What is driving institutions to invest in crypto? BlockFi's David Olsson explains
Categories: Crypto News US
In an interview with Cointelegraph reporter Joe Hall last Tuesday, David Olsson, global head of institutional distribution at BlockFi, shared his insight on the state of institutional adoption of cryptocurrencies. BlockFi is a financial services company that offers retail wealth management products, such as crypto-backed loans, interest accounts, Bitcoin (BTC) rewards credit cards, etc. Meanwhile, for institutional investors, BlockFi's proprietary platform provides financing for capital efficiency, the ability to borrow coins for hedging and shorting, and institutional-grade trading infrastructure.
When asked about any exciting trends among institutional clients adopting crypto, "Out of the 80% of Top 50 hedge funds in the world we've spoken to, they all are embarking on some sort of crypto journey, such as starting a trading desk or investing in crypto native firms run by 25 to 30-year-olds that know how to extract alpha from crypto markets and manage the risks."
That mutual funds have been planning for a surprisingly long time to wander into crypto, given the huge expansion in liquidity and organization of the space throughout the long term. As per a review directed by Constancy last year, 70% of overviewed monetary foundations intend to put resources into crypto in the following year, while 90% said they intend to do as such in the following five years. "Bitcoin has returned over 100 percent each year on avg. throughout recent years, contrasted with around 10% each year for values in the U.S. So it's simply turning out to be too enormous as far as mindshare for individuals to disregard," Olsson added.
But Olsson also pointed out that some institutions don't feel 100% comfortable, as jurisdictions with high liquidity for crypto don't always have the regulation to back them. "For adoption to increase, you need an institutional infrastructure, which means KYC [Know Your Customer], AML [Anti-Money Laundering] mechanism, which means financial transparency, cyber security, all the things that clients care about."Demand from major investors could still be running high, with 30,000 BTC moved off Coinbase on Friday.