What are the most significant factors hindering institutional adoption of cryptocurrencies?

One of the hottest questions in the crypto sphere right now is What are the most significant factors hindering institutional adoption of cryptocurrencies? Therefore it made sense to conduct last week’s podcast with this question in mind. Here are the factors that myself, James Bowater, City AM’s Crypto Insider, and Elliott Callender, founder at Nodeunlock, found to be most significantly hindering institutional adoption of cryptocurrencies:

An unclear regulatory framework. The lack of clarity surrounding the purchasing, transferring and storing of cryptocurrencies makes the space appear very unattractive to the conventional finance bigwigs. It makes sense why this would be the case, not least because the markets they are so familiar with have a long lineage of strict governmental regulation. Without this regulation in place, there is a higher probability of fraud occurring as well as simple negligence on the part of the relevant exchanges, custodians etc. I see this point as totally legitimate, although it does beg the question: what comes first the chicken or the egg? The reason for this is that I see institutional interest in the space being one of the primary driving forces behind the regulators prioritising the creation and implementation of a solid regulatory framework.

Another point that we discussed was the fact that although there are many big plans in the pipeline, e.g. ICE’s Bakkt exchange, there are still no significant channels open between the old money world and crypto. It is not as if there have not been attempts to open up these channels, but it seems that the SEC in America is just not keen on any of the proposed ETFs that have been laid down in front of them. Will these channels one day be open? Probably. But the longer these channels remain closed the worse off the crypto sphere will be. That being said, the political influence these institutions and their executives have accumulated over the years may be the deciding factor in having these channels open sooner than many expect.  This influence might take the form of a gentle nudge, for example, a polite email to the regulators or maybe something a little more obvious… lobbying perhaps. Let us not forget that London’s financial industry is the UK Conservative Party’s largest donor, who are at the time of writing the party with the most power.

The other major point we discussed was the simple fact that these markets are too irrational and immature for even sophisticated traders to invest in crypto with any sufficient level of certainty of returns. This price volatility is seen by some traders as more of an opportunity than a hindrance, but presumably not by institutional money.

 

Whichever factor you see as the most significant hindrance to the institutional adoption of cryptocurrencies I have little doubt that you are eagerly anticipating their arrival, I know I certainly am.

 

Check out part 1 of the original podcast here: https://www.youtube.com/watch?v=I3hRwZ9ycwE&t=332s

DISCLAIMER: Opinions expressed by Coinschedule Blog contributors are their own.

Anthony Broderick
Crypto Analyst & Media Editor
Anthony joined CoinSchedule in July 2018 as an intern and was quickly offered the full-time position of Cryptocurrency Analyst & Media Editor. His role includes writing reports, articles and blog posts as well as attending relevant conferences and producing weekly podcasts designed to delve deep into a particular part of the crypto sphere with an industry-leading expert.

Having graduated from the University of Edinburgh with a 2:1 in the Summer of 2018, Anthony’s dissertation - ‘Is Bitcoin Money?’ - was published as a book in December 2018 by Lambert Academic Publishers and is now available to buy online.

Anthony’s passion for cryptocurrencies began back in 2013 when he discovered the technology when revising for his Economics A Level and was cemented in place once he invested in Bitcoin in the Spring of 2014.

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