February 7, 2022
In a 2018 report, Big Four consulting firm KPMG wrote: “Crypto assets have potential. But for them to realize this potential, institutionalization is needed.” Institutionalization describes the at-scale involvement of traditional financial firms, which analysts at KPMG say will fast-track crypto’s mainstream status. In 2021, the crypto market took a giant leap forward in that direction, with a raft of financial institutions making notable moves. As predicted, crypto’s adoption rates are currently at a record level, rising by over 2,300% between the third quarter of 2019 and the second quarter of 2021.
Here are the most notable institutional moves of 2021.
Visa: Making Crypto More Accessible Via Partnerships
Being the world’s largest payment network (with over 50 million merchants globally), Visa was always going to be an important driver for crypto’s mainstream adoption. That was why its January 2018 decision to terminate WaveCrest’s membership appeared to be a setback for the market. WaveCrest was a popular cryptocurrency card provider.
However, the card network has since proved to be a crypto enabler, having continually deepened its involvement in crypto. In 2020, the company announced that its crypto strategy would be currency- and network-agnostic by supporting the digital currencies and blockchain networks that its clients and partners demand.
That has seen Visa grow its partnership with crypto platforms by more than 100% to reach 60 in the 18 months leading to December 2021. Visa counts leading crypto services such as Crypto.com, Coinbase, Binance and Anchorage as partners. Visa had made Coinbase the first pure-play crypto company to receive its principal membership in February 2020.
Some of the card company’s most notable crypto-related moves in 2021 include:
An industry first for the use of the USDC stable coin to settle transactions over the Ethereum network.
Entry into the NFT market via a $150,000 purchase of a CryptoPunk art.
The publication of a concept for making cryptocurrencies interoperable called a “Universal Payment Channel.” This would allow people using different cryptocurrencies to transact without having to worry about manual conversion.
The launch of a crypto advisory service for financial institutions looking for entry opportunities into the crypto market.
A partnership with blockchain company Consensys to help bridge central bank digital currencies (CBDCs) with existing payment infrastructure.
Citigroup: Extending Crypto Offerings to Institutional Clients
In November, multinational banking giant Citigroup promoted Puneet Singhvi from the head of blockchain and digital assets in the global markets division to lead the push to offer digital asset products to its institutional clients. In addition, the bank created 100 digital asset-related roles.
This followed the launch of a digital asset group within Citi’s wealth management unit earlier in the year.
Citi’s 2021 crypto initiatives standout out since the bank was one of the banks that banned crypto transactions on its cards in February 2018. This is a sign that the company now believes that crypto assets (either on permissioned or permissionless networks) aren’t going away.
Goldman Sachs Classified Bitcoin as an Investable Asset
2021 was also the year that Goldman Sachs, another G-SIB, made a complete U-turn on its stance about crypto assets. A leaked slide from a May 2020 investor advisory call revealed the bank’s view about digital assets. A line read: “Cryptocurrencies including bitcoin are not an asset class.”
However, by May 2021, the bank released research that says bitcoin is now an investable asset.
In June, the company made its first significant move in the crypto market when it partnered with Mike Novogratz’s Galaxy Digital to offer bitcoin futures trading to its clients.
European and Australian Banks Offering Native Crypto Wallets
Until now, only crypto companies have made it possible for consumers to buy, hold and store digital assets via a native crypto wallet. That appears to be changing, with banks in Europe and Australia trialing the idea of offering some sort of digital account. According to the Wall Street Journal, Spain’s second-largest lender BBVA and Australia’s largest bank, Commonwealth Bank of Australia, are already offering this service.
In addition, a group of savings banks in Germany, which collectively render services to 50 million of the country’s 80 million people, is planning to offer native cryptocurrency wallets to their customers, a development that will improve consumers’ trust in digital assets significantly.
Cboe Re-Enters Crypto
In October, Cboe, the first traditional exchange to list Bitcoin futures in the United States in 2017, announced plans to acquire Eris Digital Holdings. Eris operates a regulated spot and futures exchange as well as a clearinghouse.
Cboe, one of the world’s largest derivatives exchanges, had stopped listing bitcoin futures in 2019, amid a perceived dwindling interest for Bitcoin. Now, the exchange is re-entering the crypto market on the back of what the company’s chief executive described as a “huge” demand for crypto. Cboe’s participation in the crypto market brings a trust factor to the market, according to the Cboe CEO.
2022 Outlook
While 2021 was the biggest year for crypto adoption, the success was only a continuation of the growth from 2020. If that trend holds in 2022, then the market is set to witness an even more successful year, which should see crypto’s mainstream status expand into new industries. There’s simply isn’t a better time to start considering how your firm can get involved in the market. Early entry into any market could potentially bear outsized rewards.
However, as it is with every evolving market, there are large potential risks. Consequently, as with traditional assets, comprehensive data and insights are essential to decision making. Amberdata provides the institutional-grade infrastructure to give you access to the market data, blockchain data and insights you need to help you form your crypto strategy.
