Fresh capital key to growth – BCB Group’s panel at the Digital Assets Forum

Digital asset leaders call for liquidity and regulatory suitability as markets start to diverge…

Companies in the digital assets ecosystem must do more to better understand the pedestrian pace of adoption among traditional asset owners, if they are to bring much-needed fresh capital into the market.

That was the message from panellists speaking at the London Digital Assets Forum on 3 February 2025 in an opening plenary session exploring macroeconomic trends and predictions for 2025.

BCB Group’s CEO, Oliver Tonkin, joined Tim Grant, CEO at Deus X Capital, Patrick Heusser, Head of Lending at Trident Digital, and Dadi Kristjansson, CEO of Viska Digital Assets.

Addressing a near-capacity room, the business leaders agreed that while support was needed from European regulators to stimulate further innovation in the market, there was also a need to work harder as an industry to attract new capital from sovereign wealth funds, insurance companies and pension funds.

Deus X Capital CEO Grant acknowledged that traditional institutional investors were more interested than ever before in the sector, but said this hasn’t yet translated to a mass inflow of new capital.

He said: “The biggest issue, lubricant, determination of volume and progress in institutional crypto is leveraging capital. If I say that and you don’t know what I mean, you have to learn this. It will affect everything – what you build, who you sell to, and how you price risk.”

Grant explained that there was a need for digital asset innovators to better understand and appreciate the world of traditional institutional finance if liquidity is to significantly increase.

“Just look at the traditional model, where I raise money, I manage money and I get leverage from my prime broker. That does not exist in crypto yet. There are hedge funds including Brevan Howard and Marshall Wace who all want to trade [crypto], but there is not enough volume in the derivatives market as yet, and not enough service providers to allow this to happen.”

Grant explained that if the market is to benefit from the ability to leverage at scale, then new capital needs to find crypto – and digital asset investments more broadly – more attractive.

“We can’t just keep re-staking because that is not leverage. We need sovereign wealth funds, pension funds and insurance companies. We have to ask, ‘how we get the next billion of fresh capital in?’ If we don’t solve that, we will have the same conversation in a year from now.”

Speakers agreed, however, that the catalyst for market growth was not solely the tapestry of the market participants. The senior leaders addressing delegates said we were entering a critical time for European regulators to move more quickly, especially now that the US has outlined plans to aggressively fuel growth.

“We know that, when the US regulation comes out, it will be quite aggressive,” said Tonkin, CEO of BCB Group. “They are not expecting people in London or Brussels to end up in an arms race, but we need to ‘get real’ quite quickly.

“If we don’t try to compete in terms of offering regulatory certainty and an innovation- and business-friendly environment, we might well lose out. I remain optimistic, but the window is very small,” he added.

Trident Digital’s Head of Lending, Patrick Heusser, agreed that the European regulatory agenda had now slipped a considerable way behind the US and urged policymakers to act quickly to offer “regulatory clarity” to builders of new infrastructure.

With the lead-up to President Trump’s inauguration coinciding with a long bull run for Bitcoin, some speakers asked whether Western government views had notably shifted on the asset since Trump’s previous presidential term. However, speakers were unable to agree on the extent to which Bitcoin would now become accepted as a major currency in its own right.

“We have seen a lot of discussions around a National Bitcoin Reserve in the US and Bitcoin becoming a reserve asset more broadly,” said Kristjansson, CEO of Viska Digital Assets.

“The Czech Central Bank said it was exploring its use as a potential reserve asset.”

BCB Group’s Tonkin said he would be “surprised” if the UK were to ever recognise Bitcoin as a reserve asset, however, and maintained that he was equally sceptical about its adoption by the European Central Bank.

“The chances of HM Treasury holding Bitcoin is pretty low,” he said. “Ursula von der Leyen was pretty bearish on it too. I would be pretty surprised if it happens here in any material way, but in the US, who knows?”

Deus X Capital’s Grant said the industry’s fascination with Bitcoin should not be the theme that leads conversations in 2025, urging digital asset pioneers to focus instead on attracting new capital into digital assets from the world’s largest asset owners.

“[Bitcoin] is a bit of a red herring,” he said. “We also talked about Central Bank Digital Currencies for a while, but they were a bit of a stupid idea. We should be talking about how to get the Abu Dhabi Investment Authority to put fresh capital into the market.

“What does the Norwegian Pension Fund need to see? What is it that they are not seeing today that is preventing them from applying risk capital? What doesn’t give them the security and comfort to allocate capital?”

Panellists explored whether the SEC’s decision to rescind the rules laid out in its Staff Accounting Bulletin (SAB)121 in January would be enough to encourage more capital into the digital assets arena, but they believed this would have a limited effect.

Trident Digital’s Patrick Heusser said: “I am not 100% sure that SAB121 would unlock the sovereign wealth funds to pour in capital, but it is another step that was needed. If banks do not have crypto within their investment schemes and can’t actually advertise it to their clients, there won’t be much happening.

“Banks will never push it from their side and there is still not enough clarity and hunger from the bank industry to push this asset class.”

BCB Group’s Tonkin said he expected stablecoins to remain central to digital asset discussions throughout 2025, although he urged European regulators to consider the suitability of new related rulesets.

“Stablecoins, their use cases, volumes and circulation have risen in the past 12 months and that will continue,” he said. “Globally, stablecoins are a massive market now and have become quite respectable. There are genuine use cases which make them very exciting.”

Tonkin added one note of caution in Europe, relating to the recently introduced Markets in Crypto-Assets Regulation, questioning how suitable the new rulesets would continue to be to this rapidly developing asset group. He urged regulators to continue to build out their frameworks to ensure they keep pace with market innovation.

Disclaimer

The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.