Institutional money is coming. At least that's been the refrain from desperate cryptocurrency traders for the past six months, praying for an influx of new fiat to shore up prices and float their alt bags. But is it really the case that institutional investors are waiting on the sidelines for the right framework to buy in? At Blockchain Expo in Amsterdam last week, news.bitcoin.com spoke to two exchange leaders who are confident that it's a question of when, not if, institutional investors pile in.
Institutional Money Is Coming but Will It Benefit Retail Investors?
Crypto assets surged by an average of 11.4% on Monday, with bitcoin, predictably, the first to pop. The reason for the pump has been attributed to Coinbase announcing that its custodial crypto service was finally live. The service includes cold storage, an institutional-grade broker-dealer and reporting services, and a client coverage program, and Coinbase is in the process of onboarding hedge funds. But beyond the news fleetingly giving the markets an adrenaline shot, what will the long-term ramifications be of institutional money pouring in, and what's taken so long?
Kimley Kadoche is the Head of Investor Relations at LGO, which is poised to launch as an institutional-friendly exchange capable of handling large fiat transactions, and Nick Cowan is the CEO of Gibraltar Blockchain Exchange (GBX). It's aiming to become an institutional-grade token sale platform and digital asset exchange, and is onboarding its existing Gibraltar Stock Exchange (GBS) clients. Both individuals are naturally bullish on the prospects of institutional money entering the crypto market, but have their reasons for being so optimistic, having liaised with many of the big spenders pondering a move.
Step 1: Regulation
It's no secret that one of the impediments to institutional investors entering the crypto space is the need for a suitable regulatory framework; hedge funds can't simply invest their clients' funds in the same free-and-easy manner as a retail investor. "[GBX] fundamentally believe that the technology is here to stay," begins Nick Cowan, on bitcoin. "We fundamentally believe in adoption…particularly institutional, but what will accelerate that, I think, is the implementation of certain regulations: consumer confidence, investor protection, transparency, and those sorts of issues, which, at the moment, have been holding back a number of major players who might come into this market."