The Crypto Roundup: 20 August 2024

On August 19, Bitwise Asset Management announced its acquisition of ETC Group to expand its operations in Europe. Bitwise intends to rebrand ETC Group’s products under its name in the coming months. However, the company has confirmed that there will be no material changes to the construction or objectives of ETC’s existing investment strategies.

Established in 2019, ETC Group has developed a suite of spot exchange-traded products (ETPs), including ones for Bitcoin (BTCE), Ethereum with staking (ET32), Solana (ESOL), XRP (GXRP), and the MSCI Digital Assets Select 20 (DA20). These products are physically backed, ensuring that investors gain direct exposure to underlying digital assets.

Hunter Horsley, CEO of Bitwise, highlighted that this acquisition enables the firm to better serve European investors and expand its product suite with innovative ETPs. He emphasized Bitwise’s strong reputation, built over the past six years, as a sophisticated asset manager in the crypto markets, and expressed excitement about bringing this expertise to Europe.

Bradley Duke, co-founder of ETC Group, praised Bitwise for its professionalism and leadership and expressed enthusiasm about continuing ETC’s work in Europe under the Bitwise brand.

With this acquisition, Bitwise’s assets under management (AUM) have increased to over $4.5 billion. This acquisition follows a landmark year for Bitwise, which saw the launch of its first spot Bitcoin ETP, the Bitwise Bitcoin ETF (BITB), in January and its first spot Ethereum ETP, the Bitwise Ethereum ETF (ETHW), in July. BITB became one of the 25 fastest-growing ETPs of all time, amassing over $2 billion in assets, while ETHW attracted more than $300 million in assets within just a few weeks.

Despite repeated promises from the Harris-Walz 2024 presidential campaign and senior Democratic officials for a cryptocurrency 'reset' that would distance it from the Biden administration's critical stance, the 2024 U.S. Democratic Party Platform did not mention any policies on cryptocurrencies or digital assets. The 91-page document, released on August 19, covers a wide range of topics, including "corporate greed," housing, education, U.S. foreign policy, and global power dynamics.

A focus on cost-cutting appeared throughout the platform, yet it did not offer solutions to the fundamental issue of rising costs driven by monetary debasement or propose austerity measures to manage the U.S. government's soaring $35 trillion debt. Instead, the platform frequently advocated for increased government spending through expanded social entitlement programs and preserving Social Security, despite its projected insolvency as noted by the House Budget Committee in May 2024.

At a Crypto4Harris Town Hall meeting on August 14, Democratic Senator Chuck Schumer, the Majority Leader of the United States Senate, pledged his commitment to advancing bipartisan pro-crypto legislation by the year's end, contingent on Kamala Harris securing the presidency.

During the event, Schumer emphasized the growing importance of cryptocurrency in the global financial system, warning that the U.S. risks falling behind in innovation if it doesn't actively engage with the industry. He argued that the U.S. must create a regulatory environment that fosters innovation while ensuring user protection, rather than allowing the crypto industry to relocate to countries with fewer regulations.

Schumer also highlighted the need for bipartisan collaboration in the Senate to pass legislation that would help the U.S. maintain its leadership in technological innovation, framing this effort as essential not only for promoting innovation but also for safeguarding national security and consumers from potential abuses in the crypto space.

Moody’s and Elliptic, two leaders in global compliance and digital asset risk management, have announced a strategic partnership to transform how virtual asset service providers (VASPs) are screened. This collaboration integrates on-chain blockchain data with traditional off-chain data sources, providing a comprehensive solution for financial institutions, crypto businesses, and governments to navigate the complex regulatory landscape of anti-money laundering (AML) efforts.

As the digital economy grows, so do the challenges associated with managing risks at the intersection of fiat currencies and digital assets like Bitcoin and Ethereum. These challenges include adapting to evolving regulations, assessing different types of risks, and conducting due diligence to prevent illicit activities. The partnership between Moody’s and Elliptic addresses these issues by enabling a seamless integration of on-chain data—information directly recorded on blockchain networks—with off-chain data from traditional financial records and regulatory databases.

The combined solution leverages Elliptic’s real-time on-chain data, which assesses the exposure of digital asset transactions to illegal activities, and Moody’s off-chain data, offering a unified risk management interface. This integrated approach allows financial institutions and crypto businesses to gain a holistic view of the risks associated with VASPs, helping them to make informed decisions and safeguard against regulatory, legal, and reputational risks.

Elliptic’s proprietary Holistic technology underpins this solution, assessing the risk of VASPs across multiple blockchains. With profiles for over 1,000 major VASPs, this technology enables organizations to adopt a consolidated, risk-based approach to screening compliance, keeping pace with the demands of evolving regulations.

The alliance equips risk and compliance teams with the necessary tools to manage exposure to direct and indirect digital asset risks.