The global cryptocurrency ecosystem is thriving, with worldwide adoption exceeding 800% in 2021 alone.
The typical crypto investor no longer operates on the fringes of society, but is now permeating into the boardrooms of lucrative financial institutions around the world. Retirement funds, insurance companies, banks – not to mention countries like El Salvadore and the Central African Republic adopting Bitcoin as legal tender.
But what does this institutional adoption mean for the rest of us? Who has been making recent moves into the ecosystem? And how are these institutes reshaping the world of digital assets?
As the size and scope of crypto adoption among individual investors is on an upward trajectory, it has left financial institutions with little choice but to follow suit and strategise how to assimilate cryptocurrencies into their business models.
Large financial institutions entering a crypto trading platform leads to thousands more investors and billions of additional dollars being injected into digital assets. This would have a positive impact on the underlying value of those assets long-term. Many reputable institutes are already taking advantage of decentralised financial technology and are making significant moves to establish and expand their crypto footprint.
Let’s take a look at some recent institutes to adapt to their business model to meet these emerging technologies.
Institutions Making The Moves
As more people are banking on crypto as a long term investment, we have seen an enormous amount of money be funneled into blockchain startups and the nascent world of Web3. The widespread institutional adoption of the digital asset space continued through a series of landmark headlines throughout 2022.
Fidelity, one of the largest retirement plan providers in the U.S, announced plans to offer Bitcoin in 401(k) retirement accounts, becoming the first 401(k) provider to offer cryptocurrency as an investment for retirement savers. While U.S banking giant Goldman Sachs, offered its first lending facility backed by Bitcoin. The BTC backed loan allows the crypto holder to present their BTC as collateral to the bank and borrow fiat currency in return. This move is a significant step as banks continue to tip-toe into blockchain and release crypto-based products and services, including wealth management, trading, and investment banking.
Venture capital firm, Andreesseen Horowitz (a16z), also announced a new $4.5 billion fund for crypto and blockchain start-ups. Whilst a16z have been investing in crypto since 2013, their recent announcement brings their total crypto/Web3 funding to a staggering $7.6B. Much of the newly funded money ($3B) will be allocated for venture investments, with the remaining $1.5B dedicated to seed investments for promising Web3 start-ups. The fund aims to accelerate developments in layer 1 and layer 2 infrastructure, decentralised social media web3 games, self-sovereign identity, bridges, NFT communities, privacy, creator monetisation, regenerative finance, and many other areas.
Further adoption of cryptocurrencies from the institutions without a doubt benefits the overall development of crypto assets and crypto trade. This process is already underway, with increasing numbers of institutions allowing customers to stake, trade, borrow and lend against their digital assets.
However, the institutional adoption of blockchain technologies comes with the fundamental need for robust and immutable regulatory frameworks. Trust, in both partners and products, is the most important factor that underpins any trade or transaction. For crypto to continue its expansion through financial institutions, effective regulation will be essential.
Do Your Research
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