The fall of the FTX crypto exchange and the recent regulatory crackdown by the U.S. Securities and Exchange Commision (SEC) hasn’t deterred institutional interest in crypto, said Kraken’s head of over-the-counter (OTC) options trading, Juthica Chou.
“What we’ve seen is that the trading interest remains really strong both for proof-of-work networks as well as proof-of-stake networks,” Chou said Thursday on CoinDesk TV’s “First Mover.”
She said the crypto exchange is working with different clients “who are trying to gain directional exposure,” and who see that there are “possible assets with opportunities both for short- and long-term investments.”
Earlier this month, the SEC charged San Francisco-based Kraken with allegedly selling unregistered securities via its staking-as-a-service platform. The agency ordered Kraken to “immediately” close down its staking service to U.S. customers. Shortly after, Kraken’s two registered companies, Payward Ventures, Inc. and Paywayrd Trading Ltd., agreed to settle the $30 million fine issued by the SEC.
The move may stop Kraken’s U.S. based customers from participating in staking services, but according to Chou, staking more broadly is a “really interesting, important crypto native aspect” tied to new and emerging protocols, and one that she says “a lot of our institutional clients have an interest in.”
“We’ll definitely continue to see it around for a while,” she said, adding that there is also renewed interest from investors for bitcoin (BTC). Clients, she says, are paying close attention to opportunities that provide “natural leverage” and that “are more yield generating.”
That there is an uptick in institutional interest in digital assets was echoed by ETC Group’s Co-CEO Bradley Duke. He told “First Mover” Thursday that there is strong institutional confidence in crypto, adding that bitcoin is leading that effort.
Duke said that in January, bitcoin exchange-traded products (ETP) saw net inflows of about 11,301 BTC, the second-highest start at the beginning of any year since its inception in 2013.
“That’s a good indicator for us that these are players that are entering the space,” he said.