Just like psychologists know that human behaviours are a blend of nature and nurture, institutional participants need to see the right infrastructure and context to participate in crypto at scale.
The context is improving rapidly. Clear and stable regulation is the bedrock for institutional engagement. Rightly so as we all want to understand the rules of the game we are playing. While we all still await the tier 1 jurisdictions to publish black and white legislation, the signs are good.
To complement the ongoing roll-out of legislation in a number of tier 2 markets, there are increasingly positive noises emanating from regulators in Hong Kong, Korea and the UK. I think it is fair to say that the latter sees crypto as an opportunity to win big.
Nearly as importantly, we are seeing institutional endorsement with the launch of services from companies of global renown: Fidelity, Nomura and Standard Chartered.
And finally, the right kind of volatility. While traders need movement, larger funds generally seek less extreme fluctuation. So, the fact that Bitcoin has been less volatile than US equities over the last quarter is significant.
But funds also need verifiable trustworthy infrastructure. At Koine, we have focused on addressing their three primary concerns around the legitimate separation of responsibility on market participants. Trusted trading counter-parties; the avoidance of pure bearer assets or instruments; and scalable custody are essential.
While I’m not going to predict what the markets will do, I feel increasingly confident to predict that we are going to see the establishment of a scalable crypto market in 2019.