• Outflows from digital assets investment products capped $110 million in the past week. 
• About $80 million of the outflows is from North America in reaction to the US Presidential Executive Order. 

There was a lot of uncertainty among crypto investment merchants last week with the weekly crypto report indicating massive outflows. About a total of $110 million worth of investment exited crypto offerings in the past week. According to the weekly crypto report submitted by CoinShares, the latest outflows marked the end of the 7-week run of crypto inflows. Specifically, outflows from Bitcoin investment products were $70 million. Incidentally, BTC trading volumes declined in the same week. 

Digital assets see huge weekly outflows

Similarly, Ethereum had a huge outflow during the week. The weekly crypto report notes that about $51 million worth of investment left ETH investment products. Other digital assets such as XRP, Polkadot, and Solana recorded a low outflow of $0.7 million, $0.9 million, and $0.3 million, respectively.

Comparatively, blockchain equity investment and multi-asset (multi-coin) products generated inflows totaling $4.1 million and $12 million during the week. It remains the most trendy amongst merchants, with inflows representing 6.7 percent and 3.2 percent of AuM. Also, Litecoin and Cardano generated inflows of $0.2m.

Over 70 percent of the crypto weekly outflow result came from North America. Investment products traded $1 billion last week compared to the average $1.24 billion, representing just 5 percent of total bitcoin trading volumes.

The outflows are a response to the U.S. Presidential Executive Order. The Biden order states that: “the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.” It further directs agencies to consider “the actions required to launch a United States CBDC if doing so is deemed to be in the national interest.” The order also notes the specific risks and benefits flowing from internationally interoperable Central Bank Digital Currencies.

Regulatory essence for crypto weekly flow

Blockchain and exchange platforms pose new and increased risks of crimes, including laundering, phishing, and theft, with the potential for disparate financial risk to unknowing market populations. Even where there is no abuse of digital assets, data asset actors may require protection that do not exist in law. as such, regulatory concerns and geopolitics remain at the forefront of investors’ concerns for digital assets.

Experts say the regulation order will help create a path toward the regulatory clarity needed for the broad adoption of BTC and other digital assets. Presumably, the result is to increase crypto stability in the notoriously volatile crypto marketplace.

One of the provisions requires crypto exchange platforms to report tax information about those trades on a 1099-B form. After which, it will be sent to the IRS and the customer. This provision could be considered a positive, as it could relieve some trade complications like tracking. Nevertheless, it could also become an ordeal for crypto investors who deal on multiple exchanges and keep most of their crypto in a self-managed wallet. These controlling tendencies and diplomacy remain at the front line of investors’ interests for digital assets.