Prominent financial institutions in the United States, including BlackRock, Fidelity, Bank of America, JP Morgan, Morgan Stanley, Goldman Sachs, BNY Mellon, and Invesco, are making their entry into the digital asset space. These institutions, which collectively manage an estimated $27 trillion in assets, are actively working on providing their clients with access to cryptocurrencies, particularly Bitcoin.
On June 26, 2023, Meltem Demirors, the Chief Strategy Officer at CoinShares, spotlighted the progress made by several major traditional financial institutions in adopting digital assets. Some notable developments Demirors referenced include BlackRock’s filing of a spot Bitcoin ETF and Fidelity’s introduction of crypto wealth management services.
1/ last week’s @BlackRock spot Bitcoin ETF filing was big news!
but, it’s not the only story. many of the largest financial institutions in the US are actively working to provide access to Bitcoin and more.
a quick glance – $27 trillion of client assets here! pic.twitter.com/azmHZmUL2a
— Meltem Demirors (@Melt_Dem) June 26, 2023
BlackRock’s filing for a spot Bitcoin exchange-traded fund (ETF) on June 16, 2023, particularly sparked a surge of similar applications among tradFi and DeFi institutions alike. While institutional involvement in cryptocurrencies is a discernible trend, it is important to recognize that the progress is gradual rather than an overwhelming influx. Demirors aptly described the current situation as witnessing the construction of bridges in real-time.
The estimated $27 trillion figure represents the cumulative assets managed by the eight institutions mentioned above. However, only a small portion of these assets is likely to be allocated to cryptocurrency investments.
Nevertheless, the potential for significant institutional players to enter the Bitcoin market is substantial. Will Clemente, the co-founder of Reflexivity Research, pointed out that despite Bitcoin’s market valuation being below $600 billion, financial powerhouses like HSBC, BlackRock, Fidelity, and Schwab manage a colossal $25 trillion in assets, which could potentially flow into Bitcoin.
Institutional investors are also showing an increased interest in funds linked to Bitcoin. The ProShares Bitcoin Strategy ETF (BITO) recently experienced its highest weekly inflow in a year, surpassing $1 billion in assets under management (AUM). This indicates a growing appetite among institutions to gain exposure to Bitcoin through investment vehicles like ETFs.
However, regulatory concerns remain. Michelle Bowman, a member of the Federal Reserve Board of Governors, recently expressed worries about the lack of a comprehensive regulatory framework for cryptocurrencies. She emphasized the challenges faced by institutions operating within a “supervisory void.” She stressed the importance of establishing a robust regulatory framework that can provide guidance and oversight in the rapidly evolving cryptocurrency space.
As major financial institutions actively explore avenues to introduce their clients to Bitcoin and other digital currencies, the potential for increased mainstream adoption of cryptocurrencies will continue to grow.
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