Etoro has recently commissioned a report conducted by Aite Group. The report highlights the barriers for institutional adoption of Crypto trading and the steps needed to bring Crypto in line with traditional markets.
“Only by widening the playing field and facilitating more participation will crypto reach and maintain a market cap of $2 trillion and beyond.”
Barriers there may be, but the overall tone of the report was extremely upbeat. One of those interviewed for the report went as far as to say,
“There’s a dot way out on the horizon that represents a mature institutional market for crypto asset and digital assets. It’s sort of like we’re not really sure how we’ll get there, how long it’ll take, and what we’ll find when we do—but we’ve pointed the boat at the dot and set sail.”
The report was based on in-depth interviews with senior executives from various institutional entities such as banks, liquidity providers, brokers, exchanges, crypto funds, asset managers, and global technology vendors.
With the information provided by the respondents, the report was able to highlight four main areas that constituted barriers to Crypto asset adoption by institutions.
- Regulatory uncertainty
- Immature market infrastructure
- Concerns over reputational risk and security issues
- Insufficient market capitalization
The lack of a global regulatory framework was seen by respondents to be the single biggest barrier for intuitional participation in crypto trading.
In the light of there being no globally recognised security standard, the majority of respondents acknowledged that cold storage wallets were acceptable for secure, custody storage by institutions.
Among other concerns raised were: insufficient access to credit, and a need for more widespread usage of industry standards such as FIX.
On a more positive note, it was acknowledged that there was rising interest in Cryptocurrency trading from institutions, high-net-worth individuals and family offices.
It was agreed that barriers to institutional adoption were indeed slowly falling, but that growth must be led by increased regulatory clarity, enhanced market infrastructure, and more technological innovation.
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