This article comes from Cointelegraph , the original author: Andrew Singer
Odaily Planet Daily Translator | Moni
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- Block road
We all know that more and more institutional investors are beginning to try to enter the cryptocurrency / blockchain field, but the speed seems not fast enough.
According to a Fidelity Investments survey in 2019, approximately 22% of institutional investors have opened up their exposure to digital assets, most of which have been completed in the past three years. In addition, 40% of respondents said they are willing to invest in digital assets over the next five years.
According to Jonathan Levin, co-founder and chief strategy officer of Chainalysis, banks and insurance companies seem to be more willing to participate in cryptocurrency / blockchain investments than institutions in other industry sectors. In addition, fund companies and family investment institutions will also start to act once the institutional support in place is in place, but for them, there is still a lot of work to do to “enter” cryptocurrency / blockchain investment, especially in terms of compliance .
In this regard, Jonathan Levin believes that institutional investors' participation in cryptocurrencies in 2019 is mainly to build infrastructure, such as Fidelity Digital Assets and Bakkt. But now the infrastructure is in place, which means that as long as it can adapt to the compliance and market risks of cryptocurrencies, the number of institutional investors will increase significantly.
So, which institutional investors have already laid out in the cryptocurrency / blockchain field and have started to play an important role? Now, let Star Jun (WeChat: o-daily) and everyone take a look at the following ten companies, because if there is a "cryptographic Oscar", they are definitely a strong contender for the Golden Man.
1. Libra Association (stable currency)
In June 2019, Facebook released a brand-new white paper on digital currency Libra, and established the non-profit Libra Association in Switzerland, which aroused widespread attention in the cryptocurrency and financial industries.
Facebook says Libra will be based on a licensed blockchain and will be tied to a basket of bank deposits and short-term government bonds, with the task of helping to reshape the currency and change the global economy. Initially, the Libra Association claimed that their initial membership would be 27, including MasterCard, PayPal, Visa, Vodafone, eBay, and Uber.
However, things are not going well. Libra has been “suppressed” by global regulators before it was officially launched, largely because of concerns about threats to fiat currencies and potential shadow banking system risks. Later, the two U.S. senators also wrote a letter to companies such as MasterCard and Visa, mentioning that the U.S. government "deeply concerns that the Libra project could destabilize the global financial system and promote crime and terrorist financing." attention". Not only that, but Apple CEO Tim Cook also stated that companies like Facebook should not issue global currencies. As a result, by the end of 2019, a quarter of the initial members of the Libra Association announced their withdrawal, including MasterCard, PayPal, Visa, eBay, and more.
Of course, it may be too early to assert that Libra will not succeed. Perhaps because of fears that Libra would pose a potential threat, central banks in many countries began exploring their own digital currency projects. It is worth mentioning that as of early December 2019, the Libra Association hinted that they still plan to issue the digital currency Libra as scheduled in 2020, but may choose some specific regions (such as Europe).
2. JPMorgan Chase (Stablecoin)
In February 2019, JP Morgan, the largest bank in the United States, launched the stable currency JPM Coin, which is also the first traditional bank to issue and test stable fiat currencies. JP Morgan said that JPM Coin is linked to the fiat currency (USD) held by the bank in a 1: 1 ratio, designed to help institutional customers make real-time payments on the licensed blockchain platform.
JPM Coin is different from most stablecoins such as Tether (USDT) and USD Coin (USDC) in the crypto market because other stablecoins are 1: 1 linked to fiat currency collateral. JPM Coin was originally scheduled to be officially released at the end of 2019, but it was not listed until December 10, 2019.
"Interesting" is that Jamie Dimon, CEO of JP Morgan Chase, once considered digital currency a "fraud", but this did not seem to prevent them from actively exploring blockchain and crypto-related issues for years. , One of the most noteworthy projects is the "Interbank Information Network". The network is a bank payment and data sharing network based on JP Morgan Chase's internal blockchain platform Quorum. It officially went into production in 2018. It currently has 365 members worldwide and will expand to the Japanese market in 2020.
3. Intercontinental Exchange / Bakkt (Exchange)
In September 2019, a large-scale institutional exchange officially entered the cryptocurrency industry, which is the Bakkt of the New York Stock Exchange Intercontinental Exchange (ICE). Bakkt is the world's first Bitcoin futures exchange to provide physical settlement, which is different from the Chicago Mercantile Exchange (CME), which has been trading bitcoin futures contract products settled in fiat currencies.
