Who is Afraid of the Cryptoverse?
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By Irena Spiegel-Turner
What’s to Fear?
Should investors embrace tokenization and cryptocurrency or fear it? Everyday investors should be cautious as with any investment strategy and maybe yes fear the inner workings unless they have an appetite for the technical less certain nature of blockchain tokens and all its possibilities. However, institutions need to embrace non-traditional finance, digital assets, or be left behind.
Chaining It In
The mainstream investor has only experienced centralized traditional finance while the crytocurrency world — cryptoverse — was born on decentralized — dare I say wild west –concepts creating an initial divide between adapters and non-adapters but these worlds are now merging. The germination of ideas around new age monetary transactions and technologies should be embraced for what they are and how they are used to advance what modern society values most– freeing up time, fast transactions and making one’s money do the work for us to potentially provide returns on investment. But it is still the role of governments and regulators to rein in the best of this cryptoverse to keep its consumption by the everyday investor relatively safe by common standards and to aim to provide economic stability. This is currently unfolding in the U.S. with developing stablecoin governance from the Securities Exchange Commission (SEC). Soon transactions in our everyday finance will be more on blockchain than today.
Many major banks (See Exhibit 1 below) are now embracing the digital asset space and is pertinent now to allow them to move into the inevitable future. Tokenization of the markets is coming and will take over the future of the U.S. markets as we see the NASDAQ and DTCC begin to run their pilots on blockchain to tokenize securities. But does the everyday investor really need to understand the inner workings of the blockchain inner-workings?
Opaque Curtain of Protection
I would argue that the inner workings of tokenization should not matter much to the everyday investors, but this is exactly what is causing fear and uncertainly. For those uninterested in a specific cryptocurrency for their portfolio such as Etherum or Bitcoin it may be better to stick to rollouts of tokenization from major banks. If the progression of blockchain and tokenization can be kept behind an opaque curtain through a banking interface it will allow for continued shielding of the everyday investor from the innerworkings. Mainstream investors need to understand the risk and the potential returns, but they do not need to be versed in the wonky world of crypto lingo and all the possible choices.
Do I Now Have to Wear a Patagonia Gilet?
But the purpose of decentralize finance (DeFi) was to not have a middleman such as a central bank. So what becomes of the BitCoins and Ethereums of the world? Will it grow and flourish or loose momentum when many of the crypto experts join the big banks in centralization given the monetary benefits of collaboration? The big U.S. banks are now working with a small group of crypto‑native custody and infrastructure firms (e.g.,NYDIG, Coinbase Custody, Fidelity Digital Assets, and Copper ) — to deliver institutional‑grade bitcoin and digital‑asset services. These partnerships are the backbone of nearly every “quiet” crypto rollout happening across major banks today.
The U.S. is at a turning point and institutions need to lean-in or be left behind. Individual investors with no interest in the world of blockchain or those of whom are afraid of the words ‘cryptocurrency ‘or ‘tokenization’ should rely on the central banks as they always have and be sure to read the disclosures and risks before investing as they always have, but in the end whichever way the tide turns it will bring in more digital assets with it.
Exhibit 1
