Quicktake:

• NYSE President Lynn Martin considers crypto trading if regulatory guidance is clearer.
• Bullish CEO Tom Farley predicts U.S. regulatory improvements irrespective of election outcomes.
• Discussion at Consensus 2024 highlights regulatory challenges and blockchain’s potential.

During Consensus 2024, NYSE President Lynn Martin expressed openness to exploring crypto trading, contingent upon clearer regulatory directives. She emphasized the necessity of regulatory clarity to facilitate such a move, citing the uncertainty surrounding the current regulatory landscape in the United States.

Martin pointed to the success of U.S.-listed spot bitcoin exchange-traded funds (ETFs), which have amassed $58 billion in assets, as indicative of growing demand for regulated crypto products. However, she highlighted the regulatory ambiguity as a hindrance to innovation, slowing down the integration of traditional financial markets with digital assets.

Tom Farley, CEO of Bullish and Martin’s predecessor at NYSE, echoed her sentiments, highlighting recent shifts in U.S. politics towards crypto. He cited developments such as the removal of anti-crypto officials and legislative advancements like the Financial Innovation and Technology for the 21st Century Act (FIT21) as positive indicators for regulatory progress. Farley expressed optimism regarding regulatory evolution in the coming years, regardless of the presidential administration.

While Martin remains optimistic about blockchain technology’s potential to enhance financial processes, particularly for less liquid assets like municipal bonds, Farley cautioned against regulators’ reluctance to embrace public blockchains. He suggested that regulators may favor the development of private blockchains over utilizing existing decentralized networks for asset settlement, citing concerns about oversight and control.

The conversation at Consensus 2024 underscored the complex interplay between regulatory challenges and the transformative potential of blockchain technology in traditional financial markets. As stakeholders navigate this evolving landscape, regulatory clarity will be paramount in unlocking the full potential of crypto trading within established financial institutions.

“Five years of evolution happened in five minutes,” he said. “I’m really optimistic about what it means in this country. I think, just like in Europe, just like in Hong Kong, you’re going to have regulators codified, ‘Hey, what’s your reasonable digital assets industry look like.'”

“You’re gonna see progression in 2024 and 2025, irrespective of whether or not it’s Trump or Biden or Michelle Obama [will be president],” he added.

Martin said she continues to be optimistic about using blockchain technology to make financial processes more efficient and transparent, especially for less liquid assets such as municipal bonds.

However, Farley said traditional, real-world assets won’t migrate to digital asset rails en masse given regulators’ distrust towards public blockchain plumbing. “Regulators want to get their power-hungry, sticky little fingers on everything,” he said. “How do you get your fingers on the Solana? How do you get your fingers onto something that’s decentralized?”

Hence, regulators would likely push TradFi firms towards developing private blockchains instead of using the existing blockchains for settlement, he said.