Institutional involvement boosts crypto economy
Institutional involvement in the blockchain and cryptocurrency markets is now more critical than ever in the aftermath of the launch of the ProShares Bitcoin Strategy Exchange Traded Fund (ETF) that took Bitcoin (BTC) to a new high of 66,930 on October 20.
This was followed by the market taking a slight correction and VanEck’s Bitcoin Strategy ETF listing on Nasdaq. These ETFs allow institutional investors to get exposure to the volatility and gains of Bitcoin in a regulated manner. These listings were only possible after approval from the United States Securities and Exchange Commission (SEC) that has traditionally been either indifferent or reluctant to discuss cryptocurrencies other than in a punitive manner.
These events leading to newer highs for several tokens in the market highlight the impact and the importance of institutions getting involved in the industry. There are various blockchain protocols and projects that are working with institutions in partnership to increase adoption, bring real-world utility and provide additional investment opportunities to investors through features like staking, yield farming, etc.
Here are some projects that are leading the charge in that regard:
Tezos is an open-source blockchain network that aims to address the main barriers that prevent widespread blockchain adoption by enabling forkless endless upgradability along with institutional-grade security. The blockchain network has been making headway with several financial institutions globally.
Incore Bank, a Swiss Business to Business (B2B) bank, in partnership with Inacta, an Information Technology (IT) services provider and Crypto Finance Group, has picked the Tezos blockchain to implement smart contracts on a variety of on-chain digital financial products and institutional uses for the bank.
Tezos was also the choice of blockchain of the Arab Bank (Switzerland) Ltd. to provide their institutional clients an avenue to store, stake, and trade their XTZ tokens, the native token of the blockchain network.
The network also partnered with the third-largest bank in France, Societe Generale, to be used as the underlying network for the issuance of its first structured product as a security token.
In an instance of recognition from a global banking organization, Tezos was picked by the European Central Bank (ECB) as one of the blockchain networks that are fully compatible with the current fiat-based system, alongside other networks like Hypeledger Fabric and NEM.
Prosegur is a publicly traded company that has over 40 years of experience in the security of traditional financial markets with a history of publicly trading and managing over $400 billion in assets. The company operates in over 26 countries. In September this year, the company launched its crypto wing, Prosegur Crypto, an advanced crypto asset custody solution for the institutional markets and its participants.
Being a veteran in the physical asset security domain, the firm uses its expertise and technological advantage to become the firm major security firm that provides a full range of services for the safekeeping of digital assets, a complete 360-degree security solution for institutional investors indulging in blockchain technology and cryptocurrency assets. Currently, the firm works with the most prominent crypto tokens like Bitcoin, Ethereum (ETH), Ripple (XRP), Tether (USDT), Maker (MKR), and Litecoin (LTC) with the ability to include any other kinds of tokens without any restrictions or limits.
For the security of crypto tokens, the company has launched the Crypto Bunker, a multi-layered, in-depth defence mechanism that secures client funds from being manipulated in ways either digital or physical. The bunker uses secure environments, cold storage, and cold space with over 100 protection measures wrapped in six integrated security layers. The air-gapped Hardware Security Module (HSM) allows for completely offline storage and transaction signing process through the storage of private keys.
Simplex is a licensed financial institution that provides fiat to crypto infrastructure to a vast network of partners such as Visa, MasterCard, Apple Pay, Society for Worldwide Interbank Financial Telecommunications (SWIFT), Single European Payments Area (SEPA), amongst others.
The firm was acquired by Canadian payment technology company Nuvei Corporation for $250 million in cash in May this year. Since then, Nuvei has gone to make its Initial Public Offering (IPO) on the Nasdaq Global Select Market with global investment banks like Goldman Sachs, Credit Suisse, J.P. Morgan, BMP Capital Markets, and RBC Capital Markets as book-runners for the syndicate of underwriters that participated in the IPO.
Post the acquisition, Simplex will continue to enable on-ramp and off-ramp services that bridge the crypto-verse and the traditional financial channels through convenience and ease.
Since then, the enterprise-grade financial technology platform COTI has partnered with Simplex to offer bank accounts and Visa debit cards based on the Cardano blockchain as per the company blog. These accounts will be available to people in the United Kingdom and the European Economic Area (EEA).
Elrond is a blockchain protocol that enables a network that is of the “internet-scale” for distributed applications and enterprise use cases through high transactional speeds enabled by sharding. The protocol is backed by an eminent set of venture capital firms like Binance Labs, Electric Capital, NGC, Maven11 Capital, and Woodstock Fund.
Earlier this month, Elrond acquired a company called Twispay, one of only two companies in Romania to hold an Electronic Money Institution (EMI) license. The deal is pending approval of the Romanian National Bank, which could take 4-6 months for approval. This is a huge step for Elrond in warming up to the institutional economy. Once this deal goes through approval, it would allow the firm to provide its payment processing services to over 300 merchants, which includes Blue Air, the largest airliner in Romania.
It was also recently announced that Binance became an official staking provider on the Elrond network to celebrate, which the protocol announced special staking rewards. The network also partnered with Ardana, a decentralized stablecoin hub operating on Cardano, to promote stablecoins that are collateralized by the ELGD token, a token designed for use with Elrond’s exclusive Maiar Wallet.
In another boost to the network, Morningstar Ventures, a blockchain innovation firm, announced their $15 million investment for projects building on the Elrond Network alongside the launch of an Incubator in Dubai specifically for the network.
Alkemi Network is a platform based on the Ethereum blockchain that is attempting to link traditional centralized finance (CeFi) institutions and Decentralised Finance (DeFi). It is an institutional-grade liquidity network that makes professional DeFi solutions for financial institutions and individuals to generate yields on digital tokens that are based on the Ethereum blockchain. The protocol provides the mutilsig wallet functionality and institution-grade reporting.
The network has accumulated over $25 million of USD deposits from over 40 liquidity providers (LPs) of institutional-grade like JST Capital, Shift Markets, Radar, Quantstamp, and LedgerPrime.
Additionally, the protocol has raised over $6 million in capital from reputed institutional investors like Outlier Ventures, Techstars, Consensys, and Blockpact Capital. They aim to attract cryptocurrency native hedge funds, traditional hedge funds with an AUM of $1 billion, and the large centralized exchange such as Binance and Huobi, a testament to the wide range of clients and markets the network can access, enabling them to bring DeFi and its features to the masses and traditional financial institutions alike.
Firms like these are spearheading the institutional adoption of cryptocurrencies and blockchain technology to better financial inclusion and empowerment globally that is critical extremely for the growth of the industry at this watershed moment that the ecosystem currently stands at after the SEC gently nodding to the industry with the approval of the futures-based ETFs.
As the ecosystem continues to grow, the networks and projects spearheading the bridge between traditional financial institutions and crypto markets will benefit from being early adopters to enable this link and foster its growth in the near future as bigger players will continue to indulge and delve into the potential of growth that the field promises.