Crypto
Can Institutions Afford to Ignore Crypto Any Longer?
When institutions larger than the cryptocurrency ecosystem begin to wake up to the potential of crypto, it’s certainly food for thought. Can the ever-evolving world of crypto remain outside of mainstream adoption for much longer?
Larry Fink, the CEO of BlackRock, the largest asset management firm in the world with around $9.4 trillion in AUM, doesn’t appear to pull any punches when it comes to speaking his mind. In 2017, Fink dismissed crypto as an “index of money laundering.” But just three years later the BlackRock CEO admitted that assets like Bitcoin had caught his attention.
“I do believe the role of crypto is it’s digitizing gold in many ways,” Fink said in a recent interview with Fox Business, while also referring to BTC as an “international asset.” Today, BlackRock is gearing up to launch one of the first Bitcoin ETFs, subject to SEC approval, in what promises to be a flagship moment for the cryptocurrency landscape.
The arrival of an exchange-traded fund from the world’s largest asset management firm is about far more than providing more exposure to crypto on Wall Street, it’s an exceptional form of institutional advocacy.
Data already shows that institutions are waking up to this latest shot in the arm for crypto acceptance. According to the PwC report, Rebuilding confidence in crypto, some 46% of surveyed hedge funds confirmed that they intended to deploy more capital into this asset class by the end of 2023, while 37% claimed that they’re waiting for further market maturity before investing.
Sustaining an Institutionally-Focused Ecosystem
One of the biggest risks facing institutions seeking to embrace crypto is that they’re entering a world where many participants champion decentralization, and consciously reject traditional financial processes for more decentralized financial services.
Because decentralization makes it more difficult to regulate the industry through single centralized bodies, some institutional investors may be put off by a perceived lack of security. However, other market commentators believe that the arrival of institutions will help to create an adaptable ecosystem that can suit all players.
“I think we’ll get two versions,” explains Clara Medalie, director of research at crypto market analysts, Kaiko. “I think we’ll still see a continuation of the more Decentralized Finance side which is completely trustless. But we’re also going to see a permissioned version of decentralised finance that will be incorporated by these more institutional actors and this has to do with tokenisation.”
“You can’t really have the fully automated DeFi side when you’re talking about traditional finance because there is the risk component, there’s compliance, there’s regulation, and so I think it will be a combination of both depending on what the actual use cases are.”
Institutional access to these newly hybrid crypto markets will be accelerated by the arrival of Bitcoin ETFs, which will allow institutional investors and traders the opportunity to utilize a regulated and familiar investment vehicle for institutions to access through more traditional brokerage accounts.
This would prevent institutions from having to fully immerse themselves into decentralized exchanges to buy and store their assets directly. By simplifying access to crypto through ETFs, we will invariably see a broader range of institutional arrivals in the cryptocurrency market who would otherwise be cautious or wary of existing infrastructure across the market.
Bitcoin’s Halving Event and The Next Bull Run
Bitcoin’s pre-programmed halving events have been a catalyst for bull runs ever since its creation.
The term ‘halving event’ refers to an approximate four-year cycle that sees the mining rewards for Bitcoin distributed to its miners halved, which automatically contributes to ramping up the asset’s scarcity.
Bitcoin Halving
With Bitcoin’s 2016 and 2020 halving events culminating in a new all-time high value for the asset in the following year respectively, much has been made for the prospective resumption of the trend in 2024.
Although the cryptocurrency landscape offers very little in the way of recurring trends due to mass market volatility, it’s down in no small part to BTC’s halving cycle that Standard Chartered issued a forecast that Bitcoin would attain a value of $120k by the end of 2024.
Using Bitcoin’s stock-to-order flow chart as a guide, we can see a loose correlation between Bitcoin halving events and price rallies that corroborate Standard Chartered’s forecast. The resumption of this trend would not only be lucrative for institutional participants within the crypto space, but it would also provide a significant boost to the market capitalization of the cryptocurrency market.
Institutions Hold the Key to Their Future
At present, the prevailing cycle surrounding the institutional adoption of crypto is that it’s the institutional pioneers that can drive meaningful change in the industry.
