Removal of Cost to Entry
According to Robert Quartly-Janeiro, the CSO of Bitrue, traditional financial institutions are now seeking exposure to cryptocurrencies after years of attacking them. He attributes this shift to client demand for crypto assets and the growing recognition that they represent a new asset class. Quartly-Janeiro also suggests that the collapse of FTX and other negative events between 2021 and 2023 have removed barriers to entry and created an opportunity for institutions to enter the market.
Risks and Benefits
Quartly-Janeiro acknowledges both the benefits and risks associated with traditional financial institutions entering the crypto market. The benefits include increased trade volume, expanded consumer choice, enhanced professionalism, and the establishment of industry standards. However, there are also risks such as increased competition for existing crypto entities and potential spillovers in areas like stablecoins that are linked to real-world assets and currencies.
To enter the crypto market, Quartly-Janeiro suggests that traditional financial institutions consider joint ventures or acquiring existing crypto entities rather than starting from scratch. For decentralized finance (defi) projects looking to partner with traditional finance, he advises gaining deep knowledge of both worlds.
Hot Take: Traditional Finance Institutions Embrace Crypto
Despite previously criticizing cryptocurrencies, traditional finance institutions are now embracing them due to client demand and the recognition of cryptocurrencies as a new asset class. Negative events in recent years have also removed barriers to entry, allowing these institutions to leverage their brand equity and financial capabilities. While there are both benefits and risks associated with this shift, it is expected to lead to increased trade volume, expanded consumer choice, enhanced professionalism, and the establishment of industry standards. To successfully enter the crypto market, traditional finance institutions should consider partnerships or acquisitions, while decentralized finance projects should seek to understand both the defi and traditional financial worlds.
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