It may seem like crypto has lost some of its luster for institutional investors, but their interest is still here to stay and may even mature, according to Elliot Han of Cantor Fitzgerald.
Han, who runs the firm’s crypto, blockchain and digital asset investment bank, told CNBC’s “Crypto World” that those who have stayed in crypto are exploring its various use cases.
“There’s a lot of excitement in this space right now,” he told Digital Assets Week, a conference in San Francisco for some of America’s biggest financial institutions. “There are a lot of companies here looking at it from a lot of different angles and perspectives. That’s what we’re trying to learn and understand better is what those other use cases are that aren’t not necessarily obvious.”
It sounds like a preliminary step, but it’s a significant shift in mindset from when people crowded into the crypto market in 2021 hoping to get a good return for overcoming some of the infamous volatility of crypto.
“Back then it was more of a frenzy,” Han said. “There was all this hype and crypto, blockchain euphoria. And frankly, people weren’t looking at it from a use case perspective, they were just looking at it [and asking] how can i make the most money?”
One of the biggest emerging topics for this corner of the market is the ability to “tokenize” real-world assets like gold on a blockchain. Many attendees at the event argued that this would give institutions the ability to provide more information and data to clients about their investments.
This isn’t the first time the institutional world has gotten excited about blockchain while pushing bitcoin and cryptocurrency use cases to the back burner. In 2015 and 2016, almost every bank in the United States went through a testing and learning phase with blockchain technology – private blockchains, not public ones like the Bitcoin network. This phase was more about deploying the technology within private banking systems.
Now, “we’re seeing a lot more maturity,” Han said, attributing it to regulation “slowly coming together” and “more institutional players coming into the space.”
“Last time there were a handful,” he explained. “Everyone was talking about [how] “the institutions are coming, they are coming” – and then you wait a year, two, three, and you still haven’t really seen them coming in droves. Now, are the floodgates open? No, I do not think so. But I think you see a lot more that have come into space. … You definitely see a lot more experimentation.”
Part of the experimentation is a step-up for institutions, he said. A larger move will take a long time, he said.
Most major banks like JP Morgan And Goldman Sachs which began experimenting seven years ago are still in the market, Han said. There are also more smaller investors like family offices and smaller venture capital funds entering the market.
As for the cryptocurrency itself, “the investment aspect is still there”, but “the basis is going to be tokenization”.
“Yes, do some kind of allocation, but are you betting the farm on that? I don’t think so,” Han said, warning that there is still a high level of volatility, uncertainty and regulatory action ahead. take. is really going to cause a lot of institutional investors to be cautious about these investments.”
“But at the same time, a lot of those who are forward-thinking are still getting involved, dipping their toes into setting aside pockets of capital that make sense,” he added. “They’re looking to get involved and I think that’s going to continue to stick.”