Crypto Needs Central Bank Regulation for Broader Acceptance, Market Players Say

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

article-image

Blockworks Exclusive Art by axel rangel

share

key takeaways

  • 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.


Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.


Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Unlocked by Template.png

Research

With the spot ETH ETF approval, the institutions are coming. stETH - given its dominance in marketshare, existing liquid market structures, and highly desirable properties - is poised for institutions.

article-image

Trump insiders say he will dismantle the anti-crypto army within an hour of taking office, but the campaign has been quiet about how it plans to do so

article-image

Plus, Solana set a record for weekly unique active addresses on the network last week

article-image

Launching cryptocurrencies the old fashioned way may soon make a return

article-image

Kraken and CertiK brought their beef to social media after Kraken said researchers exploited $3 million through a bug

article-image

NVIDIA’s historic run is only deepening the divide between mega-cap tech stocks and the rest of the market.