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A virtual panel titled “Cryptocurrency Institutional Investment: Increasing Returns and Improving Diversification.” was moderated by Kristina Lucrezia Cornèr, editor-in-chief at Cointelegraph, during the 8th edition of the Blockchain Africa Conference 2022.
Dimitrios Kavvathas, chief strategy officer at Amber Group and co-founder and managing partner at Nexo, Panelists Kalin Metodiev, talked about the various opportunities that institutional investors find in the blockchain and digital space both in Africa and global level.
A crypto borrowing and exchange platform, Nexo has recently started providing crypto custodial products and services along with lending services to institutional investors, in collaboration with Fidelity Investments’s crypto wing, known as Fidelity Digital Assets.
The panelists discussed the ongoing institutional investing scenario within the blockchain and crypto space, agreeing about the immense expansion in institutional onboarding. However, Metodiev points out that the institutional investors might say that the crypto market remains too volatile, meaning that the total effect of crypto compared to other assets in a portfolio is too challenging.
Kavvathas says that according to him, there is a lot to be done in large liquidity provision institutions by just adding crypto as one more asset class for it. He adds that while there is no doubt that participation is increasing, it has not reached the position where it can be considered meaningful yet. Metodiev also outlined the significance of the African market and the number of potential users increasing daily due to the rapid adoption of blockchain technology on the continent.
It is also important to note that along with mass adoption also comes regulation. Metodiev points out that despite the fact that a free market should not be mixed with politics, there needs to be some regulation: “It’s a pipe-dream if we believe we live in a rose-colored bubble,” Metodiev adds and to wait for millions of dollars to come in without any policies or procedures.
Kavvathas agrees that even though the community is hesitant towards it, the crypto will be pushed into the regulatory structure.
The coroner then raises the question, what can act as the catalyst in the responsible use of cryptocurrency as per the United Nations agenda on environmental, social, and governance, or ESG. Metodiev believes that the more the institutions voice their opinion about their commitment to the goals of ESG, the more support from service providers will come for these initiatives. However, Metodiev says that it starts with a big investment in blockchain technology.
Kavvathas talked about the partnership of Amber Group with Moss Earth, a climate tech company, and its program to tokenize carbon footprints of Bitcoin transactions. According to him, blockchain companies are quite well positioned to offer climate change solutions; however, there is the requirement to be a “tailwind” from regulators and governments following their lead.
At the end of the discussion, Kavvathas shared his excitement about the incentives and tokenomics related to permissionless blockchains that allow the crypto community to overcome and bridge obstacles to sustainability investing.
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Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
