Alternative Investments/Digital: “Front-Running Opportunity Of A Lifetime”
A bitcoin ETF may be round the corner, says hedge manager Raoul Pal.
Former Goldman Sachs (NYSE: GS) employee and hedge fund manager Raoul Pal cites recent developments as a regulatory thaw that may augur the approval of a bitcoin ETF. (Crypto News Flash)
Regulatory events that bode well
Raoul Pal cited the OCC’s clarification in July that banks’ custody services could include cryptographic keys and other crypto-related assets.
Dailyalts.com reported in July the view from Acting Comptroller of the Currency Brian P Brooks: “This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”
“Just understand: the pension plan, the endowment, the family office, the [registered investment advisors], they’re so far trying to get their heads around Bitcoin, and they don’t have a product to trade yet,” says Pal. “So they passed the custody regulations in the US, so now banks can custody. That means prime broking is coming for hedge funds. Hedge funds will be first into the space, that’s clear…”
Separately, on Friday, the Kraken Digital Assets Exchange announced that it had won approval from the State of Wyoming to form the world’s first Special Purpose Depository Institution (SPDI).
Kraken Financial, a Kraken entity, can now operate as a fully independent bank. It is the first digital asset company in the U.S. to receive a bank charter recognized under both federal and state laws.
As an SPDI, it can offer the full range of deposit-taking, custody, and fiduciary services for digital assets. Moreover, it can do this in a fully regulated manner.
Bitcoin ETF on the horizon?
According to Pal, we are on the threshold of a new era of bitcoin adoption. And this time, the institutions would join the party.
“Every pension plan will allocate some money to it. Every family office will allocate some money to it. And the more the price goes up, the more they will allocate because the larger the market cap of Bitcoin is […] This is an opportunity for retail to front-run the institutions for once as opposed to Goldman Sachs front running us.”
Raoul is apparently not fazed by the stoic refusal of the SEC to approve a bitcoin ETF to a host of applications from various entities. These include Wilshire Phoenix, VanEck and SolidX, as well as Bitwise.
“They will get an ETF across the line,” he insists. “There will be billions of dollars that will pour into it.”
Related Story: Banks and FSAs Cleared as Crypto Assets Custodians