BlackRock Bitcoin ETF’s Remarkable Growth

With BlackRock’s iShares Bitcoin ETF holdings now at approximately 745,357 BTC, it has surpassed Coinbase’s reserves of 706,150 BTC and Binance’s 584,557 BTC. This achievement underscores a growing trend where institutional investors favor ETFs over traditional exchange custody. The ETF’s rapid accumulation points to deep institutional conviction and a structural realignment in crypto markets.

Ethereum ETF: Next in Line?

The Ethereum ETF by BlackRock is not far behind, with its holdings reaching 3.6 million ETH, just 200,000 ETH short of overtaking Coinbase as the second-largest Ether custodian. If this momentum continues, BlackRock is set to surpass major exchanges like Coinbase by the end of the year, further tightening the supply of Ether in the market.

Impact on Market Dynamics

The shifting custody trends are also reflected in reduced inflows to exchanges. According to CryptoQuant, Bitcoin’s 30-day moving average inflows have hit their lowest since May 2023, indicating a decrease in retail and institutional selling pressure. Similarly, Ethereum inflows have also dwindled, reinforcing investor confidence in holding their assets amid rising prices.

These changes suggest a tightening supply environment for both Bitcoin and Ethereum, setting the stage for sustained bullish momentum. With BlackRock’s continued expansion in the ETF space, the influence over crypto’s market structure is likely to grow more pronounced.

ETF Demand and Its Implications

Recently, Ether ETFs have seen net inflows exceeding $1.5 billion, including a single-day influx of $450 million. Despite previous outflows, Bitcoin ETFs have also witnessed a resurgence in demand, with nearly $310 million in inflows over recent days. This activity highlights where market demand is concentrated and signals potential bullish trends as the year closes.

In conclusion, BlackRock Bitcoin ETF and its Ethereum counterpart are reshaping the landscape of crypto custody. As these ETFs continue to attract institutional interest, the market is likely to see further tightening of supply, contributing to a positive outlook for both Bitcoin and Ethereum.

Note: This article does not contain investment advice. Readers should perform their research before making any investment decisions.

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The document, labeled “Crypto-Asset Safekeeping by Banking Organizations,” details risk factors that banks need to consider, such as understanding the intricacies of a rapidly evolving asset class, potential legal liabilities if crypto assets are misplaced, and the legal and compliance obligations under the Bank Secrecy Act and Anti Money Laundering regulations.

The document further notes, “Providing crypto-asset safekeeping services may entail significant resources and attention.” The agencies behind this document are the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Board of Governors of the Federal Reserve System.

Banks often engage third-party services to handle their crypto asset custody. For example, asset manager BlackRock utilizes Coinbase and subsequently Anchorage for Bitcoin (BTC) custody. BNY Mellon, the oldest bank in the US, also provides digital asset custody services for its clients. However, the document emphasizes that banks remain answerable for the actions of their sub-custodian. This could have significant implications if a bank’s custodian is attacked, resulting in lost crypto assets.

The document underlines the necessity of audit programs, addressing the peculiarities of crypto assets, including key generation, transfer and settlement of assets control, and staff expertise. If such programs are lacking within the bank, it is advised that “management should engage appropriate external resources…to assess crypto-asset safekeeping operations.”

There have been recent hints that banks are considering branching out into crypto. The Wall Street Journal reported in May that a group of big banks was in “early talks” to issue a joint crypto stablecoin. The regulatory environment currently holds appeal, especially as governing bodies have eased the transition into crypto. For instance, the Federal Reserve has removed the “reputational risk” criteria from its bank oversight, which was previously criticized for unfairly targeting crypto businesses.

In contrast, some crypto-based companies are contemplating becoming banks themselves. On July 2, Ripple, the creator of XRP (XRP), applied for a banking license with the OCC. Circle, the creator of stablecoin USD Coin (USDC), has followed suit.

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Balchunas anticipates that this figure could climb up to $10 million on its second day of trading, based on the impressive volume seen on its debut. This ETF stands out from the pack of staking ETFs currently being scrutinized by the U.S. Securities and Exchange Commission (SEC), as it was registered under the stringent securities guidelines of the Investment Company Act of 1940.

Under this Act, funds are obligated to entrust their assets with a qualified custodian. REX-Osprey revealed on Wednesday that it had selected Anchorage Digital, the sole federally regulated bank permitted to custody and stake digital assets, as its custodian.

