In 2021, the cryptocurrency industry experienced a huge surge in institutional adoption. Experts predict that this trend will continue in 2019. It will all depend on the technology used to secure funds and store data.
Institutions Fear Security Risks
The volatility of the cryptocurrency market is a well-known criticism. Institutional players are not concerned about this. Recent research by Europe’s largest digital-asset hedge fund manager showed that institutional investors are being held back from the digital asset and cryptocurrency industry due to security concerns.
Nickel Digital Asset Management commissioned the study. It involved 50 institutional investors and 50 wealth mangers from the US, UK, Germany, France and UAE, who together manage over $108 billion. 79% of participants stated that asset custody was the most important factor when deciding whether to invest in this space.
Next: Regulations and Volatility
67% are concerned about volatility in cryptocurrency and digital assets prices, while 56% were worried about market cap. Noticeably, 49% cited the regulatory environment as the reason they aren’t jumping on the crypto bandwagon. These high-profile investors are positive about the possibility of the United States regulatory watchdog Securities and Exchange Commission (SEC) being “given more authority” to regulate these assets.
According to the report, 73% of institutional investors as well as wealth managers support giving more power to SEC. They believe this would have a positive effect on crypto prices. 32% believe it will have a very beneficial effect.
The carbon footprint has been cited as an important factor that could hinder adoption. The environmental impact of Bitcoin is still a major concern for some investors, but it’s not a big issue for the majority of wealthy investors. The poll results show that only 12% of respondents included carbon footprints from Bitcoin and other cryptocurrency in their top three reasons to not invest.
Marla Brooks – Financial Analysis
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