In an interview with Cointelegraph reporter Joe Hall last Tuesday, David Olsson, BlockFi’s global head of institutional distribution, shared his views on the state of institutional adoption of cryptocurrencies. BlockFi is a financial services company that offers retail wealth management products such as cryptocurrency-backed loans, interest accounts, Bitcoin (BTC) rewards credit cards, etc. Meanwhile, for institutional investors, BlockFi’s proprietary platform provides capital efficiency financing, the ability to borrow coins for hedging and short selling, and institutional-grade trading infrastructure.
When asked about the exciting trends among institutional clients adopting cryptocurrencies, Olsson told Cointelegraph: “Of the 80% of the world’s top 50 hedge funds we have spoken to, all are embarking on some type of crypto journey, such as starting a trading desk or investing in native crypto firms run by 25-30 year olds. who know how to extract the alpha from the crypto markets and manage the risks.”
“It really is a generational story. Early asset managers don’t have the natural digital native perspective of someone who is younger. But we see a lot of interest.”
Olsson told Cointelegraph that hedge funds have been preparing for quite some time to venture into cryptocurrencies, given the significant increase in liquidity and institutionalization of the space over the years. According to a study conducted by Fidelity last year, 70% of financial institutions surveyed plan to invest in cryptocurrencies in the next year, while 90% said they plan to do so in the next five years. “Bitcoin has had returns of over 100% per year on average for the last 10 years, compared to around 10% per year for stocks in the US So it is getting too big in terms of mental involvement so that people ignore it,” Olson added.
“Cryptocurrencies can fix the pipes of the financial system around the world, starting with removing expensive bank fees.”
But Olsson also pointed out that some institutions are not 100% comfortable, since jurisdictions with high liquidity for cryptocurrencies do not always have the regulation to support them. “For adoption to increase, you need an institutional infrastructure, which means KYC mechanisms [Conozca a su cliente]AML mechanisms [Anti-lavado de dinero]which means financial transparency, cyber security, all the things that customers care about.”
As Cointelegraph previously reported, demand from major investors could still be high, with 30,000 BTC withdrawn from Coinbase on Friday.
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