Industry panelists at Consensus weigh in on what to expect from the technology this year
By Alissa Fleck
During a panel called “Wall Street Meets Crypto: Who’s Disrupting Who?” at this year’s Coindesk Consensus conference in New York City, three industry experts offered predictions on what we can expect to see from blockchain in 2019. One thing that is sure to take place, all panelists agreed, is wider adoption of the technology in mainstream finance.
Each of the past three years were supposed to be crypto’s “year of the institution,” according to Greg Tusar, co-founder of Tagomi Systems and a former Goldman Sachs executive. In fact, “this will be the year of the institution,” he said. What’s different this time? Tusar points to strong indications that major institutional players will enter the space by year’s end, as well as increasingly favorable attitudes toward the existence of crypto ETFs.
Fidelity Investments, one of the largest asset managers in the world, announced on May 6 that it intends to roll out crypto trading in a matter of weeks. It will offer the service exclusively to institutional investors, giving them an early-mover leg up on competitors. The company also released a study earlier this month that indicated 47% of institutional investors were interested in investing in digital assets. Crypto ETFs, meanwhile, have been a hotly debated issue that thus far have been sidelined by an ambiguous regulatory landscape. But most experts agree they are inevitable.
Other recent shifts indicate a more hospitable landscape for institutions, according to Tusar. They include the evolving OTC market, increased market liquidity, pressure on spreads and exchange fees, and the sheer volume of tools and services that have been digitized.
Of course, to bring institutions on board in a meaningful way, the “world of credit” will have to infiltrate the “world of crypto,” said David Mercer, CEO at LMAX Exchange. Major institutions manage so much money that credit is a critical component of wooing institutions, he explained, adding that he believes unlocking credit in the crypto ecosystem is within reach.
“The first global bank will trade Bitcoin on an exchange [in 2019],” Mercer predicted.
Caitlin Long, who’s had a front row seat to — as well as a major hand in — blockchain adoption as a co-founder of the Wyoming Blockchain Coalition, echoed the other panelists. She expects to see issuers of mainstream securities issuing on the blockchain in 2019.
Société Générale S.A., a Paris, France-based, multinational investment bank that is often referred to by its nickname, “SocGen,” issued $112 million worth of Ethereum bonds in April, a move met with a credit positive rating from Moody’s. Long said the rating reflects the major advantages of issuing securities on the blockchain, including a reduction in the extensive red tape and other hurdles associated with using intermediaries. In light of this, Long predicted, “it’s not long before you see significant issuers on the blockchain this year.”