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Institutional integration of crypto options are increasing exponentially, and regions like Africa, though just scratching the surface, are experiencing a boom in crypto interest.
Those are two takeaways from a recent Blockchain Africa Conference, 2022 edition.
Comments concerning Africa’s crypto climate, as well as growing global institutional tide, were made by several analysts during a virtual panel entitled “Cryptocurrency Institutional Investment: Increasing Returns and Improving Diversification,” moderated by Cointelegraph.com.
Kalin Metodiev, co-founder of Nexo, a leading crypto exchange focused on fintech banking features, said that in terms of institutional investment:
“The institutional interest in the [crypt] space is increasing constantly on multiple fronts. Those we typically see in the media, like institutions buying bitcoin, for example, there are a few names at least that we saw in 2021. It seemed like many institutional participants were falling very keenly how quickly and by how much their [crypto] balance sheet was growing, in Bitcoin and Ethereum, for example.”
Nexo recently started delivering crypto custodial services, products, and lending services to institutional clients in conjunction with Fidelity Digital Assets, part of Fidelity Investments.
Headwinds Have Been Significant, But Not A Deal Breaker
Metodiev said that if the SEC okayed a spot bitcoin ETF (Exchange Traded Fund), it would further spur institutional exposure. In late 2021, the SEC gave the greenlight to several bitcoin futures ETFs.
Since then, the Biden administration has issued a directive calling for a wider coordinated government agency assessment regarding cryptos, in a move some saw as de-emphasizing the SEC as the only arbiter of crypto related matters.
There have been other problems that have given cryptos a rocky road despite surges in the late winter and late summer of 2021:
- A years-long SEC suit against the Ripple (XRP) blockchain, has been seen by many as a drag on the sector. Ripple has focused on providing speedy and cost effective cross-border banking and currency settlements, and could potentially be a successor to the legacy SWIFT system.
- China finally made good on threats to drive bitcoin mining away, though other regions, including the U.S. quickly made up the slack. More recently, China has come down on NFT platforms and seemingly the technology itself, showing the limits of the Communist regime when it comes to the innovations of the disruptive technology
- The heavy sanctions brought against Russia due its conflict with Ukraine, has provided an opening for crypto naysayers to accuse the sector of being easily exploitable for sanction avoidance, and call for changes and more regulation.
But despite the issues, analysts taking part in the Blockchain Africa Conference said that cryptos have continued to draw increasing interest and participation.
Metodiev commented that institutions ranging from small hedge funds to very large financial liquidity providers have been onboarding with Nexo at an “exponential” pace.
On the subject of crypto use in Africa, though it currently only accounts for about three percent of the overall market cap volume, participation was up more than 2,600 percent in 2021.
That growth rate eclipsed the rest of the world.
Kucoin CEO Johnny Lyu recently commented, “Financial problems the region is experiencing are forcing people to look for new instruments and technologies that can give them some of the economic freedom they currently lack.”
The Trends Journal has been predicting and chronicling mainstream institutional moves to cryptos in numerous articles, such as “CRYPTO SANITY” (16 Feb 2021), “‘THE CRYPTO-ING’: FINANCIALS PICKING UP PACE TO CRYPTOS” (24 Aug 2021) and others.