Fed Governor Signals “New Era” for Crypto, Evernorth Plots XRP Treasury, and Hong Kong Preps for SOL ETF

Takeaways

• Federal Reserve Governor Christopher Waller said the Fed is entering “a new era” and will welcome distributed ledgers and crypto into conversations around payments: Waller asked the Fed to explore a "skinny master account” which will allow payment innovators to access Fed rails.
• Evernorth has reached a deal to merge with Armada Acquisition Corp II to form a Nasdaq-listed company targeting more than $1 billion in proceeds: The vehicle has announced plans for most of the proceeds to acquire an XRP stockpile for use in yield generating strategies and DeFi activities.
• Hong Kong’s first spot SOL ETF has cleared regulatory approval and is slated to list on the Hong Kong Stock Exchange next Monday: The product will trade in Hong Kong dollars, Chinese yuan and US dollars, and will charge a 0.99% annual management fee.
• 21Shares, Bitwise and WisdomTree are making physical bitcoin and ether ETPs available to retail investors in the UK: The move follows the FCA’s decision to lift a four-year long ban on crypto ETNs for retail customers and allows investors to hold these products in ISAs, standard brokerage accounts, and more.
• Strategy has acquired an additional 168 bitcoin for just under $19 million, pushing its total holdings to 640,418 BTC: The purchases were again funded by ATM sales of the firm’s perpetual preferred stock programs.

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Fed Embraces Crypto, Proposes ‘Skinny Master Account’ for Payment Innovators

Waller remarked that the Fed wants innovators “at the table” and said the distributed ledgers and tokens are being “woven into the fabric” of global finance. He also stated that crypto is now “welcomed to the conversation” and that the DeFi space will no longer be “viewed with suspicion or scorn.”

One of the most significant remarks made by Waller was the notion of a so-called “Skinny Master Account” which would allow payments innovators to access settlement rails directly. A variant of master accounts used by banks, Waller described the “Skinny” account as a means of allowing Fed services to be accessible to providers beyond banks, without undermining monetary policy.

The remarks signal a major shift in approach toward crypto from the Fed. They come after regulatory shifts in recent months have helped foster innovation in the US crypto space, rather than hindering it. Waller also emphasized that strong safeguards would be needed, and that filtered eligibility and supervision would still be required to ensure proper controls.

Evernorth Plans SPAC to Build Public XRP Treasury Targeting $1 Billion in Gross Proceeds

The deal will target a raise of $1 billion in gross proceeds, which includes $200 million in funding from Japanese financial services giant SBI. Kraken, Pantera Capital, Rippleworks, and others will participate in the funding round.

The funding will reportedly be used to acquire an XRP treasury through open market purchases and use these tokens in yield generation and targeted DeFi strategies. The firm will also use some of its tokens to operate validators on XRP Ledger and utilize Ripple’s stablecoin, RLUSD, for onramping for DeFi. Evernorth has named Asheesh Birla as CEO, Matthew Frymier as CFO, and Meg Nakamura as COO with the treasury plans reportedly only proceeding if the merger and funding targets are reached.

Hong Kong’s First Spot SOL ETF Cleared for HKEX Listing, Trading to Begin Monday

The product will use the ticker 3460, and shares will be quoted in Hong Kong dollars, Chinese yuan, and US dollars. It will also charge a 0.99% management fee with BOCI-Prudential Trustee Limited functioning as primary custodian and OSL Digital Securities as sub-custodian.

The product will list October 27th, and crypto industry participants and traditional investors alike will monitor its launch closely. JPMorgan analysts have previously predicted that within their first year, Solana-based exchange products will attract around $1.5 billion in net inflows, which is fairly low in comparison to Ethereum or Bitcoin exchange products. JPMorgan’s initial forecasts for ether ETFs inflows in 2024 proved to be overlypessimistic as inflows surged toward the end of the year.

21Shares, Bitwise and WisdomTree Open Retail Access to Bitcoin and Ether ETPs in the UK

Retail investors in the UK can now hold crypto-linked products in ISA’s standard brokerage accounts and other formats.

21 Shares will list physically backed products for bitcoin and ether and has added staking functionality to its ether ETP. Bitwise will also list ETPs for both assets on the exchange and has lowered its fees for the products. WisdomTree’s bitcoin and ether products have already gone live on the exchange with Blackrock also launching its iShares Bitcoin ETP this week.

Analysts have described the listings as a major development for the space, as it brings the UK closer in line with its peers in terms of retail crypto product availability. WisdomTree’s CEO of Europe, Alexis Marinoff, noted that there was still work remaining to make these products more widely available in the country, and that the launch of their ETPs in the UK signals how far the industry has evolved.

Strategy Buys 168 BTC, Holdings Rise to 640,418 BTC

This latest acquisition has lifted the leading bitcoin treasury’s holdings to 640,418 BTC, with the aggregated cost of the entire inventory sitting at $47.4 billion. At current prices, the value of Strategy’s bitcoin stockpile is now over $71 billion, representing significant unrealized gains compared to purchase price.

The latest purchase was once again funded through Strategy’s at-the-market programs for a number of perpetual preferred share offerings, including STRK and STRF among other offerings. The offerings are a component of the firm’s wider capital plans, which aims for $84 billion in equity to be used to acquire bitcoin through to the end of 2027.

-Team Gemini