“Are we ready for institutions? Just looking at everything that happened, probably the answer is no,” said Chen Arad, co-founder and chief experience officer at crypto risk surveillance firm Solidus Labs. “But the map comes with the territory.”
It will only be through institutional adoption and advocacy that the crypto space will become a productive environment for more institutions.
Although there’s still risk throughout the industry, we’re seeing evidence that the crypto ecosystem is becoming safer and more sustainable for all participants.
In the launch of Bitcoin ETFs providing institutions with unprecedented exposure to crypto markets in a regulated environment, we may see a surge in advocacy that converts institutional interest into intent.
When institutions larger than the cryptocurrency ecosystem begin to wake up to the potential of crypto, it’s certainly food for thought. Can the ever-evolving world of crypto remain outside of mainstream adoption for much longer?
Larry Fink, the CEO of BlackRock, the largest asset management firm in the world with around $9.4 trillion in AUM, doesn’t appear to pull any punches when it comes to speaking his mind. In 2017, Fink dismissed crypto as an “index of money laundering.” But just three years later the BlackRock CEO admitted that assets like Bitcoin had caught his attention.
“I do believe the role of crypto is it’s digitizing gold in many ways,” Fink said in a recent interview with Fox Business, while also referring to BTC as an “international asset.” Today, BlackRock is gearing up to launch one of the first Bitcoin ETFs, subject to SEC approval, in what promises to be a flagship moment for the cryptocurrency landscape.
The arrival of an exchange-traded fund from the world’s largest asset management firm is about far more than providing more exposure to crypto on Wall Street, it’s an exceptional form of institutional advocacy.
Data already shows that institutions are waking up to this latest shot in the arm for crypto acceptance. According to the PwC report, Rebuilding confidence in crypto, some 46% of surveyed hedge funds confirmed that they intended to deploy more capital into this asset class by the end of 2023, while 37% claimed that they’re waiting for further market maturity before investing.
Sustaining an Institutionally-Focused Ecosystem
One of the biggest risks facing institutions seeking to embrace crypto is that they’re entering a world where many participants champion decentralization, and consciously reject traditional financial processes for more decentralized financial services.
Because decentralization makes it more difficult to regulate the industry through single centralized bodies, some institutional investors may be put off by a perceived lack of security. However, other market commentators believe that the arrival of institutions will help to create an adaptable ecosystem that can suit all players.
“I think we’ll get two versions,” explains Clara Medalie, director of research at crypto market analysts, Kaiko. “I think we’ll still see a continuation of the more Decentralized Finance side which is completely trustless. But we’re also going to see a permissioned version of decentralised finance that will be incorporated by these more institutional actors and this has to do with tokenisation.”
“You can’t really have the fully automated DeFi side when you’re talking about traditional finance because there is the risk component, there’s compliance, there’s regulation, and so I think it will be a combination of both depending on what the actual use cases are.”
Institutional access to these newly hybrid crypto markets will be accelerated by the arrival of Bitcoin ETFs, which will allow institutional investors and traders the opportunity to utilize a regulated and familiar investment vehicle for institutions to access through more traditional brokerage accounts.
This would prevent institutions from having to fully immerse themselves into decentralized exchanges to buy and store their assets directly. By simplifying access to crypto through ETFs, we will invariably see a broader range of institutional arrivals in the cryptocurrency market who would otherwise be cautious or wary of existing infrastructure across the market.
Bitcoin’s Halving Event and The Next Bull Run
Bitcoin’s pre-programmed halving events have been a catalyst for bull runs ever since its creation.
The term ‘halving event’ refers to an approximate four-year cycle that sees the mining rewards for Bitcoin distributed to its miners halved, which automatically contributes to ramping up the asset’s scarcity.
Bitcoin Halving
With Bitcoin’s 2016 and 2020 halving events culminating in a new all-time high value for the asset in the following year respectively, much has been made for the prospective resumption of the trend in 2024.
Although the cryptocurrency landscape offers very little in the way of recurring trends due to mass market volatility, it’s down in no small part to BTC’s halving cycle that Standard Chartered issued a forecast that Bitcoin would attain a value of $120k by the end of 2024.
