The cryptocurrency market kicked off last year with a bang but ended with a slump. However, investors are still pouring billions into the crypto space even though crypto prices tanked. Blockchain and crypto-related firms raised $3.9 billion as of October last year and many investors see its long term prospect and see the current bear market as something that will be soon over. Many investors are convinced that the worst is over and see crypto as a viable investment opportunity. This year, analysts predicted some big names in Wall Street and the financial industry to enter into crypto, in line with the prediction recently by Fidelity Investments.
Fidelity Investments, a financial company based out of Boston has recently partially released a crypto-based service called the Fidelity Digital Asset Service (FDAS). The services offered by Fidelity are currently custody and trade execution, but the service is currently limited to Bitcoin. The company has clarified it will expand to Ethereum, but hesitant at the time due to the upcoming fork in the Ethereum network. These changes in the network could have some disruptive effects on Ethereum, hence the company has decided to wait for the dust to settle down a bit. Tom Jessop, current head of FDAS and a former Goldman Sachs executive, revealed that in a survey conducted by the company that 20 percent of the 450 institutions (hedge funds, family offices, financial advisors, venture groups, crypto-native companies, etc) who took part had some kind of crypto investment involvement. The services will only be offered to a few select clients in a soft launch or a sandbox approach and will later be rolled out to others after reviewing the feedback. But the service is for institutional investors and not for retail customers.
JP Morgan has chosen an alternative way to enter the crypto world by integrating the technology to its day to day activities. Recently, JP Morgan has tested a stable coin called JPM (JP Morgan) coin, which is pegged against one US dollar. Even though each JPM coin is equal to on US dollar the bank has made it clear that it is not a legal tender. JPM coin works on a permissioned version of the Ethereum network called Quorum. The platform was developed in partnership with the Ethereum startup EthLab. Quorum is the backbone of JPM coin. It is one of the first projects to come out of a working group within the bank known as the Blockchain Center of Excellence. The bank was able to transfer value from one institutional account to other thus the test was a success. This project, however, is solely for institutional customers and not for retail customers.
Lack of regulations
For most institutional investors, the lack of regulation is a big headache. This has the potential of creating a situation where investors want to invest but are hesitant. Along with regulations, the confusion created by taxation is another headache, here the lack of any solid legislation makes life harder for the investors along with the potential for future legal trouble. Even though hardcore crypto enthusiasts will resist any type of regulation, most agree that in order for the industry to mature new regulations will be necessary. Countries with substantial crypto activity are in the process of making new laws and legislation, but the pace is really slow. On a positive note, many countries like Japan has implemented new legal frameworks for the industry and those countries are currently experiencing a crypto boom.
While many big names are trying to get institutional investors into crypto, another war is going on between Binance, Coinbase, and other exchanges. But this one is over wooing retail customers, by introducing more features like options to buy crypto using credit and debit card by Binance and the option to withdraw funds to Paypal account by Coinbase. Push for adoption is happening at both ends, at the institutional side and the retail side and companies are rolling out new features and products at breakneck speed. What will be the final stroke that would be required to bring crypto to mainstream remains to be seen.
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