When we say institutions are entering cryptocurrencies, what institutions are we actually referring to?

Which institutions are we referring to when we say they are entering cryptocurrencies?

Author: Stablecoin Sean, Partner at FinTech Collective; Translation: LianGuai0xjs

We are in the season of cryptocurrency conferences in the United States. So, it is expected that discussions such as “institutions are pouring in” or “what do we need for institutional adoption” are common.

The fundamental problem is that in the United States, the term “institution” typically encompasses too much, and the reality is that when it comes to cryptocurrencies and institutionalization, you have to think more intricately.

Here is my framework for thinking about institutional entry into cryptocurrencies in the United States:

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• IOSG founder Token2049 impression Bull market still needs time, the toughest time has come
• Behind the 15 Celebrities Involved in the JPEX Case KOL Cold-blooded Hype Murder, Downtown Cash Throw for Traffic

● Large asset owners (pension funds, endowments, foundations): They have noticeably reduced their allocation to cryptocurrency funds and direct investments, with most currently having little to no involvement in cryptocurrencies. Perhaps they attend conferences, but they clearly do not engage in asset allocation. They are the most conservative, therefore moving the slowest in a market recovery (if there is one) and the last to take action.

● Asset management companies (such as Fidelity, Van Eck, Franklin Templeton, BlackRock, etc.): There is a lot of headline news in this area, from ETFs to using blockchain technology to disrupt the current banking structure in the capital markets. As financial disintermediation has taken funds out of the pockets of asset management companies and directly handed them to banks, asset management companies are the most supportive of cryptocurrencies. Companies like Franklin Templeton actually operate nodes on public blockchain networks, put money market funds on-chain, and run single managed accounts (SMAs) for their clients to provide Alpha in cryptocurrencies.

● Banks (JPMorgan Chase, Goldman Sachs, Morgan Stanley, etc.): Permissionless cryptocurrencies are not their friends, as they are the most disruptive to their monopolies and fee structures, so it’s best to believe that they are lobbying behind the scenes to protect commercial and consumer finance from the impact of permissionless DeFi. Additionally, they have almost no touchpoints on these things, except perhaps acting as market makers in the Bitcoin (BTC) and Ethereum (ETH) markets, as they have the strictest compliance and regulations. They are running private versions of certain public chains that are not truly open access or open source, just to reduce intermediation and back-office costs.

● Corporations (actually enterprises, not true institutions): They are experimenting with technology for new use cases and have historically made direct allocations to cryptocurrency funds. For example, companies like LianGuaiyLianGuail and Visa are experimenting with stablecoins, and NFTs for loyalty points from companies like Starbucks.

● Smaller asset owners (family offices, high net worth individuals): They have been hit hardest in 2022 and 2023, with excessive allocations to all technologies including cryptocurrencies. They are not going to bounce back quickly.

The next time someone uses the term “institution” in relation to cryptocurrency, it is best to exercise appropriate caution in their comments if they cannot distinguish between the aforementioned categories.

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