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October 16, 2018

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Research Expects Cryptocurrencies Will Stay

September 27, 2018

 

Two U.S. based independent research firms conducted reports on the cryptocurrency industry, and whether or not the new technology will be able to carve out a permanent place in the global economy. In both cases, the data provides a clear case that cryptocurrencies are here to stay and provides similar issues to address to improve their integration.

 

In the report, “The Institutionalization of Cryptocurrency,” Greenwich Associates surveyed 141 institutional investment executives on the industry. Richard Johnson, a vice president in Greenwich Associates' Market Structure and Technology group and the author of the report puts it simply:

 

"They’re telling us that they don’t think it’s going away and that it’s here to stay."

 

The Tabb Group’s research took on a broader scope of the industry to evaluate what has happened in the relationship between institutional investors and the cryptocurrency market. “Crypto Trading: Platforms Target Institutional Market” brought together a range of data on institutional demand, crypto exchange revenues and institutional market trading volume. It goes on to review crypto exchanges and platform/toolsets used to targeting the institutional investor market.

 

The Institutionalization of Cryptocurrency

 

The data shows that over 70% of institutional finance executives believe that cryptocurrency will have a place in the future financial industry. The group most often noted that regulatory framework will develop around cryptocurrencies, leading to growth and innovation. But there was still substantial disagreement:

  • 10% believe cryptocurrencies will remain a fringe asset class without mainstream adoption

  • 10% believe regulatory crackdown will eliminate the market altogether

 

The report identifies two major areas under development that could help make cryptocurrency more accessible to banks, asset managers, hedge funds, and other large organizations:

  • “Financialization” - investment products like futures and ETFs would allow institutions to gain more exposure to cryptocurrencies

  • Custody - institutions need a legal method to possess cryptocurrency

 

Crypto Trading: Platforms Target Institutional Market

 

The concluding sentiment from the Tabb research is that institutional capital investment in cryptocurrencies from institutions is preparing to enter the crytpocurrency market, but needs the changes highlighted by Greenwich Associates research to happen first. Once legal framework is established, the report claims that input from major institutional money including hedge funds and pensions, will likely drive a large market surge. They establish this process with three primary needs before that influx is possible:

  • Regulatory clarity: The regulations between the SEC, Department of Justice, and Commodity Futures Trading Commission must be aligned

  • Institutional grade data: There needs to be universal methods for reporting trading data

  • Enterprise-ready infrastructure: Cryptocurrency products and exchanges are operating below the quality level of global exchanges, and need the infrastructure in place to support doubling the market value.

     

     

     

     

     

     

     

     

     

 

By: BGN Editorial Staff

 

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