Asset managers have their own interest in the future of crypto

While the cryptocurrencies fell, established asset managers such as ABRDN, Charles Schwab and Blackrock hard to gain a foothold on the market. Mind you not by investing directly in volatile cryptocurrencies. ABRDN, the British investment group, recently acquired a participation in the Digital-Asset exchange Archax. Blackrock opens direct access for customers to the Coinbase crypto exchange. Schwab has launched a crypto -bound stock market -traded fund.

skeptics will say that asset managers are trying to take advantage of an immature, speculative market if careless customers who rely on cryptocurrencies are still susceptible to hype or even fraud. The Caisse de Dépôt et Placement du Québec, a great Canadian pension fund administrator, underlined and wrote down the risks, which in his opinion was an early investment in bankrotte crypto credit platform Celsius Network.

The CEO of Blackrock, Larry Fink, was an early Bitcoin critic who at best accused him of inconsistency. But when he snapped on Bitcoin in 2017, the foundations of crypto were more fragile than today. It is hardly surprising that companies like Blackrock, which also develops a spot bitcoin trust for institutional customers, try to address new investor groups.

asset managers must be open to several financial future. Cryptocurrency could become a legitimate method to secure the portfolios of demanding investors like other alternative assets such as wine or gold. It could still pay off to have a certain presence. But regardless of whether cryptocurrencies regain their previous level or not, the history of the markets suggests that something useful usually remains after bubbles.

By now investing in the superstructure of the market, asset managers can also prepare for the possible advisory of digital central bank currencies that offer some of the promised advantages of crypto with the security of support from central banks. They improve their understanding of the underlying technology such as blockchain. And you can enable yourself to hire innovative and fintech-versed young employees who are released by shrinking crypto companies. In other words, it is quite possible to use the technology, the entrepreneurial spirit and the innovation of crypto and at the same time to stay away from the investment class.

As far as normal investors are concerned, the growing connections between high finance and crypto seem to be a step of the origins of digital currencies as an instrument to tear down the establishment. But at least by filtering their investments by orthodox institutions, they limit their risk of theft and fraud. Nevertheless, cryptocurrencies are still largely unattended, have the potential to contribute to wider market instability, and are a risky home for the savings of small investors who are used to solid regulatory protection.

The obvious solution is to build fixed guardrails, as this newspaper repeatedly proposed. Unfortunately, different agencies and countries have different settings. Financial entrepreneurs and innovators will of course try to take advantage of such differences. For example, crypto companies are committed to ensuring that cryptocurrencies are regulated by Commodity Futures Trading Commission that regulates derivatives, and not from the more restrictive securities and Exchange Commission.

In a still a buyer -friendly market, the participation of asset managers offers a thin layer of additional security. Your interest could strengthen surviving crypto companies who want to gain access to institutional customers. But the power of the asset managers also goes hand in hand with the responsibility to help the crypto market grow and help protect weaker investors.