Why a new crypto platform from the New York Stock Exchange owner is huge news
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Over the weekend the owner of the New York Stock Exchange said it would launch a Bitcoin futures business as part of a project to build a global platform for digital assets.
It is the biggest crypto news this year, says top expert and Apollo Capital chief investment officer Henrik Andersson.
It’s also part of larger wave of recognition by institutions that crypto is no longer on the fringe — it’s still risky, but isn’t going away as an asset class.
Stockhead spoke to Mr Andersson about the latest developments in the world of cryptocurrency.
How quickly is cryptocurrency going mainstream?
A few years ago we were wondering if the government is going to ban cryptocurrencies, are they going to be around in a few years, and now there’s no doubt it will be around. We have seen announcements this year that we would never have dreamed about a few years ago.
The one from ICE — the Intercontinental Exchange — that it’s launching Bitcoin futures by November was the biggest news so far this year.
ICE is one of the most trusted institutions in the world when it comes to finance. They own the New York Stock Exchange.
They are working with Microsoft, Boston Consulting Group, and Starbucks to provide a service for retail and institutional access to the market.
Starbucks is an interesting addition there.
And ICE is federally regulated in the US. The New York Stock Exchange and ICE are federally regulated institutions so you cannot get any higher quality institutional backing for crypto assets.
What other traditional financial structures are being adapted to crypto that are changing it from niche to necessary investment class?
There is a potential wall of money coming from the institutional investor base.
The first institutionalisation of crypto markets started with Bitcoin futures on the CME and CBOE in December last year.
But there are very few listed instruments so far. There are no ETFs yet, that would be another big step.
I think it is likely we will get an ETF first on Bitcoin within one to two years.
What needs to happen for institutions to really start getting on board with crypto assets?
Custody is a big thing.
There are very few qualified custodians of crypto assets [entities qualified to safely hold these assets]. So far we have the custodians have been crypto companies, like Coinbase.
What will happen within the next 6-12 months is we will see custodial services launched by traditional financial firms.
What are the other things institutions need?
They want more clarity around regulation, especially around exchanges. We saw that earlier this year with AUSTRAC putting additional regulation around anti money laundering and know your customer procedures.
What about crypto asset funds, are many appearing in Australia?
There are more and more popping up over the last year, mostly by people with a crypto background that might never have managed money before.
I think it’s likely that we’ll see the first institutions start to invest in some of these next year.
Henrik Andersson is the chief investment officer for crypto fund, Apollo Capital.
He has over 17 years experience in global financial markets, with almost a decade on Wall Street. Henrik has extensive experience across three continents as a quantitative analyst, senior research analyst and in institutional equity sales.
Apollo Capital is Australia’s premier crypto fund, allowing sophisticated wholesale investors to gain access to investment opportunities within the crypto asset market.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.