Institutional interest in crypto is maturing, with a fresh focus on diverse use cases, says Elliot Han, a Managing Director and Head of Technology Equity Capital Markets at global financial services firm Cantor Fitzgerald.
Han emphasized the evolving interest in the crypto sector, highlighting that it’s no longer just about riding the wave of crypto’s notorious volatility for financial gain. Han recalled the crypto frenzy of 2021 when people were more focused on capitalizing on the hype rather than understanding the potential applications of the technology:
“Back then it was more of a frenzy. There was all this crypto, blockchain hype and euphoria. And quite 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?“
Tokenization of real-world assets, such as gold, is a particularly hot topic. CNBC quotes several participants at the event who advocate for this approach, believing it would enable institutions to offer clients richer data about their investments.
Han also noted a shift in interest from private blockchains, which were the focus in 2015 and 2016, to public ones like Bitcoin. According to him, this indicates the market’s increasing maturity, with regulatory measures gradually falling into place and an influx of institutional players entering the arena.
This influx isn’t yet a deluge, as Han pointed out in his conversation with CNBC. However, he noticed more extensive experimentation in the crypto space, although he cautioned that significant advancement for institutions would take considerable time:
“Last time, there were a handful. Everyone kept talking about [how] ‘the institutions are coming, they’re coming’ – and then you wait a year, two, three, and you still haven’t seen them really come in droves. Now, have the floodgates open? No, I don’t think so. But I think you see a lot more that have come into the space. … You’re definitely seeing a lot more experimentation.“
Despite the challenges, Han mentioned that big players like JPMorgan and Goldman Sachs, which started exploring this field seven years ago, are still active. He also noted the entrance of smaller investors, such as family offices and smaller venture capital funds.
Regarding cryptocurrencies, Han mentioned that their investment value remains, but the new baseline is tokenization. He advised caution due to the enduring volatility, uncertainty, and future regulatory actions:
“Yes, make some sort of allocation, but do you bet the farm on it? I don’t think so… That’s going to really cause a lot of the institutional investors to be cautious about these investments.“
Despite these caveats, he affirmed that many forward-thinking institutional investors continue to engage with the sector, setting aside capital for crypto investments.