Institutional Adoption of Crypto: Present Situation

Institutional Adoption of Crypto: Present Situation

The growing interest in crypto from the part of institutional investors has been noticed in the last few years. There are many reasons why wealthy people and corporations pay attention to the crypto sector. Among them, we may highlight anonymity, decentralization, security, accessibility, speed of transactions, ease of sending funds anywhere worldwide, and low fees. In this article, we will see who are institutional crypto investors and how they change the crypto landscape.

Who are Institutional Crypto Investors and what Services Do They Require?

Institutional crypto investors encompass:

  • tech companies that want to join the new and promising financial sector;
  • investment funds that act on behalf of their clients;
  • financial organizations, banks that aim to expand their services by adding crypto transfers and investments;
  • payment services that use crypto for business to provide crypto transactions apart from traditional currencies;
  • family offices;
  • etc.

All these large market participants require safe and reliable institutional services such as custody, liquidity, help in managing funds and reducing risks, access to new promising investment options and token sales, benefits for market makers, etc. On top of this, there must be the highest level of security for large amounts of money traded by institutions and protection against fraud schemes involved. All these requirements spur the development of the infrastructure of crypto trading platforms. Examples may be Binance and Coinbase exchanges that have departments for VIP clients, provide robust custody services, crypto AML check and KYC verifications, and the whole infrastructure for efficient and safe investment.

The massive flow of companies into the crypto sector not only changes the infrastructure of large institutional trading platforms but also raises the regulatory aspect of digital assets.

Latest News on Regulations Caused by Crypto Institutional Adoption

As was said, the increasing interest of institutions in crypto causes growing scrutiny on the part of regulations. After the European Council’s formal approval of the Markets in Crypto-Assets Regulation (MiCA) on October 5, 2022, a significant milestone has been achieved. MiCA was expected to receive final approval and publication in 2023. 

Upon implementation, MiCA will establish a unified regulatory framework for crypto assets across the European Union. Notably, it will be the world’s first comprehensive instrument to regulate both cryptocurrency issuers and service providers, as well as specific crypto categories.

By fostering innovation while upholding principles of financial stability, market integrity, and investor protection, the EU demonstrates its leadership in the realm of crypto-assets. These efforts aim to encompass crypto-asset markets within the purview of financial services regulation, positioning the EU at the forefront of crypto regulation.

Key Takeaways

  • High returns, anonymity, decentralization, low fees, and speedy transactions attract large investors to the crypto market.
  • Institutional crypto investors demand a developed and regulated infrastructure for safe and efficient work with digital assets.
  • Large institutional crypto platforms provide investors with high liquidity, promising assets, safe trading, custody, and other solutions.
  • The growth of crypto investments spurs the need for developing regulations and laws that would encompass both investors and crypto-assets service providers.