Although Bakkt's performance was not satisfactory at the beginning, it started to improve soon. On November 27, 2019, Bakkt's bitcoin futures trading volume reached a record high, with a total of 5,671 futures contracts traded (a transaction value of $ 42.5 million).
In early December 2019, Bakkt launched the first regulated Bitcoin options and cash-settled futures contract products in the United States. And just last month, Kelly Loeffler, former chief executive of the exchange, was appointed as a U.S. Senator, replacing the former Georgia senator Johnny Isakson. .
4. US Commodity Futures Trading Commission (CFTC)
In October 2019, the new chairman of the U.S. Commodity Futures Trading Commission, Heath Tarbert, stated that Ethereum and Bitcoin are commodities, not securities, and will be regulated by the U.S. Commodity Exchange Act. At the same time, the U.S. Commodity Futures Trading Commission will Will be the main regulator of these two cryptocurrencies.
Heath Tarbert said at the time:
"I estimate that people will see Ethereum-related futures contracts and other derivatives that may be traded in the near future."
The high-level statements of US regulators have given Bitcoin and Ethereum developers and investors a better understanding of current and future regulatory transparency. Because if the U.S. Commodity Futures Trading Commission intends to regulate Ethereum and Bitcoin, it means that cryptocurrencies will definitely not be banned-this is the biggest concern of the crypto industry.
In addition, when making his first public appearance in October 2019, Heath Tarbert also emphasized the importance of blockchain and digital assets. According to Perianne Boring, CEO of the Digital Chamber of Commerce in the United States, the United States has been lagging behind other countries in blockchain innovation and has not been supported by US policymakers and regulators. In this regard, Heath Tarbert reiterated that he hopes that the United States can play a leading role in the cryptocurrency / blockchain field, because in the end "only those who are technologically advanced are qualified to write the rules of the game."
5. Fidelity Investment (custodian)
It can be said that the escrow business is not the most exciting business in the cryptocurrency / blockchain industry, but it is a vital part. Especially with the gradual maturity of the industry, escrow will be integrated into many investment decision-making powers, such as how to pass the bitcoins held by him to the heirs after the death of older bitcoin holders.
In view of this, Fidelity Investments, a mutual fund giant that manages $ 7.2 trillion in assets, has decided to launch Fidelity Digital Assets, a crypto custodian whose target customers include hedge fund, family investment institutions, and market intermediaries By.
Fidelity Investments has a carefully planned deployment route in the cryptocurrency industry and achieves its goals through a series of landmark work, such as:
- Conduct preliminary research in 2014;
- Established a blockchain incubator in May 2015 and started the proof-of-concept process;
- In November 2015, Fidelity Charitable accepted Bitcoin as a charitable donation;
- In June 2016, established academic and industry partnerships;
- In September 2017, the Fidelity Charity Foundation announced its acceptance of Ethereum charitable donations;
- In October 2018, Fidelity Digital Assets, the crypto division, was announced.
In mid-December 2019, Fidelity Digital Assets announced that if there is sufficient demand, they will increase their support for Ethereum in 2020.
6. Utility Settlement Coin project / Fnality International (Bank Alliance)
Solving cross-border transactions is often considered a very promising use case for blockchain technology. In 2019, a global banking consortium wants to explore blockchain applications for cross-border transactions.
Last June, 14 financial institutions from the United States, Japan, and Europe jointly invested $ 60 million in Fnality International. The company will use the funds to build an Ethereum blockchain that allows transactions between banks to use "Utility Settlement "Coin (USC)" tokens, which will be linked to cash collateral deposited with the central bank.
The Utility Settlement Coin project was led by UBS in 2015. Other shareholders include Banco Santander, Bank of New York Mellon, Barclays, Canada Imperial Commercial Bank (CIBC), Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, Mizuho Bank, MUFG Group, Nasdaq, Sumitomo Mitsui Banking Corporation and State Street Bank & Trust.
Olfa Ransome, chief commercial officer of Fnality International, said that as a banking consortium, they want to solve blockchain interoperability issues, saying:
"We must not only achieve interoperability between traditional systems, digital venues and platforms, but also interoperability between competing blockchains. No matter what the standards and protocols are, we can support atomic liquidation (atomic settlement) and different on-chain payment methods. "
Once approved by regulators, the platform is expected to be operational in mid-2020.
