Opinion: Maturing under institutional pressure has been beneficial for the growth of cryptocurrency
Disclaimer: The author’s views and opinions expressed in this article are solely their own and do not represent the views and opinions of crypto.news’ editorial team.
The blockchain industry and crypto community have faced numerous challenges in rehabilitating their reputation and establishing a solid foundation. Although progress has been made, there is still much work to be done.
In the past year, and particularly in the last four months, we have witnessed the gradual transformation of the industry’s image. The devastating bear market played a significant role in shaking off the perception of crypto as a playground for immature individuals in the tech and financial sectors. Surprisingly, FTX has emerged as a prominent player in the industry, which was unimaginable just three years ago.
The recent indications of a bull market can be attributed to several key catalysts, with institutions, especially those from the traditional financial sector, leading the way. The approval of Bitcoin spot ETFs by the US Securities and Exchange Commission earlier this year ignited institutional interest and prompted traditional financial giants to explore crypto services and investment options for their clients.
As someone who has been involved in crypto for years, it is encouraging to witness prominent names in traditional finance finally embracing blockchain technology. This shift in attitude raises the question: what has caused this change?
The evolution of crypto has followed a non-linear path towards maturity. New technologies, projects, and use cases continue to emerge, driving the industry forward. However, since the last bear market, there has been a concerted effort within the industry to clean up its act. This goes beyond a superficial rebranding and involves addressing unsustainable business practices.
One factor contributing to this change is the increased regulatory clarity. A year ago, regulations and laws surrounding crypto were less defined compared to the present. This regulatory framework provides blockchain projects with specific guidelines to ensure legal compliance. It also enables traditional institutions to enter the space without fear of associating with a pariah industry. Although crypto still faces regulatory challenges, industry leaders are prioritizing compliance, mirroring the practices of banks and major financial institutions.
Institutions are rewarding projects that prioritize compliance and regulatory adherence. Blockchain projects that focus on business and institutional usage are gaining popularity. Ripple, for example, has established itself as a go-to network and protocol for enterprise use. Startups like Coreum are taking this a step further by creating a bridge to Ripple’s XRP Ledger, enabling businesses to boost liquidity and leverage their digital assets. Coreum demonstrates how blockchain networks can attract institutional engagement by implementing international standards of financial communication, such as ISO 20022 messaging.
While Ripple has targeted institutions from the beginning, its partners offer services that appeal to institutions seeking to enter the blockchain space. The question of whether institutions should develop proprietary solutions or partner with established companies depends on budget and technical feasibility. Tokenizing real-world assets, for instance, requires a robust infrastructure to ensure security and efficiency. Companies like GK8 have partnered with leading institutions to provide a platform that guides them through the process of digital asset tokenization, offering secure digital asset custody through offline storage and token issuance.
The strides made in institutional blockchain collaboration are a result of projects regrouping and redeveloping their technology to cater to critical areas. The efforts to attain institutional acceptance have revitalized crypto’s potential as a mature and viable industry, even in areas once considered superficial.
For example, NFTs have faced significant scrutiny despite their popularity in the blockchain and web3 space. Major companies like EA Sports and Nike now utilize NFTs in gaming and loyalty programs. Startups like ChainGPT are implementing generative AI technology to make NFT creation more accessible. They have also partnered with Polygon Labs and Binance to combat fake news and bots in crypto communities. These developments demonstrate how projects can legitimize themselves by evolving and meeting genuine needs.
Although the crypto industry may not be as glamorous and meme-driven as before, the appeal to institutions has brought much-needed stability and legitimacy. By tailoring their technology to address specific areas of importance, blockchain projects have the opportunity to become integral infrastructure for a new financial and technological landscape. While reaching widespread mainstream acceptance may require sacrificing some of the industry’s earlier appeal, it is a trade-off worth making for long-term sustainability and growth. As long as the core principles of blockchain remain intact, traditional institutions can leverage its potential to develop innovative products and services beyond the financial realm.
Now, it is up to projects and institutions to maintain the positive momentum and continue driving the industry forward.
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