Despite Increased Adoption Of Crypto, Institutional Reservation Remains
Anna Carpenter
Tue, 04/27/2021 – 13:30

FRNT Financial

Publication Date

Crypto and Bitcoin Market Cap Story of Day




Crypto was broadly higher this morning with Ethereum (ETH) threatening a move above record highs of about USD 2,600. Ripple (XRP) is outperforming in the Top 10. 

Crypto Story of the Day

In the past several weeks, Charles Schwab, NatWest, and HSBC have expressed caution over the adoption of crypto. While the asset class has seen accelerated adoption, there remains plenty of institutional reservation.

Charles Schwab CEO Walt Bettinger said on a call with analysts last week that the institution “would like to see more regulatory clarity” in regards to crypto before offering investment services for the space. Bettinger added that “[i]f Charles Schwab, the company, decides to participate in the crypto market, we will be highly competitive, we will be disruptive, and we will be client-oriented.”

Also last week, a board member of UK bank NatWest described that institution as taking a “cautious approach” to crypto and noted that the institution has “no appetite” for clients involved with crypto. The board member described crypto as “high risk.” 

Earlier in the month, HSBC confirmed that it had barred customers using its InvestDirect platform from investing in MicroStrategy. The bank told crypto news outlet The Block that it “has no appetite for direct exposure to virtual currencies [VCs] and limited appetite to facilitate products or securities that derive their value from VCs.” 

Toronto-based TD Bank has been actively limiting the ability of its customers to buy crypto for several years, in spite of roughly 10 crypto-based ETFs having been approved by regulators. As we say that, however, some of the most ardently opposed traditional financial firms have recently shown they can “flip.” JPMorgan began accepting crypto businesses for the first time in May 2020, signing on Coinbase and Gemini as clients. 

On Monday, CoinDesk reported that JPMorgan plans to offer private wealth clients an actively managed BTC fund this summer. This is in spite of high profile crypto criticism from JP Morgan CEO Jamie Dimon in the past, describing the coin as “a fraud” in 2017. 

New participants in the crypto space have consistently tapped crypto-native firms for assistance, i.e. PayPal and Paxos, JPMorgan and NYDIG. We’ve previously described this as mainstream adoption and attention that have outpaced the understanding of BTC and crypto. This is partly due to highly-technical events, like hard forks, which have little legal, accounting, and other precedent. Such crypto-specific events complicate the ability of institutions to participate, particularly without crypto-native firms offering guidance. 

Having said that, we find that despite what we’ve seen in the last 6 months, those that have entered the space are, in comparison to their counterparts, early pioneers. The reality of the situation is that, in spite of there being unprecedented institutional adoption underway, the baseline for many such participants remains cautious.

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