Institutional Investors Are Revolutionizing The Cryptocurrency Industry

Survey reveals that twenty percent of institutions interested in Cryptocurrency


Amid the 2018 bear market, institutional investors were able to gain some ground in the cryptocurrency industry. Many high-profile institutions started participating in the blockchain space. This played a part in holding things together while the bears tried to cripple the market. Big names like the Rockefeller family and George Soros started taking their positions in the crypto market according to the reports from Bloomberg at the time. They reported that the $26 billion Soros Fund Management was making plans to invest in cryptocurrencies. Around the same period, the Rockefeller family started partnering with Coinfund in a bid to assist blockchain centric entrepreneurs.


Things Are Getting Serious In The Cryptocurrency Industry


Before now, many investors were sceptical about the cryptocurrency market because of the lack of a standard regulatory framework and high volatility of digital assets. Now, things are changing. Big players are starting to explore the benefits of blockchain technology and they have what it takes to revolutionize the cryptocurrency market.
The co-founder of Persona, Stefan Neagu, said that Bitcoin has triggered the interest of many institutional investors. In his words:

“Bitcoin (BTC) has attracted a lot of big time players in the market. Institutional investors view BTC as an investment instrument. This made the cryptocurrency market more credible. It is no longer a playground for speculators but a sandbox of a group of individuals who are willing to transfer money from the real economy to the cryptocurrency market.”


Thanks to over the counter trading in 2018, many institutional investors were able to penetrate the market. Exchanges like eToro and Coinbase launched OTC options for institutional buyers. Research revealed that the volume of institutional trades recorded on typical cryptocurrency exchanges diminished in 2018 as the interest in OTC trading increased.


Favorable Cryptocurrency Regulations For Institutional Investors


Institutional investors are careful about how they deal with the industry because they do not want to get into trouble with the regulatory watchdogs. Not every country has flexible policies on cryptocurrencies. Right now, Hong Kong is one of the few countries that set clear and flexible regulations for the institutional investors in the industry.


The Security and Futures Commission in Hong Kong, SFC, introduced new rules that were drafted to limit cryptocurrency trading of institutions. If a portfolio manager or fund intends to invest more than 10% of its holdings in cryptocurrencies, it must obtain a license. So, only qualified institutional investors can invest in cryptocurrency portfolios.

Custody As A Set Back For Institutional Trading

One of the factors that has caused many institutional investors to hold back from the cryptocurrency industry is unavailability of custody options. Custody reduces the risk of theft attached to investing in digital assets. If the cryptocurrency industry is backed by an established custodian, institutional investors will feel more comfortable entering into the market.


Bitcoin (BTC) Price Today – BTC / USD
Name Price24H (%)
Bitcoin (BTC)
$7,641.00
-4.34%


Last year, many firms launched custody platforms for securing digital assets and some major banks are launching custody solutions as well. Intercontinental Exchange and Nomura, not too long ago, announced that they are making plans to launch custody services. Banks like Goldman Sachs, JPMorgan, and the Bank of New York Mellon have also reportedly been exploring custody solutions for digital assets. This will certainly impact the price of cryptocurrencies positively in the long run.

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