Road to Success

(Kitco News) – As the crypto market trades sideways following a 67% collapse in total value over the course of 2022, institutional interest in the nascent asset class continues to climb higher as more options become available to gain access in a regulatory-compliant way. 

Due to the increasing interest, the multinational investment company BlackRock announced the launch of a new exchange-traded fund (ETF), at the end of September, offering exposure to blockchain and crypto companies for users in Europe. 

According to BlackRock’s website, the new fund is “Designed for investors wanting exposure to a wide variety of companies that are involved in the development, innovation, and utilization of blockchain and crypto technologies.”

Guilhem Chaumont, CEO of Paris-based Flowdesk, sees the move by BlackRock as “more than noteworthy” due to the ETFs expansion to a wider range of digital assets. 

“It’s not just bitcoin anymore – although bitcoin is incredibly important for this industry,” Chaumont said. “It’s a whole host of other blockchain companies and related technologies that are being recognized as transformative for global finance and digital technology more broadly.” 

The Flowdesk CEO suggested that this is not only a positive development for crypto as an asset class but also a major development for blockchain as a technology. “With the world’s largest asset manager committing more and more to digital assets, you can be sure that everyone – including regulators – is paying close attention to blockchain,” he noted. 

As for whether the new product from BlackRock is a signal that EU officials will be more open to the digital asset industry, Chaumont suggested that the blockchain ETF “comes at the right time to confirm the legitimacy of the digital asset industry,” and “highlights the massive opportunities that blockchain holds.” 

Effects on developing legislation

When it comes to how BlackRock’s new product could influence the Markets in Crypto Assets Regulation (MiCA) being developed in the European Union, Chaumont believes that it has helped create a positive environment for the improvement of MiCA. That being said, the CEO suggested that the direct impact may never be known due to the complex and arcane nature of EU decision-making. 

Still, BlackRock’s influence could help to make the MiCA clearer, more specific, and smooth out the rough edges, Chaumont said. 

“After all, digital asset regulation requires a framework that is very different from that of ‘traditional assets.’ Regulators either already know this or are starting to realize it, and I think that’s a really good thing.”

Wider crypto world

Moving away from the topic of BlackRock’s new ETF to the broader crypto ecosystem, popular sectors that have been attracting new participants include NFTs – which are making advancements in proof-of-ownership and intellectual property rights – play-to-earn gaming and payment technologies. 

Despite the fact that the ecosystem just celebrated its 14-year anniversary of the Bitcoin whitepaper, Chaumont stressed that “we are still early.” 

“It’s like trying to imagine Facebook, Netflix, or Amazon in the ‘80s. You’d really have to work your imagination… This is the same in crypto, decentralized finance, and everything blockchain.”

The CEO went on to describe a variety of use cases where tokenization is applicable, including for use with money in the form of central bank digital currencies (CBDCs), financial and physical assets like real estate, DAOs, and more efficient supply chain management. 

“Combine these with immersive web3 platforms (like the metaverse), and you get experiences that we never thought were possible,” Chaumont said. “So there are many more use cases, and never-before-seen business models that could make our lives so much better, our economies much more equitable and thriving.”

As for what is needed to increase the adoption rate of crypto moving forward, Chaumont suggested that it will require the community to “grow up and take full responsibility.” 

What that would look like involves “creating industry standards and good practices, respecting the principles of consumer protection, starting self-regulation, and complying with laws and regulations globally,” he added.  

“Crypto will not have a mass appeal until people and institutions are 100% sure that their money is in good hands: that DeFi companies can secure their wealth without getting hacked; that the next innovation they want to invest in is not a scam or a Ponzi scheme; or if anything goes wrong, there is a guarantee or insurance that helps them in need.”

The user experience is also something that needs to be improved on as many of the current crypto and DeFi apps are “difficult to use, highly technical, and full of insider lingo that is too difficult to grasp for most.”

More than anything, Chaumont suggested that the market needs to keep innovating. “Blockchain is not about coins and NFTs; it’s about how to create participative business models and more efficient and transparent organizations from local start-ups to global institutions,” he said.  

As for the tendency of some in the crypto community to see every negative macroeconomic report as a sign of impending doom that will make way for Bitcoin to take over the world, the CEO advised that while he believes crypto is here to stay and destined to be part of the solution, it would be wise for proponents to adopt a more realistic understanding. 

“[crypto] isn’t immune, and isn’t an antidote to all problems of our current socio-economic order, which is subject to big crises periodically. The critique of capitalism is very well-founded. But the full-blown anarcho-libertarian rhetoric needs to be toned down.”