7. Fairfax County Retirement System (Pension)
In February 2019, the Fairfax County Retirement System (FCRS) in Virginia, USA became the first pension fund to invest part of its retirement assets ($ 21 million) in cryptocurrencies. The Fairfax County retirement system explained to investors that the investment was allocated through Morgan Creek Digital, and given that blockchain technology is still in its early stages, this investment accounted for only a small portion of system assets. It is reported that in October 2019, the Fairfax County retirement system invested another $ 50 million in the second fund of Morgan Creek Digital.
In fact, the investment principles of retirement funds are still very conservative, and investment targets are usually more cautious than hedge funds and university endowment funds, which makes them still reluctant to buy cryptocurrencies.
8. Chicago Mercantile Exchange (Exchange)
In 2019, Bakkt seemed to make headlines compared to many other cryptocurrency exchanges, but the Chicago Mercantile Exchange (CME), the world's largest futures market, attracted the most bitcoin futures contracts. At its peak in May 2019, the average daily trading volume of CME Group reached US $ 515 million, with more than 13,600 futures contracts being traded daily. On May 13, 2019, Bitcoin's daily trading volume reached a record 33,677 contracts, which was equivalent to more than 168,000 BTC (then valued at approximately $ 1.705 billion).
However, when the time came to the end of 2019, the CME Group's bitcoin futures transaction declined. In May 2019, the average daily trading volume of CME Group exceeded 7,000 bitcoin futures contracts, and by the end of December, this A figure is less than half of May.
In fact, CME Group has been expanding the supply of other crypto products. In November 2019, they announced the launch of option products based on Bitcoin futures contracts in mid-January 2020. Some insiders believe that the bitcoin derivatives market will one day dwarf the spot market.
9. B3i Services AG (Insurance Alliance)
In July 2019, B3i Services AG, a well-known blockchain consortium in the insurance industry, announced the launch of a product that covers the scope of catastrophe excess loss reinsurance.
B3i was founded in 2018 and was formerly known as the Blockchain Insurance Industry Initiative, a blockchain insurance industry initiative that aims to use blockchain technology to reduce friction in risk transfer. Each reinsurance contract in the B3i insurance blockchain network is written into the smart contract on the Corda blockchain platform, which can automatically verify the conditions to execute the contract, such as whether the asset should be returned to the agent, or should be returned to the source, Or both.
As early as May 2016, five insurance companies within the predecessor of the B3i network began to try Ethereum, and now it has 18 insurance companies and reinsurance companies from five continents, including: Aegon, Allianz , Axa, Swiss Re, Liberty Mutual, Munich Re, Tokio Marine, Scor, etc.
10. Harvard University (University donation)
In April 2019, Harvard Management Co., an investment arm of Harvard University, invested in crypto assets for the first time. This asset company manages assets of up to 38.3 billion U.S. dollars. Many people think this is a victory in the cryptocurrency / blockchain field, because this time it has finally been recognized by institutional investors.
At that time, Harvard University spent less than $ 12 million on the purchase of blockchain tool development company Blockstack's tokens. This number is actually not much for Harvard Endowment Funds, but it may indicate that well-known U.S. university endowment funds for crypto assets Investment will grow further. In fact, other elite university funds such as Stanford University and MIT have been low-key exploring the cryptocurrency space. In 2018, Yale University also invested in two crypto funds managed by Andreesen Horowitz and Paradigm.
Summary: compliance issues still exist
Until institutional investors truly dive into the cryptocurrency / blockchain space, compliance issues remain the biggest "hurdle." In November 2019, Chainalysis conducted a poll of financial institutions, and more than half of them cited compliance as the main issue preventing them from investing in cryptocurrencies. In addition, 39% of respondents said they were concerned about the inability to control illegal activities, and 18% said they were unsure whether they would be able to comply with government regulations for the cryptocurrency industry.
However, as heavyweight institutions such as Fidelity Investment, JP Morgan Chase, and Intercontinental Exchange continue to explore cryptocurrency / blockchain technology, and even endowment funds and pension funds begin to try to enter this emerging technology field, maybe in 2020 we will See more and more large institutions adopt cryptocurrency and blockchain technology.