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The cryptocurrency space continues to be characterized by conversations surrounding its adoption and investment by large institutional investors. Landmark events like Coinbase’s Direct Listing (COIN) in April may suggest digital currencies are starting to enter the mainstream. According to Fidelity Digital Assets President Tom Jessop, however, two emerging themes are becoming evident about cryptocurrency.
“What is evident are two things – this is seen as its own unique asset class with its own fundamental drivers, which differ from other financial assets,” Jessop told Yahoo Finance Live. “We’re seeing clients dig into these issues, really understanding not just the technology, but the application of these assets in their portfolios. And perhaps more importantly, what we’re seeing is continued buying interest over a longer period of time.
A recent Fidelity Digital Assets survey found that around 70% of respondents intend to have an allocation to digital assets within the next five years.
“And this is a representative sample of institutions ranging from family offices and hedge funds to much more traditional institutions,” added Jessop. “We therefore continue to see a slow and constant interest in progress towards the generalization of this asset class.”
Jessop joined Yahoo Finance Live to discuss the state of the crypto market amid a pandemic as well as the accelerated hiring of Fidelity in light of the growing demand for crypto. Fidelity Digital Assets, a stand-alone company originally operating as a division within Fidelity Investments, provides custody and transaction execution services for the emerging asset class of cryptocurrencies to institutional investors.
When it comes to what may make investors hesitate to get into crypto, Jessop said volatility remains one of the most important factors. Another is that many are still learning the fundamental framework of crypto that gives them value. Finally, the regulation of cryptocurrencies also remains at the forefront of the minds of many potential investors.
“Regulation and regulatory clarity are still an issue for many investors who want to ensure that there is a solid basis of regulation, or at least a direction of movement before committing significant assets in the space. “said Jessop.
Regulation of crypto-currencies
On Tuesday, August 3, SEC Chairman Gary Gensler suggested the path to widespread adoption of cryptocurrencies would be one of tighter regulation. Former Goldman Sachs partner said the SEC is closely examining digital assets and their applications, including initial coin offerings (ICOs), trading platforms, lending platforms, DeFi, stablecoins. , custody and exchange traded funds.
Jessop believes that some level of “regulatory clarity” is needed and that investor protection is an issue that limits the rise of crypto as an asset class to the level of confidence behind stocks and bonds.
“We think attention is positive, although there may be things of concern that are said from time to time,” Jessop said. “But we and others are very committed to regulators and continue to educate them on how to bring this asset class into the mainstream and into a regulatory framework that captures many of the principles that apply to other asset classes. “
As to what a “fair” regulatory framework for crypto might look like in practice, he said transparency regarding the reporting and enforcement standards that apply to existing asset classes is what is. Most important.
“I think [regulation would integrate] the same standards of investor protection, transparency, ”said Jessop. “The things that made the US and global capital markets liquid and accessible to all investors [would be applied] to digital assets, but again, [regulation must] take into account some of the unique attributes of technology.
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV
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