Digital assets: DB enters MAS' Project Guardian, crypto ETPs debut in the UK

Deutsche Bank has joined the MAS' Project Guardian, which aims to test the feasibility of asset tokenisation applications in regulated financial markets.

Collaborating with leading fintechs and digital natives is key to engineering technologically advanced asset servicing products - Mike Clarke, Deutsche Bank

As part of the asset and wealth management workstream, the bank said it will test an open architecture and interoperable blockchain platform to service tokenised and digital funds. It will then propose protocol standards and identify best practices.

Deutsche Bank is one of the latest financial institutes to tap into the state government-led Project Guardian. The multi-year project involves global policymakers (including the United Kingdom’s FCA, Switzerland’s FINMA, and Japan’s FSA) and financial services industry representatives.

Mike Clarke (pictured), global head of securities services product management said: 'Collaborating with leading fintechs and digital natives is key to engineering technologically advanced asset servicing products. This will not only enhance our competitiveness but empower us to create more value.'

Other institutions like HSBC, United Overseas Bank (UOB), UBS Asset Managment, SBI Digital Markets, and many others are among the active participants. 

21Shares, WisdomTree first to launch crypto ETPs in UK

21Shares and WisdomTree each listed several Bitcoin and Ethereum ETPs on the London Stock Exchange this Tuesday, specifically targeting professional investors.

The latest move came after the Financial Conduct Authority’s approval for listing crypto ETPs in March, which allow the trading of non-leveraged, or physically backed exchange-traded notes (ETNs) linked to Bitcoin and Ethereum (Ether).

21Shares, the world’s largest crypto ETP issuer led by CEO Hany Rashwan (right), listed four physically backed crypto ETNs that fall under the ETP category. The 21Shares Bitcoin ETN and the 21Shares Ethereum Staking ETN both have an expense ratio of 1.49%, while the 21Shares Bitcoin Core ETN and the 21Shares Ethereum Core ETN hover at 0.21%. Each is listed in both GBP and USD. The launch also marks the ETN provider's official entrance into the UK market.

Meanwhile, WisdomTree also introduced two physically-backed crypto ETPs – the WisdomTree Physical Bitcoin and WisdomTree Physical Ethereum ETPs – with both priced at 0.35%.

‘Interest in the asset class amongst European investors has significantly increased this year, in part due to a new fee environment for these ETPs and the launch of US spot bitcoin ETFs,’ Alexis Marinof (right), head of Europe at WisdomTree, said in a statement. ‘We expect this development to be an inflection point for crypto ETPs in the UK since it means professional investors now have a more convenient and locally regulated access point with the familiar ETP wrapper.’

And the UK isn’t the only one. Crypto asset pegged ETPs have gained attention worldwide in recent months as more financial institutes embraced Bitcoin and showed interest in making such a mainstream investment tool.

This includes the US’ first spot Bitcoin ETFs that started trading on the Nasdaq in January, with asset managers like Blackrock and Valkyrie among the active participants. Last month, the Hong Kong Stock Exchange (HKEX) also welcomed the listing of Asia's first spot virtual asset (VA) ETFs.

Marketnode secures Series A funding led by HSBC

Marketnode, a Singapore-based digital market infrastructure operator, secured funding for its Series A financing round led by HSBC, according to its announcement. The exact amount raised during the Series A funding was not disclosed.

The investment allows Marketnode to collaborate with the financial services industry to ‘scale infrastructure across key asset classes such as digital fixed income and structured products’ and participate in the upcoming launch of Fundnode and roll out other tokenised asset offerings,’ the statement said.

The infrastructure operator, led by general manager and president Rehan Ahmed (right), was founded in 2021 as a joint venture between the Singapore Exchange (SGX) and the state-owned investment firm Temasek, which also contributed to the latest funding round. 

The latest development came after its effort on the Monetary Authority of Singapore (MAS)’s Project Guardian last summer as the regulator announced the expansion to a further pilot phase focusing on the issuance of tokenised multi-currency and equity-linked structured notes. These notes, under HSBC’s existing issuance programme, were tokenised by Marketnode’s multi-asset issuance platform and distributed by United Overseas Bank (UOB) for its wealth management clients.

Volatility Shares readies leveraged Ether ETF listing

The Volatility Shares 2x Ether ETF (ETHU), a leveraged Ether ETF sponsored by asset manager Volatility Shares, will start trading on the Chicago Board Options Exchange (CBOE) on 4 June, the company stated on its site.

According to a file submitted in April to the US Securities and Exchange Commission, the fund intends to typically enter cash-settled Ether futures contracts as the ‘buyer’ in order to obtain two times exposure to Ether's performance. This means that in a cash-settled futures market, the counterparty pays cash to the buyer if the price of a futures contract goes up, and the buyer pays cash to the counterparty if the price of the futures contract goes down.

The latest activity followed its 2x Bitcoin Strategy ETF (BITX), a leveraged Bitcoin-linked ETF, that began trading in June 2023. According to Volatility Shares’ site disclosure, the fund’s quarterly net asset value reached over 134% as of 31 March.

New York Stock Exchange to introduce Bitcoin options

The New York Stock Exchange announced this Wednesday its intention to bring cash-settled spot Bitcoin options into the market. Contracts would be subject to regulatory approvals.

The option will be tracking the CoinDesk Bitcoin Price Index (XBX), developed by CoinDesk Indices. Currently the benchmark for US$20 billion in ETF assets under management, XBX tracks the spot price of Bitcoin, denominated in USD.

‘Upon regulatory approval, these options contracts will offer investors access to an important liquid and transparent risk-management tool,’ Jon Herrick (right), chief product officer at New York Stock Exchange, said in a statement.

Singapore market maker get green light from Abu Dhabi regulator

QCP Capital, the Singapore-based digital assets market maker and broker-dealer, has received in-principle approval from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) to conduct regulated activities.

The Asia digital asset options trading desk said in a statement that its expansion is responding to a comprehensive and bespoke regulatory framework introduced by the FSRA for the regulation of exchanges, custodians, brokers, and other intermediaries engaged in virtual asset activities.

‘With most of the crypto derivative market currently existing outside the US, Abu Dhabi and the UAE have a lot of potential to capture this market segment,’ it said.

Founded in 2017, the company said it is also a provider of ‘trading solutions and structured strategies’ besides operating the trading desks for digital asset derivatives.

A flurry of crypto-focused companies has shown interest in opening a business in the United Arab Emirates as one of the hubs. Last September, Zodia Markets, a digital asset platform backed by Standard Chartered Ventures, also secured approval in principle from the Abu Dhabi Global Market to operate as an over-the-counter (OTC) crypto broker-dealer in Abu Dhabi. In August 2023, Laser Digital Middle East FZE, the digital asset subsidiary of Japanese financial services giant Nomura, received operating license approval from Dubai’s Virtual Asset Regulatory Authority (VARA), the final stage of the licensing process.

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