Institutional Investors & CryptocurrencyAn institutional investor refers to a nonbank person or an organisation that trades securities in dollar amounts or huge share quantities so that it will be qualified for lower commissions and preferential treatment. They will invest in bonds, future contracts, stocks, etc. These investors perform majority trades and hence influence the prices of the securities.
So, why is it that we often hear - institutional investors stay away from crypto investment? ("https://all-stocks.net/jpmorgan-analysts-institutional-investors-currently-run-away-from-cryptocurrency-investments/") According to a report by Researcher Tabb Group, the digital currencies will be going institutional in or around the year 2018.
The virtual money that gives the option of a decentralised network has got the attention of many investors and is becoming more mainstream thanks to the pinnacle achieved by bitcoin in recent years. From $1000, it rose to an all-time record high of $20,000 within a year. Although it fell down to $6000 in the next two months, the rise in its value has boosted investors’ interests in the cryptocurrencies.
So, why did the large investors hold themselves back from investing in the cryptocurrencies? There are three vital reasons that played a vital role in the institutional investors’ decisions.
Regulatory Clarity: As we all know the cryptocurrencies are mostly unregulated. Now, an unregulated currency will surely not interest an institutional investor. However, the global lawmakers are thinking about ways to better the existing systems.
Institutional grade data: In the cryptocurrency environment/ system, there are no rules that specify what kind of data should be reported. While in the markets that the institutional investors usually deal, for example- fixed income, data should be reported.
Infrastructure: Another reason that prevented the institutional investors from investing in bitcoins or other cryptocurrencies is the unavailability of a proper and secure infrastructure. This is not the case when these investors invest in equities. There they will be having brokers, custodians and exchanges to deal with the trades.
Although there are reasons why the institutional investors had held themselves back, they are slowly getting into the crypto-world. Few banks are also approaching the markets. Like mentioned above, you will surely witness digital currencies going institutional.
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