the first thing that happens is  it goes to legal review. We have to make sure we’re not listing is security by mistake.

It also goes in for a technical review – the white paper is reviewed from a development point of view, and from the technology side.

We also do due diligence around the founders, the whole project, the thesis behind it, and we take into account what our clients want – are they asking for this? What’s the ask? Is it popular? And in what do we fundamentally believe?

As a shorthand, and I’ve said this before, my dad trades on BTC markets and if I listed a dud or you know, something that I felt was a dud, my mum would kill me!

But I think that’s actually the guiding ethos here – we’re in an area where there is no regulation, there’s no frameworks. We just have to operate to the highest standard that we can.

And one other thing, too, is that because we’re a proper exchange, we support all of the tech stack ourselves. So we’ve got to build the damn thing before we can list it – we don’t go to an international exchange and buy it. We we do it ourselves.

And so it’s all of those kind of factors combined, that have made us slower o with our listings, but that’s shifted this year. I think we’ve we’ve listed six new assets in the last five months there’s a couple more assets to go. We certainly have the top 10 covered, top 15, top 20. We’re looking to expand the assets that we’ve got on platform we’re looking to increase the amount of products, wider products that we have.

One other thing… I sat on a trading floor during the GFC and I saw the damage that was caused to regular people. I’ll be damned if I’m going to see that happen again on my watch on what I can control. And so this is why we do it how we do it – I call ourselves the designated driver of Australian crypto.

And I mean that. We’re as everybody else about where we’re going, but it’s just that we’re we’re sober behind the wheel. That’s how I describe it.

 

Is the retail crowd returning? Where are we at in the cycle?

Have you seen any metrics on your exchange that would indicate any rise in engagement from the retail crowd? 

We’ve definitely seen a pickup in the number of people whose accounts had gone dormant and that are now re-engaging with the market.

We’ve been seeing what we would classify as lapsed accounts coming back in as opposed to the steadfast hodlers who’ve remained. And that’s the bit that’s given me the most encouragement.

Lastly, I know you’re bullish on the future of crypto and for BTC Markets as a business, but where do you think we’re at in this cycle? 

On that, firstly we are bullish yes – and on what we’re doing. We hunkered down and went into cockroach mode, as they call it, to get through the bear market, so that we were ready and primed to take advantage of the bull when it started to emerge. We’re a profitable business and we don’t ask to anybody else. We’ve got two shareholders, that’s it, and we call our own tunes.

But as for the cycle and this uptick in crypto this year – we’ve been hitting all-time highs, but not all-time highs in terms of volume.

This isn’t a retail FOMO moment in the market. This is institutions, this is bigger money coming in and moving the market in a different way.

So, the fact that retail hasn’t returned in a big way yet, it’s actually very exciting when you think about it like that.

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