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Here’s what you should know about regulated exposure to Bitcoin

Biraajmaan Tamuly

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Bitcoin breaching the $40,000-mark re-ignited levels of interest last seen in 2017, especially since more and more institutions and investors are now flooding in with keen interest. Both retail and institutional demands are rising today and as a result, crypto exchange-traded products or ETPs are thriving in the process. In fact, recent reports also suggested that a German exchange-traded product accrued an average daily trading volume of 57 million Euros in the first 11 days of January.

Numbers by the Industry

With interest and attention in crypto spiraling up, CryptoCompare recently released a digital asset management review report.

According to the report, Assets under Management or AUM across all ETPs rose by 95% over the past month. In fact, the AUM recorded was found to be around $35.96 billion. Unsurprisingly, Grayscale’s Bitcoin Trust Product was responsible for a majority of the cumulative AUM, with the same holding a share of over $22 billion.

Additionally, aggregated ETP volumes also tripled in January 2021 with over $830 million registered per day. Grayscale’s GBTC volumes represented 64% of the total volumes.

With more interest flooding into the sector of regulated crypto-exposure, the question remains  – Does this benefit or further harm the crypto-landscape?

Weighing Options: Self-Bitcoin Custody or Third-Party Introduction?

To be honest, the aforementioned argument can go on for a long time since both sides of the debate have some very valid points.

Crypto-regulations would certainly bring more mainstream adoption and increase consumers and businesses in the digital asset industry. Some countries are already forming a crypto-positive attitude, with Switzerland being one of them. In fact, Switzerland’s Financial Markets Supervisory Authority has already granted licenses to two institutions providing banking services for crypto-clients.

On the other hand, countries like India and the United States continue to apply a veil of uncertainty over crypto-regulations. Some organizations have made some significant strides, with the likes of Grayscale Bitcoin Trust becoming an SEC reporting company in early 2020. Overall, however, governments are still worried about the potential undermining of fiat currency, an asset they are trying to protect dearly.

Here, a major drawback remains the possible dissolution of a digital asset’s identity. Bitcoin’s primary allure remains that it is completely transparent and its holdings are completely anonymous. Regulated crypto would take away some of the decentralization as centralized bodies will be responsible for the protection of customer’s crypto-allocation. Grayscale is the best example as investing in Bitcoin through GBTC is unlike any traditional self-custody method.

Where are we heading?

As we are already heading towards more institutional investments in 2021, the growth of regulated financial products is certain. However, the eventual landscape is still fuzzy as the jury is still out on whether the traditional financial landscape can co-exist with an emerging decentralized crypto-ecosystem. Finally, there’s the third option – Crypto gets absorbed by the traditional set of ways.


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Biraajmaan covers market trends of major cryptocurrencies. As a graduate in engineering, his interests lie in Blockchain technology. With over a year as a journalist, his articles focus on US and UK markets.

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