Rapture #174: Further Institutional Adoption
In the past couple of days, there have been a few huge announcements from leading financial institutions. Goldman Sachs executed its first over-the-counter crypto transaction (finally), Ray Dalio's Bridgewater, the largest hedge fund in the world, will soon be investing in a crypto fund, and Commonwealth Bank stated that crypto is already mainstream.
Let's dive into these announcements and what they might mean for the crypto market.
Goldman Sachs' crypto trade
On Monday, Goldman Sachs announced that Galaxy Digital had facilitated an OTC crypto transaction with the famed investment bank as a bitcoin non-deliverable option. While settlement of a non-deliverable BTC option does not come in the form BTC, this step signifies that investment banks are slowly but surely moving towards supporting more digital asset services.
Galaxy Digital believes this move will cause the other Wall Street investment banks to soon copy Goldman Sachs, leading to further adoption of the asset class.
According to Galaxy Digital, investment banks are increasingly forming crypto focused teams. That being said, a lack of regulatory clarity is a barrier to entry for these highly regulated traditional financial service institutions.
This trade is interesting, but I will note that Goldman Sachs has dipped its toe into crypto multiple times over the past 5 years, with little to show for it in general. Hopefully, this move represents the "real" shift to the asset class.
Bridgewater investing in a crypto fund
While Bridgewater did not announce which crypto fund they will be allocating towards, a source from Bridgewater confirmed that the hedge fund will deploy a small slug of their fund into crypto. They are about halfway through their crypto plan for this year. Note that Bridgewater has no plans to directly invest in digital assets and is instead opting to allocate to an existing crypto fund.
The firm is in the midst of doing due diligence on liquidity providers, service providers, and the other entities required for an institution to utilize before deploying capital into the space.
Ray Dalio, the founder of Bridgewater, has already announced he holds BTC.
Commonwealth Bank states crypto is already mainstream
Commonwealth Bank's, Australia's largest bank by total assets, Managing Director stated that the stats on their app related to crypto display that the asset class is now mainstream. Furthermore, managing director Sophie Gilder noted that the feedback on the bank's crypto services were overwhelmingly positive.
Approximately 900,000 of Commonwealth Bank's customers have transferred capital to crypto exchanges in the past two years. Gemini currently works with Commonwealth Bank on their crypto pilot program, which allows customers to trade 10 digital assets natively through the CommBank app.
Takeaways
While none of these announcements are market moving in my opinion, they do signify the continued growth in institutional adoption of crypto, a theme that will continue over the next 5 years. Despite happening at a snail's pace, mainstream institutional adoption will happen and is one of the most important trends to track in the space.
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