In an interview with Cointelegraph reporter Joe Hall last Tuesday, David Olsson, global head of institutional distribution at BlockFi, shared his insight on the state of institutional adoption of cryptocurrencies. BlockFi is a financial services company that offers retail wealth management products, such as crypto-backed loans, interest accounts, Bitcoin (BTC) rewards credit cards, etc. Meanwhile, for institutional investors, BlockFi's proprietary platform provides financing for capital efficiency, the ability to borrow coins for hedging and shorting, and institutional-grade trading infrastructure.
When asked about any exciting trends among institutional clients adopting crypto, Olsson told Cointelegraph, "Out of the 80% of Top 50 hedge funds in the world we've spoken to, they all are embarking on some sort of crypto journey, such as starting a trading desk or investing in crypto native firms run by 25 to 30-year-olds that know how to extract alpha from crypto markets and manage the risks."
"It really is a generational story. The early asset managers don't have the natural, digital native perspective of someone that's younger. But we see a tremendous amount of interest."
Olsson told Cointelegraph that hedge funds have been preparing for quite a while to venture into crypto, given the significant increase in liquidity and institutionalization of the space over the years. According to a study conducted by Fidelity last year, 70% of surveyed financial institutions plan to invest in crypto in the next year, while 90% said they plan to do so in the next five years. "Bitcoin has returned more than 100% per year on avg. over the last 10 years, compared to around 10% per year for equities in the U.S. So it's just becoming too big in terms of mindshare for people to ignore," Olsson added.
"Crypto can fix the plumbing of the financial system worldwide, starting with eliminating expensive fees from banks."
But Olsson also pointed out that some institutions don't feel 100% comfortable, as jurisdictions with high liquidity for crypto don't always have the regulation to back them. "For adoption to increase, you need an institutional infrastructure, which means KYC [Know Your Customer], AML [Anti-Money Laundering] mechanism, which means financial transparency, cyber security, all the things that clients care about."
As Cointelegraph previously reported, demand from major investors could still be running high, with 30,000 BTC moved off Coinbase on Friday.