Crypto moves in on Wall Street

Crypto moves in on Wall Street

  • 21.03.2025 08:00
  • politico.com
  • Keywords: danger, danger

Crypto is expanding beyond digital assets into traditional markets like stocks, with companies like Kraken and Robinhood leading the charge under Trump's regulatory-friendly policies. This shift could disrupt Wall Street and spark conflicts between crypto firms and established financial institutions.

Coinbase ReportsHOODsentiment_satisfiedCOINsentiment_satisfiedBLKsentiment_dissatisfiedCIIHYsentiment_satisfiedDASHsentiment_neutral

Estimated market influence

Kraken

Positivesentiment_satisfied
Analyst rating: N/A

Kraken is expanding into derivatives trading and stock offerings.

Robinhood

Robinhood

Positivesentiment_satisfied
Analyst rating: Buy

Robinhood's CEO is exploring real-world asset integration on their platform.

Coinbase

Coinbase

Positivesentiment_satisfied
Analyst rating: Buy

Coinbase is pushing for regulatory clarity to expand crypto's market reach.

BlackRock

BlackRock

Negativesentiment_dissatisfied
Analyst rating: Strong buy

BlackRock is a traditional financial firm that may resist crypto expansion.

EDX Markets

Positivesentiment_satisfied
Analyst rating: N/A

EDX Markets supports tokenizing stocks and works with both crypto and traditional finance.

Citadel Securities

Negativesentiment_dissatisfied
Analyst rating: N/A

Backs EDX Markets but may resist crypto expansion.

Bloomberg Intelligence

Neutralsentiment_neutral
Analyst rating: N/A

Provides market structure analysis on crypto's entry into traditional markets.

Freddie Mac

Negativesentiment_dissatisfied
Analyst rating: N/A

Facing potential privatization which could affect its role in housing finance.

Fannie Mae

Negativesentiment_dissatisfied
Analyst rating: N/A

Likely to be impacted by administration's privatization plans.

SEC

SEC

Positivesentiment_satisfied
Analyst rating:

Hosting roundtable on crypto assets and considering Coinbase's regulatory requests.

Treasury Department

Negativesentiment_dissatisfied
Analyst rating: N/A

Under scrutiny for potential reputational risk criteria in supervision.

FHFA

Negativesentiment_dissatisfied
Analyst rating: N/A

Experiencing leadership changes and challenges with Freddie Mac and Fannie Mae.

Klarna

Neutralsentiment_neutral
Analyst rating: N/A

Partnership with DoorDash for buy-now, pay-later services.

DoorDash

DoorDash

Neutralsentiment_neutral
Analyst rating: Buy

Collaborating with Klarna on payment options.

NinjaTrader

Positivesentiment_satisfied
Analyst rating: N/A

Acquired by Kraken to expand into derivatives trading.

Context

Analysis of Crypto's Expansion into Wall Street

Key Facts and Data Points

  • Kraken Acquisition: Kraken announced its acquisition of derivatives trading platform NinjaTrader as part of its "multi-asset class ambitions," which includes offering stock trading in the future.

  • Robinhood's Strategy: Robinhood CEO Vlad Tenev has been exploring the integration of real-world assets like stocks and real estate into crypto platforms.

  • Coinbase's Push: Coinbase is urging the Securities and Exchange Commission (SEC) to clarify regulatory frameworks, aiming to expand crypto's reach in traditional markets.

  • Crypto Lobbying Influence: Crypto firms are leveraging their growing political power under President Trump's administration to push for regulatory changes favorable to their expansion.

Market Trends and Business Impact

  • Expansion into TradFi: Cryptocurrency companies are increasingly targeting traditional financial markets (TradFi), including stocks and futures, signaling a shift in market dynamics.

    • Example: Kraken's move into derivatives trading and Robinhood's interest in real-world assets highlight crypto's ambition to disrupt traditional finance.
  • Regulatory Shifts: The Trump administration's regulatory environment has provided crypto firms with more flexibility to explore new opportunities beyond digital assets.

Competitive Dynamics

  • Collaboration vs. Competition:
    • Partnerships: Examples include BlackRock and Coinbase, where traditional financial institutions are collaborating with crypto platforms.
    • Competition: Wall Street is expected to resist crypto's encroachment, particularly in areas like brokerage services and market infrastructure.

Strategic Considerations

  • Market Disruption: Crypto firms view traditional finance as overly complex and aim to streamline processes using blockchain technology. This could lead to significant disruptions in how financial markets operate.
    • Example: Tokenizing stocks is seen as a potential game-changer, though it faces resistance from traditional players.

Regulatory and Political Implications

  • SEC's Role: The SEC is hosting its first roundtable on digital assets, signaling increased focus on regulating the crypto space. This could set precedents for how digital assets are classified and regulated in the future.

    • Quote: "Regulators have a decision to make about whether their job is to protect the business models of incumbent players or whether to have a financial system that protects investors and promotes capital formation," said Coinbase's Faryar Shirzad.
  • Political Influence: Crypto firms are increasingly using political influence, including lobbying and campaign contributions, to shape regulatory outcomes favorable to their expansion.

    • Example: A crypto-backed super PAC spent $1.16 million supporting GOP candidates in Florida, indicating the industry's growing political clout.

Long-Term Effects

  • Potential Market Changes:
    • Crypto's push into traditional markets could lead to significant changes in how financial services are delivered, potentially breaking up existing monopolies and creating new competitors.
    • Example: The debate over whether crypto exchanges need to be broken up mirrors antitrust concerns in traditional finance.

Conclusion

Crypto's expansion into Wall Street represents a fundamental shift in the financial landscape. While opportunities for innovation and efficiency exist, the industry faces significant challenges, including regulatory scrutiny, competition from traditional players, and the need to navigate complex political dynamics. The outcome of these efforts will shape the future of both crypto and traditional finance.