They’ve seen the hype, they’ve seen the gains, they’ve studied the space.
Now, they’re marching headfirst into crypto.
It feels wrong to say, but the entrenched, bureaucratic TradFi institutions have been buidling the bear as much as any crypto native projects.
Institutions are the gateway to crypto heavens, and they’re passed knock knock knocking on heaven’s door. They’ve come to join the party.
Considered and Certain
The 2 words above are key staples in the TradFi business model.
Whilst there are risky start-ups, the institutions we’re talking about today require certainty before moving into almost taboo markets such as crypto.
The innovation and growth of the sector is just too much to ignore.
Due diligence has been done. Specialised departments have been created. Crypto infrastructure is being built.
We are continuing to see vast amounts of capital flowing into the space, with VCs deploying $14.2 billion into crypto in the first half of 2022. Vitally, non-specific VC funds such as Northzone have clearly set their sights, and their multi-billion funds, on crypto. With an estimated $500 billion of VC raised funds side-lined, ready to be deployed, seeing more non-native VCs heavily interested in crypto, with an increasingly large % of funds allocated to the space, shows clear momentum that has no signs of stopping!
Believe it or not, that is not surprising to us. We are extremely bullish on crypto, we were involved early, and know its potential – inflows were inevitable.
What is more interesting is the fundamental shift we have seen in both narrative and involvement. As little as 2 years ago, institutions were, excuse the language, shit-talking crypto at every opportunity. Now, we have J.P.Morgan investing in crypto trading networks, Barclay’s investing in Copper, an “institutional gateway to digital asset investing”, ex-Goldman Sachs and Robinhood employees setting up a DeFi exchange focused blockchain, and multiple Ivy League university endowments directly investing in Web3 funds, to name a few examples.
Previously, large institutional players were investing (to avoid missing out on the hype-based price movements). Now, they are building the framework needed for unfaltering involvement in crypto when the regulatory framework is set.
To demonstrate this, I have included a list of key news articles at the bottom – check it out!
The Institutional Race To Arms
When you dig below the headlines and consider their intentions, that’s where you strike gold.
Above, we talk about the modus operandi of TradFi institutions, considered and certain. The moves we are seeing are preparing for at least a crypto-friendly future, if not crypto-centric.
These moves require tedious bureaucratic processes, passing risk departments, board meetings, shareholder votes, and the array institutional of red tape.
The battle calls echoing in the halls of the London and New York Stock Exchanges are akin to a fundamental shift in mindset. They are preparing, making crypto a fundamental part of the future offering. Business models in the largest companies in the world are changing.
The speed of involvement is increasing to the point it could now be considered a race to arms.
They recognise the future, and they’re coming for it.
There is no turning back now.
Their Weapons
Blackrock offers Aladdin clients direct access to crypto through a partnership with Coinbase (Aladdin manages over $21.6 trillion as of Oct 2021).
J.P.Morgan seeks hire to push banking products onto the metaverse.
An amusing contrast to this: https://www.youtube.com/shorts/O2c1qAWkZq0
Perhaps even more amusing is J.P.Morgan opening a Decentraland lounge…
This is huge, as it’s unclear what their future involvement could be – stock on chain sounds like an amazing idea…
Fidelity hires towards goal of retail-focused crypto offering.
Brazil’s largest private bank plans to launch asset tokenisation platform.
The bank will transform traditional financial products into tokens, and offer crypto custody services.
Fireblocks and Fintech Major FIS bring DeFi to capital markets.
This allows FIS’s 6,400 institutional clients acces to large crypto trading venues, liquidity providers, lending desks and DeFi applications.
T-Mobile partners with Helium Network for new Helium Mobile 5G network.
This one is more of a business partnership than the institution diving into crypto, but it shows how mainstream it is becoming.