As supply chain concerns continue and the US dollar struggles to curb inflationary concerns, the cryptocurrency remains a tempting portico in the current financial storm. The recent approval of Bitcoin’s first futures exchange (ETF) (BTC), which can be traded on the NYSE and Nasdaq of ProShares and Valkyrie Funds, has created a new class of financial instruments. enthusiasm in the markets. Valkyrie received explicit approval from the US Securities and Exchange Commission (SEC), while the ProShares ETF simply did not object.

Thus ends a great year for the institutional financial interest in the crypt. Coinbase had a whopping $ 64 billion direct NASDAQ listing, while large venture capitalists (VCs) like Andreessen Horowitz (a16z) also launched their $ 1 billion fund dedicated solely to cryptocurrency. focus.

Financial enthusiasm isn’t limited to the biggest names in the industry. Crypto technology startups are said to have raised over $ 2.6 billion in the first quarter of 2021, more than in 2020 as a whole.

For a crypt to be a truly serious investment tool that can stand up to the competition, not just a fad that is the equivalent of the 21st century gold rush or tulip craze, it must provide long-term support. institutional financing term as a serious tool. . investment alternative.

Easier said that done. So how does encryption work?

Related: Why Now? It took the SEC eight years to license a Bitcoin ETF in the United States

Lower the fence and open the door
Crypto has already demonstrated its ability to produce triple-digit percentage returns, but these large fluctuations in value only reinforce its perception of the “wild west” of finance. Crypto will only become a complete investment alternative when it has achieved almost uniform confidence in both its stability and transparency.

Many stakeholders and custodians of the new cryptography have no doubt expressed skepticism. SEC Chairman Gary Gensler, one of the top US supervisors, said he was still concerned about investor protection in the $ 2.5 billion cryptocurrency market. As Gensler himself said at the top of all markets at Yahoo Finance last month:

“Investors are not as protected as they are, whether they enter the stock or bond markets that we have overseen for so long. Without him, I think, as I have told others, it really is a bit of a wild west.”
The speculative nature of the market, coupled with insufficient supervision, creates the image of a dangerous environment. For a certain type of investor, the feeling of excitement and danger is almost welcome: “hold on” one day and buy the sauce the next, but this is not a recipe for wooing larger institutional finances, much less pension plan managers. or 401 … (k) s.

The big companies in the cryptocurrency industry know this for sure and are already trying to create standards that make crypto more affordable for everyone from big finance to small retail investors. In a report to the U.S. Senate Banking Committee, the a16z described above described the principles of industry regulation, which included:

Anyone looking at the a16z report shouldn’t lose sight of the fact that not only was it presented to a government agency, it also contained solutions that would be impossible to implement without government cooperation. Libertarians and crypto-anarchists may mock this, but for crypto to reach its full investment potential, this collaboration between governments, large financial institutions, large crypto institutions and retail crypto investors is essential.

Related: Learn (and be afraid) about the new IRS crypto tax reports

Sorry, sir, but we need some law
While Bitcoin was originally conceived as a means of evading central banks and currency manipulation, the government’s signing (and buying) of cryptocurrencies in the form of regulation will continue to be essential to building global legitimacy and subsequent investment. , until they are cryptocurrencies. and investment vehicles are nominally “decentralized”.

It is best for the industry to be proactive in this regard, not only in applying the law itself, but also in determining how a crypt is regulated by federal lawmakers who are not necessarily crypto-savvy or the most knowledgeable. The United States is currently passing an infrastructure law

Source: CoinTelegraph