“Staking is the next chapter in the crypto ETF story,” Nathan McCauley, the CEO of Anchorage, stated in the announcement, adding, “This launch marks a major step forward in giving institutions full access to the crypto ecosystem in a regulated package.”

Despite rumors that the SEC may be considering general guidance to simplify ETF listings, the Deputy Secretary of the agency, J. Matthew DeLesDernier, communicated to the New York Stock Exchange that a recently approved Grayscale ETF was under “review”. This suggests that the SEC may still be hesitant to loosen its typically rigid listing standards.

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On May 27, Komainu, a regulated digital asset custody provider, introduced custody support for Lido Staked ETH (stETH), Ethereum’s most significant staking token that accounts for 27% of all staked Ether ETHUSD. The service is available for institutional investors in Dubai, United Arab Emirates, and Jersey, a self-governing British Islands territory. This initiative facilitated a compliant route for institutions to access Ethereum staking yields during a period of significant diversification into digital assets.

“Staking strategies are actively being explored by asset managers, custodians, family offices, and crypto-native investment firms,” Gilbert revealed to Cointelegraph. Meanwhile, US exchange-traded fund issuers await clear regulatory guidelines to launch Ethereum staking ETFs.

Despite Ethereum’s lackluster performance, Gilbert noted that institutions find liquid staking tokens like stETH appealing as they address issues related to capital lock-ups and intricate custody arrangements. Tokens like stETH offer immediate liquidity and are compatible with qualified custodians like Komainu, Fireblocks, and Copper.

Lido’s institutional adoption drive has picked up pace recently, with the launch of Lido v3, featuring modular smart contracts designed to help institutions comply with regulatory requirements. Gilbert emphasizes that custody solutions are vital for certain institutions, like asset managers and family offices, which operate under stringent compliance and risk management frameworks.

He contrasted this with crypto-native firms, which are more comfortable handling crypto assets directly and often bypass third-party custody solutions. Gilbert points out that staked Ether tokens like stETH are increasingly being used by both traditional and crypto-native institutions to reap Ethereum staking rewards without tying up capital for extended durations.

These tokens also offer liquidity benefits through decentralized finance (DeFi), centralized finance (CeFi), and over-the-counter (OTC) markets. As a result, the demand for staked Ethereum has surged significantly. Cointelegraph recently reported that the amount of Ether staked in the Beacon Chain hit a new record high.

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The establishment of a chartered Trust Company enables Zero Hash to expand its regulatory view, ensuring the widest regulatory coverage for crypto and stablecoin infrastructure. The Trust:

• Resonates with the company’s pledge to compliance-centric innovation as the industry gears up for imminent legislative developments, including the GENIUS Act, anticipated to impose specific regulatory mandates for stablecoin custodians.
• Empowers Zero Hash to augment its service range. As a Qualified Custodian, the company can now safeguard tokenized assets on behalf of SEC-registered institutions, further broadening its appeal to corporate clients.
• Facilitates Zero Hash to roll out new account categories for brokerage clients, encompassing retirement accounts and registered investment advisors.

“This authorization is a testament to our steadfast dedication to being the most comprehensive and reliable partner in the crypto and stablecoin arena,” stated Stephen Gardner, CEO of Zero Hash Trust. “We are thrilled to broaden our offerings for partners we serve, including leading payment groups like Shift4 and Stripe, and brokerage partners such as Interactive Brokers and tastytrade.”

Simultaneously, Zero Hash announces the appointment of two public board members to the Trust. Mary Ruppert, with over two decades of experience as a lawyer, compliance officer, and public policy professional, including stints at PayPal and the Department of Justice. David Hannigan, currently the CISO at NuBank, has previously headed security at Spotify and Capital One.

About Zero Hash: Zero Hash is the preeminent crypto and stablecoin infrastructure provider that flawlessly integrates fiat, crypto, and stablecoins on a single platform, enabling a more efficient way to transfer money and value globally. Its embeddable infrastructure aids start-ups, enterprises, and Fortune 500 companies in developing a diverse plethora of use cases, including cross-border payments, commerce, trading, remittance, payroll, tokenization, wallets, and on/off-ramps.

Zero Hash is backed by investors, such as Point72 Ventures, Bain Capital Ventures, and NYCA. Zero Hash Trust Company LLC will operate in North Carolina with a non-depository trust charter issued by the North Carolina Commissioner of Banks.

Media Contacts: Zero Hash, Shaun O’Keeffe, (855) 744-7333, media@zerohash.com

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