Using Bitcoin’s stock-to-order flow chart as a guide, we can see a loose correlation between Bitcoin halving events and price rallies that corroborate Standard Chartered’s forecast. The resumption of this trend would not only be lucrative for institutional participants within the crypto space, but it would also provide a significant boost to the market capitalization of the cryptocurrency market.
Institutions Hold the Key to Their Future
At present, the prevailing cycle surrounding the institutional adoption of crypto is that it’s the institutional pioneers that can drive meaningful change in the industry.
“Are we ready for institutions? Just looking at everything that happened, probably the answer is no,” said Chen Arad, co-founder and chief experience officer at crypto risk surveillance firm Solidus Labs. “But the map comes with the territory.”
It will only be through institutional adoption and advocacy that the crypto space will become a productive environment for more institutions.
Although there’s still risk throughout the industry, we’re seeing evidence that the crypto ecosystem is becoming safer and more sustainable for all participants.
In the launch of Bitcoin ETFs providing institutions with unprecedented exposure to crypto markets in a regulated environment, we may see a surge in advocacy that converts institutional interest into intent.
Bitcoin fell for the first time in four days with speculative bets being pared across financial markets after Federal Reserve officials suggested greater caution over how quickly they can continue reducing borrowing costs.
The original cryptocurrency fell as much as 5.3% to $100,752, a day after climbing above $108,000 for the first time in what’s been a record-breaking rally this year. The seven largest digital tokens as measured by market value were all lower, data compiled by Bloomberg show.
Cryptocurrency adoption in Latin America is
experiencing explosive growth, driven by a mix of factors in the area like
economic instability, financial innovation, and regulatory evolution. Countries
like Brazil, Argentina, and Mexico are emerging as global leaders in
cryptocurrency usage, offering a fertile ground for both individuals and
businesses to explore digital assets as practical solutions for real-world
financial challenges.
To learn more about Latin America’s rapidly
evolving crypto market, download our whitepaper, “Unlock the Potential of Latin
America’s Booming Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
The rising wave of crypto in Latin
America
Cryptocurrency adoption in Latin America is
accelerating, fueled by inflation and currency devaluation. In Argentina, where
inflation has devastated the peso, Bitcoin and stablecoins have played an
important role in protecting savings. Around 15% of the population uses crypto
regularly, finding it a critical hedge against inflation.
In Brazil, crypto is even being integrated
into mainstream finance. The country was one of the first to approve
cryptocurrency exchange-traded funds (ETFs), and by 2023, the value of USDT
transactions was equivalent to $55 billion, more than 80% of its crypto volume.
This makes Brazil a key player in the global crypto market.
Mexico has carved out a niche in crypto
remittances, with Bitso processing over $3.3 billion in cross-border payments
in 2022. Crypto is emerging as a more efficient solution for these
transactions, benefiting millions of families reliant on remittances.
Regulatory evolution driving market growth
The regulatory environment across Latin
America is evolving, creating opportunities for businesses to expand. For example,
El Salvador made history by becoming the first country to adopt Bitcoin as
legal tender, with further initiatives like Bitcoin-backed bonds and a
government-sponsored crypto wallet. This bold experiment has positioned El
Salvador as a global trailblazer for cryptocurrency adoption, even as its
long-term effects are being evaluated.
Meanwhile, Mexico’s fintech law from 2018
recognized cryptocurrencies as virtual assets, establishing a clear regulatory
pathway for businesses. This clarity has helped companies like Bitso thrive. Meanwhile,
Colombia’s regulatory sandbox has promoted crypto experimentation in a
controlled environment, attracting fintechs and positioning the country as a
future hub for innovation.
Argentina, while still working on a
comprehensive regulatory framework, has seen increased interest in crypto
regulation under its new pro-crypto government. Colombia’s sandbox model is
providing fintechs with a controlled environment to test their offerings,
positioning the country as an emerging leader in the digital asset space as
well.
Emerging opportunities
Despite infrastructure and regulatory
challenges, Latin America offers immense opportunities for crypto growth.
