Bitcoin and Institutional Interest
Guest Blog Post By Kirk David
Bitcoin and Institutional Interest
Bitcoin and other cryptocurrencies have been a niche topic for many years. Recently, we’ve seen a massive uptick in the number of people with knowledge about these unique forms of currency. The future of Bitcoin is up for debate, but many people believe that the currency needs institutional acceptance if it is to advance into a proper currency.
On the other hand, many people who initially began mining and trading Bitcoin are fearful that institutional investment and acceptance will ruin the currency. They see Bitcoin as an escape from the traditional structures that control the flow and distribution of money.
Regardless, in the past 6 months we have seen a variety of different institutional firms and companies announce interest in Bitcoin. Whether you’re a fan of these firms or not, it’s interesting to see that Bitcoin and crypto are receiving mainstream credibility. In this article, we’re going to take a look at some of the different firms and organizations that are starting to lend credence to the viability of Bitcoin.
Goldman Sachs is probably the most famous investment bank on Wall Street. This titan of trade is one of the first major banks to voice their interest in Bitcoin. Recently, it was announced that Goldman Sachs would start trading Bitcoin-related contract with clients. Due to regulatory issues, Goldman Sachs will not initially be trading real Bitcoin but instead will sell contracts that are linked to the price of Bitcoin.
Eventually, the bank does plan on trading real cryptocurrencies if regulatory permission is given. This would be a massive step in the legitimization of Bitcoin as a tradable currency. Goldman Sachs hired Justin Schmidt to head their digital assets division – he has been given the green light to explore different ways that Goldman can utilize the cryptocurrency industry.
On the other side of the pond from Goldman Sachs, Barclays has also stated their interest in cryptocurrency. The British bank has indicated it has similar intentions to open a trading desk for cryptocurrencies. But on top of this, Coinbase – one of the largest Bitcoin exchanges in the world – recently opened an account with Barclays.
It has been tough for Bitcoin exchanges to open bank accounts, as many banks don’t want to deal with the potential blowback of being associated with cryptocurrencies. For this reason, the fact that Coinbase has been able to open a Barclays account is a huge deal. It also makes trading much more accessible for people in the UK.
British users of Coinbase will no longer have to transfer currency before they deposit it into a Coinbase account. This provides greater value and transparency for Coinbase customers in the United Kingdom.
Perhaps one of the most surprising announcements in recent times is the BBVA investment in Coinbase. Many large banks have steered clear of cryptocurrencies; some credit card companies have even banned users from using their credit cards to purchase Bitcoin – they believe that a market crash could leave people over-leveraged.
But BBVA is taking a different approach. The famous Spanish bank owns a number of regional banks in the United States, including Compass Bank. Instead of shying away from the cryptocurrency trends, they’ve approached it head-on. BBVA invested heavily in Coinbase to help provide liquidity for the US-based crypto exchange.
This investment showed that a major international bank was willing to put faith into the cryptocurrency community. To better understand how crypto might shape the future of finance, BBVA was willing to purchase a piece of the pie.
Because of BBVA’s investment in Coinbase, we might see further involvement with the bank and Bitcoin in the future! Make sure to watch this space.
Pension and Investment Fund Interest
There have been reports that a number of pension and investment funds have started to gain interest in purchasing cryptocurrency as part of their investment strategy. A lot of the liquidity in the investment market comes from these large funds – organized investment from pensions would see a huge surge in demand for cryptocurrencies.
It appears that the volatility of the coins is still causing funds to hold out for more certainty. Pensions funds typically look for moderate, secure growth that doesn’t put the assets of their pensioners at risk. While crypto might have a considerable upside, the unknowns are keeping these wary investors away.
CNBC has reported that this ‘could be the year’ that we see some of the large pension funds enter the crypto market. Regulation might still be keeping this from happening, but if enough pressure is applied to the situation, it might only be a matter of months before we see our first entrants.
Verdict: The Future Looks Bright for Institutional Involvement
If you’re someone who welcomes institutional involvement in Bitcoin, the above examples will be music to your ears. It’s evident that plenty of moving pieces are coming into place – many of the most influential banks and financial services companies are starting to understand the importance of cryptocurrency.
There was a time where it appeared the only value many intuitions were concerned with was blockchain. Billions of dollars have been poured into using blockchain to help banks better facilitate their own transactions. While this spoke to the value of the currency behind Bitcoin, it didn’t lend any credence to the value of the currency itself.
But as Bitcoin and other cryptocurrency prices skyrocketed, the interest in these digital assets increased. And while volatility remains an issue, there’s something that many banks and funds can’t ignore – their customers want them to offer ways to invest in cryptocurrency.
If large financial institutions are to play a role in the future of cryptocurrency, it seems they are best to enter sooner rather than later. Many people are becoming more adept at using traditional exchanges – Robinhood has even released their own way of purchasing crypto.
If you’re interested in cryptocurrency and some of the topics that surround this new form of currency, check out some of the other content on our site.