Is institutional interest in cryptocurrencies not all that it is made out to be
A large number of money managers continue to refrain from cryptocurrency investments, SkyBridge Capital founder Anthony Scaramucci said, in a recent interview. He estimated that a mere 10% of the institutional financial sector is looking at the asset class. He said,
“The institutions are not there…Anybody who’s telling you there’s institutional adoption into this space is not being totally honest or they’re seeing something that I’m not seeing.”
Additionally, Scaramucci predicted that maybe a large bank will end up buying a crypto-exchange like Coinbase to enter decentralized finance in the future. In this context, the rise in institutional adoption of cryptocurrencies is worth noting in the last year.
A Fidelity report on digital assets had previously found that seven in ten institutional investors look to invest in cryptocurrencies in the future. This is when more than 50% of 1100 respondents have invested in the digital asset class. The percentage was even higher in Asia at 70%. On the contrary, a separate report listed the hurdles that institutional investors have been facing in crypto adoption. Anatoly Crachilov, CEO of Nickel Digital, explained,
“Whilst many forward-looking institutional investors are increasing their exposure to digital assets, our findings show that concerns around security and custody of these assets remain a top concern for many other allocators.”
Despite the gaps, there has been a surge in DeFi adoption by institutional investors. A recent survey by Chainalysis also pointed out that large transactions by institutional players accounted for over 60% of all DeFi transactions in Q2 of 2021.
Moreover, institutional asset managers held a total AUM of $59,218 million combined, as per CoinShare’s Digital Asset Fund Flows report until 17 September. And that’s not all, hedge fund managers have also been diving into crypto funds lately.
Earlier last month, Bitwise Asset Management announced two DeFi Crypto Index Funds to offer Uniswap and Aave investment funds to professional investors. In a public filing on 8 September, Bain Capital Ventures (BCV) also announced the creation of BCV Crypto Fund I, L.P. This week, Cobo, a popular crypto-asset management platform, raised $40 million from investors like DST Global, A&T Capital, and IMO Ventures.