Institutional inflows to digital assets are at an all-time high. But its still really, really hard to get holdouts off the bench.
Giorgi Khazaradze, the CEO and founder of crypto trading terminal Aurox, and Glenn Barber, head of sales at institutional crypto trading platform Copper, talked about whats keeping institutions out of crypto markets at the Decrypt and Yahoo Finance Crypto Goes Mainstream event yesterday in Brooklyn.
One thing they agree on: Regulations, or a lack thereof, remain a huge issue for firms watching from the sidelines.
It would be nice if the United States government, or anyone in that regulatory capacity, would come out and establish a framework which, in our minds, should be unique and different in that were talking about an asset class that is global, permissionless, borderless, 24/7, 365, Barber said. I think that if we took a much more open architecture approach to the regulatory framework and didnt try to put a round peg through a square hole, wed be in better shape.
Its something Copper, based in London, has been watching closely. The firm has been publishing monthly roundups on its blog to cover developments in every region.
It is really about the regulation. I mean, taking a risk and investing in tokens on decentralized exchangesthere is no safety net, said Auroxs Khazaradze. And an institution is not going to take that risk.
Its an issue thats come up for other firms. Earlier in the day, FTX CEO Sam Bankman-Fried said the onboarding process for institutions can be lengthy as they decide how to participate without running afoul of regulators.
Its going to take a year for many of these places. Sometimes multiple years, he said. The amount of work a compliance department has to do to become acquainted with the cryptocurrency ecosystem and get comfortable is fairly significant for a lot of these players.
Another reason firms have stayed out is the knowledge gap, said Khazaradze. Thats something Aurox has tried to address with its retail users through deals like a $200,000 Learn & Earn campaign running on CoinMarketCap until November 24.
The company is betting that building a reputation with retail traders will translate into more name recognition with institutional clients.
Retail investors cant drive this market by themselves, Khazaradze said. Institutions can speed up the adoption and everything, but they need to have some kind of safety before they want to get involved.