Argentina and Venezuela, with their hyperinflationary economies, continue to
see widespread crypto adoption as citizens seek alternatives to their unstable
currencies. Stablecoins like USDT and USDC can help individuals and businesses
in these countries by providing greater financial stability.
Mexico’s growing role in crypto remittances
and Colombia’s fintech-friendly environment highlight the region’s potential
for further expansion. Tokenization is another area of growth, with Brazil’s
agricultural commodity token project, Agrotoken, revolutionizing access to
credit for small farmers. Brazil’s Drex initiative also highlights the
country’s commitment to developing a fully digital economy and integrating
blockchain technology into mainstream financial systems.
Latin America’s complex economic landscape,
combined with its openness to crypto solutions, makes it an exciting market for
businesses seeking to leverage digital assets. By addressing regulatory and
payment infrastructure challenges, companies can unlock the full potential of
this rapidly evolving crypto market.
The role of payment solutions in this evolving
market
Cross-border payments and regulatory
complexities are significant hurdles for businesses expanding into the Latin
American crypto market. The region’s rising demand for remittances, along with
fragmented payment infrastructures, means businesses must navigate
multi-currency transactions. Additionally, evolving regulatory landscapes
require businesses to stay compliant while managing operational risks.
Paysafe addresses these challenges by
offering solutions that streamline cross-border payments, supporting multiple
currencies and reducing transaction costs. With strong integration into key
local systems, Paysafe helps businesses deliver the seamless payment options
customers expect.
Furthermore, Paysafe’s regulatory expertise
ensures businesses remain compliant across diverse markets, while its advanced
security features protect against fraud, providing businesses with the trust
and reliability they need to thrive in the region’s fast-growing crypto
ecosystem.
Conclusion
Latin America is a prime market for
cryptocurrency adoption and its growth shows no sign of slowing down. From the
pioneering efforts of El Salvador to the sophisticated regulatory framework in
Brazil, the region offers diverse use cases for businesses looking to enter or
expand their crypto operations. Our whitepaper highlights that despite
challenges like regulatory fragmentation and cultural nuances, Latin America
presents tremendous opportunities for growth.
For more detailed insights and strategies,
download our whitepaper, “Unlock the Potential of Latin America’s Booming
Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
By leveraging Paysafe’s comprehensive
payment solutions, businesses can seamlessly navigate the complexities of the Latin
American crypto landscape, unlocking the full potential of one of the world’s
fastest-growing markets.
Disclaimer:
This article is not intended to be
financial, investment or trading advice. This article is for information and
solely for education purposes. It does not protect against any financial loss,
risk or fraud.
Why Paysafe
Paysafe supports Latin American businesses
with over 25 years of experience, offering top-tier fraud, risk, and compliance
support. Their solutions streamline cross-border payments, support multiple
currencies, and reduce transaction costs, enabling confident expansion in the
crypto market.
Cryptocurrency adoption in Latin America is
experiencing explosive growth, driven by a mix of factors in the area like
economic instability, financial innovation, and regulatory evolution. Countries
like Brazil, Argentina, and Mexico are emerging as global leaders in
cryptocurrency usage, offering a fertile ground for both individuals and
businesses to explore digital assets as practical solutions for real-world
financial challenges.
To learn more about Latin America’s rapidly
evolving crypto market, download our whitepaper, “Unlock the Potential of Latin
America’s Booming Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
The rising wave of crypto in Latin
America
Cryptocurrency adoption in Latin America is
accelerating, fueled by inflation and currency devaluation. In Argentina, where
inflation has devastated the peso, Bitcoin and stablecoins have played an
important role in protecting savings. Around 15% of the population uses crypto
regularly, finding it a critical hedge against inflation.
In Brazil, crypto is even being integrated
into mainstream finance. The country was one of the first to approve
cryptocurrency exchange-traded funds (ETFs), and by 2023, the value of USDT
transactions was equivalent to $55 billion, more than 80% of its crypto volume.
This makes Brazil a key player in the global crypto market.
Mexico has carved out a niche in crypto
remittances, with Bitso processing over $3.3 billion in cross-border payments
in 2022. Crypto is emerging as a more efficient solution for these
transactions, benefiting millions of families reliant on remittances.
