KPMG Report: Cryptocurrencies Not a Store of Value, Market Needs More Institutional Participation
The “Big Four” financial consulting and professional services giant KPMG has recently released a report dubbed “Institutionalization of Crypto Assets” last week which goes to say that it’s still a long-time for Bitcoin and other cryptocurrencies to be regarded as a Store-of-Value (SoV).
The report goes to mention that the lack of trust and scalability is the major reason why Bitcoin can neither be regarded as a store-of-value (SoV) nor a medium of exchange (MoE). The report goes to mention that proper institutionalization of the entire cryptocurrency sector will help to establish sustainability and scalability.
Needless to say that volatility still remains a pressing issue for institutional investors to venture in the crypto space. Just in the last one week’s time, the crypto market has lost nearly %25 valuation with Bitcoin losing more than 20% and going below $5000.
KPMG chief economist Constance Hunter said, “More participation from the broader financial services ecosystem will help drive trust and scale for the tokenized economy and help the crypto market grow and mature”.
According to the KPMG report, institutionalization means the large-scale participation of banks, finch companies, exchanges, payment institutions, broker-dealers, and other financial entities from the industry. Such a large-scale participation will help to reduce friction and existing inefficiencies in the crypto sector.
Furthermore, the KPMG report lays emphasis on the regulatory environment surrounding the crypto space. It says that regulations pose a big challenge to the crypto industry. But it notes that crypto industry players should work with the regulators to create an organized crypto sector.
The report further goes to mention that despite the continuing “debate between supporters and detractors,” crypto market in 2018 has seen a continuous inflow of new entrants. The report notes: “In 2018, we are seeing a wave of new entrants in the market such as security token platforms, stablecoins, and even established financial services institutions that are launching crypto products and services. Cryptoassets are now impossible to ignore.”
We have seen how the big financial institutional companies like ICE and Fidelity Investments are warming up to the idea of crypto adoption. Earlier in August, NYSE parent Intercontinental Exchange (ICE) announced the launch of its Bakkt platform. ICE has partnered with giants like Microsoft and Starbucks for this projects. The major aim of Bakkt is to bring crypto into the mainstream by increasing its adoption and daily utility for different services. The Bakkt platform will go live by December 2018 end along with the physically-settled Bitcoin Futures contracts.
On the other hand, Fidelity is preparing for the launch of crypto trading and custody solutions for institutional investors. Its cryptocurrency subsidiary Fidelity Digital Asset Services will look after providing cryptocurrency trading and storage solutions to high-end investors like family offices, hedge funds and market intermediaries.