INSTITUTIONS EMBRACE DIGITAL ASSET DIVERSIFICATION AND THE IMPENDING REGULATORY FOCUS ON DEFI – UNRAVELLING THE WEEK IN CRYPTOCURRENCY 

Amid an environment of formidable challenges, the allure of digital assets continues to grow and captivate institutional investors and conventional financial powerhouses alike. A recent study spearheaded by Laser Digital, a subsidiary of Nomura, Japan’s leading investment bank, reveals an astonishing fact: an overwhelming majority, a staggering 96%, of institutional investors perceive digital assets as an opportunity to diversify their investment portfolios. This prevalent sentiment of enthusiasm towards cryptocurrencies among mainstream financial institutions suggests that there are burgeoning opportunities awaiting the crypto industry.

Institutional Enthusiasm Towards Cryptocurrency Remains Robust

The Laser Digital survey included 303 investors from a diverse range of countries – 21 in total – and covered a broad array of institutions including pension funds, wealth managers, family offices, hedge funds, sovereign wealth funds, and other investment funds. The survey painted a clear picture – 96% of these investors firmly believe that digital assets provide a “diversification investment opportunity”. This essentially means that cryptocurrencies can play a vital role in complementing traditional assets such as cash, equities, bonds, and commodities. The combined managed assets of these survey participants amount to nearly $5 trillion, and about half of them project that their total exposure to digital assets will be in the range of 5 to 10% within the next three years.

The survey further highlighted some intriguing insights that emphasise the sustained interest in the digital asset sector. It revealed that 82% of investors maintain a positive outlook for Bitcoin and Ethereum in the upcoming twelve months. Similarly, 88% of respondents stated that either they or their clients are pondering over investing in the digital asset sphere. Interestingly, not all this interest is concentrated on the two largest digital assets by market capitalisation. A good 88% of the surveyed investors affirmed that they recognise the value in diversifying their portfolios with carefully selected cryptocurrencies beyond Bitcoin and Ethereum.

Traditional Financial Giants Are Turning Their Focus to Bitcoin and Digital Assets

Following BlackRock’s recent filing to launch a spot Bitcoin ETF, Meltem DeMirors, CoinShares’ Chief Strategy Officer, reported that major traditional financial firms in the United States, managing a combined $27 trillion in assets under management (AUM), are actively exploring possibilities to offer their clients access to Bitcoin and other digital assets. This list of actively exploring institutions includes financial heavyweights such as Fidelity, JPMorgan Chase, and Goldman Sachs. It should be noted that this $27 trillion represents their total AUM, and only a fraction of this would, theoretically, be allocated to Bitcoin and other digital assets. However, despite current regulatory ambiguities, it’s clear that these institutions are fixed on the long-term prospects that the digital asset landscape offers.

Your Optimal Gateway to Cryptocurrency Investments

Given the sustained institutional interest and the proactive exploration of digital assets by traditional financial giants, platforms like Ainslie Crypto provide a perfect opportunity for investors looking to enrich their portfolios with cryptocurrencies. Ainslie Crypto offers a secure and personal way to invest in cryptocurrency, making it an ideal choice for both individual, SMSF and institutional investors who are keen on expanding their investment horizons.

Regulatory Changes and The Future of Decentralised Finance (DeFi)

In the aftermath of FTX’s collapse, regulatory authorities around the globe have been intensifying their enforcement activities and proposing new rules regarding digital assets. The emphasis so far has been on centralised exchanges and basic consumer protections. However, given the current trend, it’s not unreasonable to anticipate that regulations around Decentralised Finance (DeFi) may soon come under the limelight.

In the European Union, lawmakers are already considering incorporating DeFi regulations in the upcoming version of MiCA. A recent report published by France’s Autorité des Marchés Financiers (AMF) emphasises the crucial need for regulating DeFi to ensure a level playing field. Considering the cross-border nature of DeFi, the AMF advocates for a comprehensive global regulatory framework that adheres to a consistent and proportionate approach. While specific details are not provided, the report supports the principle of “same activity, same risk, same regulation”. Additionally, they back the Financial Stability Board and the international securities regulator IOSCO.

In an era of swift digitisation and mounting institutional acceptance, the cryptocurrency industry is poised to make monumental strides. The coming weeks, months, and years promise to bring fresh developments, challenges, and opportunities. Continue to join us in this exciting journey as we navigate the intricacies of the rapidly evolving world of digital assets. Stay tuned for next week’s roundup where we continue to decipher the latest trends and insights in the world of cryptocurrency.

 

Remember to subscribe to this newsletter and follow us on social for regular updates on the dynamic world of blockchain and cryptocurrency. If you’re interested in an easy and personal way to buy/sell/swap cryptocurrency, don’t hesitate to contact us – call 1800 AINSLIE. Our team of friendly consultants are ready to guide you, your company or SMSF through the process, making your cryptocurrency buying journey effortless. We also offer industry-leading crypto custody with minute-by-minute internal audits to guarantee the safety of your assets.