Regulatory evolution driving market growth
The regulatory environment across Latin
America is evolving, creating opportunities for businesses to expand. For example,
El Salvador made history by becoming the first country to adopt Bitcoin as
legal tender, with further initiatives like Bitcoin-backed bonds and a
government-sponsored crypto wallet. This bold experiment has positioned El
Salvador as a global trailblazer for cryptocurrency adoption, even as its
long-term effects are being evaluated.
Meanwhile, Mexico’s fintech law from 2018
recognized cryptocurrencies as virtual assets, establishing a clear regulatory
pathway for businesses. This clarity has helped companies like Bitso thrive. Meanwhile,
Colombia’s regulatory sandbox has promoted crypto experimentation in a
controlled environment, attracting fintechs and positioning the country as a
future hub for innovation.
Argentina, while still working on a
comprehensive regulatory framework, has seen increased interest in crypto
regulation under its new pro-crypto government. Colombia’s sandbox model is
providing fintechs with a controlled environment to test their offerings,
positioning the country as an emerging leader in the digital asset space as
well.
Emerging opportunities
Despite infrastructure and regulatory
challenges, Latin America offers immense opportunities for crypto growth.
Argentina and Venezuela, with their hyperinflationary economies, continue to
see widespread crypto adoption as citizens seek alternatives to their unstable
currencies. Stablecoins like USDT and USDC can help individuals and businesses
in these countries by providing greater financial stability.
Mexico’s growing role in crypto remittances
and Colombia’s fintech-friendly environment highlight the region’s potential
for further expansion. Tokenization is another area of growth, with Brazil’s
agricultural commodity token project, Agrotoken, revolutionizing access to
credit for small farmers. Brazil’s Drex initiative also highlights the
country’s commitment to developing a fully digital economy and integrating
blockchain technology into mainstream financial systems.
Latin America’s complex economic landscape,
combined with its openness to crypto solutions, makes it an exciting market for
businesses seeking to leverage digital assets. By addressing regulatory and
payment infrastructure challenges, companies can unlock the full potential of
this rapidly evolving crypto market.
The role of payment solutions in this evolving
market
Cross-border payments and regulatory
complexities are significant hurdles for businesses expanding into the Latin
American crypto market. The region’s rising demand for remittances, along with
fragmented payment infrastructures, means businesses must navigate
multi-currency transactions. Additionally, evolving regulatory landscapes
require businesses to stay compliant while managing operational risks.
Paysafe addresses these challenges by
offering solutions that streamline cross-border payments, supporting multiple
currencies and reducing transaction costs. With strong integration into key
local systems, Paysafe helps businesses deliver the seamless payment options
customers expect.
Furthermore, Paysafe’s regulatory expertise
ensures businesses remain compliant across diverse markets, while its advanced
security features protect against fraud, providing businesses with the trust
and reliability they need to thrive in the region’s fast-growing crypto
ecosystem.
Conclusion
Latin America is a prime market for
cryptocurrency adoption and its growth shows no sign of slowing down. From the
pioneering efforts of El Salvador to the sophisticated regulatory framework in
Brazil, the region offers diverse use cases for businesses looking to enter or
expand their crypto operations. Our whitepaper highlights that despite
challenges like regulatory fragmentation and cultural nuances, Latin America
presents tremendous opportunities for growth.
For more detailed insights and strategies,
download our whitepaper, “Unlock the Potential of Latin America’s Booming
Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
By leveraging Paysafe’s comprehensive
payment solutions, businesses can seamlessly navigate the complexities of the Latin
American crypto landscape, unlocking the full potential of one of the world’s
fastest-growing markets.
Disclaimer:
This article is not intended to be
financial, investment or trading advice. This article is for information and
solely for education purposes. It does not protect against any financial loss,
risk or fraud.
Why Paysafe
Paysafe supports Latin American businesses
with over 25 years of experience, offering top-tier fraud, risk, and compliance
support. Their solutions streamline cross-border payments, support multiple
currencies, and reduce transaction costs, enabling confident expansion in the
crypto market.
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