Friday’s WSJ headline on Bitcoin: “Bitcoin Price Falls to $38,000 in Tandem With Tech Selloff.” The statement that followed? “Digital currency hits its lowest level since August 2021, showing a tight correlation with moves in the stock market.” One fintech CEO comments on what’s happening with digital assets.
“We’re seeing Bitcoin, in particular, as well as some of the other digital assets, move in patterns that coexist with the stock market. The implications to that are far reaching. In particular, it is going to push regulators towards a permanent classification of digital assets, including stablecoins, something that has been up in the air for some time,” offered Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“These regulatory dilemmas are keeping certain investors out — and keeping some investors that are in from increasing their positions. 2022 long promised to be the year that would see change in this arena, but as there is more and more evidence that digital assets are showing movements that mirror the market, it is even more enhanced,” said Gardner.
“Beyond regulatory issues dealing with classification, I think the bureaucrats are going to be pressured to take a hard look at custody, too. The providers currently servicing the digital assets segment just aren’t providing the intense security that the industry demands,” noted Gardner.
Fireblocks, which is among the best known custody providers, found itself embroiled in a lawsuit with StakeHound, which alleges the custody company lost roughly $70MM of Ethereum, after the key vanished. As a result, StakeHound could not access over 38,000 ETH.
“The rise of institutional investors really has blown the doors of the barn, and it made it clear that custody needs to be more than simply an afterthought. We need firms with a background in cybersecurity and financial technologies to take the lead here. Custody can’t be handled by startups with big investors and a complete lack of competency in safeguarding digital assets,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Over the past weeks, headlines continue to emerge about Bitcoin’s movement in relation to the market. As that continues to expand, there’s just going to be no question that now is the time to normalize the classification of cryptocurrencies,” noted Gardner.