• Nine out of 10 surveyed predict that central banks will have to regulate cryptocurrencies
  • In general, cryptocurrency markets have high volatility, but most major cryptocurrencies have posted higher gains year to date

Throughout 2021, cryptocurrencies have grown in the public interest. There have been national conversations about the digital asset class and their regulation.

In order to reach broader acceptance, cryptocurrencies will need additional scrutiny, according to a 2022 Global Institutional Investor Outlook survey reported by Natixis Investment Managers. 

Natixis is the second-largest investment management firm in Europe and has over $1.4 trillion assets under management. 

Nine out of 10 surveyed predict that central banks will have to regulate cryptocurrencies, while a handful see the potential for crypto to replace currency reserves or fiat at 25% and 28%, respectively.

People have been saying that crypto needs stricter regulation for years, Joshua Lim, head of derivative trading at Genesis said to Blockworks.

“The reality is banks and hedge funds have to move into crypto because their competitors are,” he added. 

Earlier this month, US Securities and Exchange Commission (SEC) Chairman Gary Gensler said that cryptocurrency companies and exchanges won’t be able to operate outside of regulatory oversight for much longer, Blockworks previously reported. 

Cryptocurrency exchanges should be registered with the SEC just like traditional securities exchanges, Gensler said.

While some crypto companies have ignored regulatory talks, a handful of crypto exchanges, including FTX, Coinbase, Ripple and Binance, have released regulatory frameworks to help officials navigate cryptocurrency regulation. “It’s critical to bring clarity to this space,” Coinbase CEO Brian Armstrong tweeted in mid-October. 

The survey from Natixis was conducted by CoreData Research from October to November 2021 and included 500 institutional investors across 29 countries throughout North America, Latin America, the United Kingdom, Continental Europe, Asia and the Middle East. 

Of those 500 surveyed, there were 157 corporate pension plans, 89 endowments or foundations, 100 public government pension plans, 128 insurance companies, 22 sovereign wealth funds and 4 central banks. 

Separately, institutions see the potential for corrections across asset classes and sectors, but cryptocurrencies top the list with more than half of institutions surveyed calling for a correction, it said. 

“I believe we’ll see differentiation across crypto in 2022, it’s possible that we’ll see ETH take the spotlight away from BTC,” Lim said. “We’re seeing a lot of rotation in the ETH/BTC cross,” he added.

Even though these market players are predicting a correction, 40% consider it to be a legitimate investment option. Of the 28% who invest in crypto, the majority of them said they will maintain (62%) or raise their allocation (28%) 

In general, cryptocurrency markets have high volatility, but most major cryptocurrencies have posted higher gains year to date (YTD). Out of the top 100 cryptocurrencies on CoinMarketCap, only 10 digital assets were down YTD, as of 10:30 am ET on Dec. 8.

The five highest increases YTD were seen from Gala at 45,427%, Axie Infinity at 18,491%, The Sandbox at 13,976%, Polygon at 13,825% and Terra at 11,027%, according to data from CoinMarketCap.  

Separately, bitcoin, which is the largest cryptocurrency by market cap, is down about 25% on the month, but its price is still up 168.8% on the year.

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  • Jacquelyn Melinek is a New York-based reporter covering funding, decentralized finance (DeFi) and decentralized autonomous organizations (DAOs). She previously reported on energy markets for S&P Global Platts and Bloomberg News and is published in over 65 news outlets. She graduated from the University of North Carolina at Chapel Hill with a degree in Media and Journalism. Contact Jacquelyn via email at [email protected]