A former Standard Chartered executive, Daniel Santos, has said that the creation of more positive regulations by the leading digital asset economies will boost the number of institutional investors entering the Crypto space.
Influx of Institutional Investors Anticipated from the Beginning
This statement comes just days after it was announced that Fidelity Investments will be offering Custodian solutions for the Crypto space. The decision to enter the Crypto space made by the firm, and which caught many by surprise, has been seen as an indication of the growth to be experienced in the market. This move indicated that institutional investors are also curious and interested in the Crypto space and also that regulators have officially accepted digital assets to be alternative stores of value.
Just a year after the unveiling of Bitcoin, many within the Crypto community predicted that major institutional investors such as hedge funds and pensions will be apportioning a percentage of their portfolio towards the digital asset class.
However, with custodian solutions and institutional products not being available, many institutional investors were wary of the sector.
Positive Regulations To Attract More Institutional Investors
Santos noted that with the market experiencing regulatory uncertainty, many institutional investors were skeptic of the asset class. This was because for institutional investors to invest in an asset class that could be regarded as unregistered securities; they would see a lot of compliance-related issues from the SEC (US Securities and Exchange Commission).
The clarification that Bitcoin and Ethereum were not regarded as securities in the existing regulations only came from the SEC this year. And with this Santos noted that with more positive regulations imposed on the global Crypto market, more institutional Investors would be attracted to the sector in the months to come.
He said that the way to reverse the negative sentiment that institutional investors had was through market regulation. He added that if the Crypto sector was to ever be established into a credible alternative asset class it would have to apply rules that would eliminate fraudulent activity and promote stable growth and in this way, institutional investors would be attracted to the sector.
Ryan Zagone, who is an executive at Ripple Labs, while speaking to Bloomberg said that long gone were the days where Cryptocurrencies were protected as anonymous assets created to bypass regulations. He added that in order for the castor to grow it was important for regulation to be established stating that the idea of dismissing regulatory authority and authorities was immature.
The Decision on An Exchange Traded Fund
With major institutions and investment firms like Fidelity, Goldman Sachs and Citigroup entering into the Crypto space through the provision of custodian services it is evident that the Crypto market has been opened up for investment by the SEC and other financial authorities.
Now the major regulatory decision remaining for the SEC is the decision to approve an ETF which would effectively recognize the sector as a solidified and established one. There is currently no application for a Bitcoin Exchange Traded Fund that has been approved by the regulatory body.