As part of the 8th edition of the Blockchain Africa Conference 2022, a virtual panel titled “Cryptocurrency Institutional Investment: Increasing Returns and Improving Diversification.” was moderated by Kristina Lucrezia Cornèr, editor-in-chief at Cointelegraph.
The panelists, Dimitrios Kavvathas, chief strategy officer at Amber Group and Kalin Metodiev, co-founder and managing partner of Nexo, discussed the different opportunities institutional investors find in both Africa and the global digital space.
Nexo, which provides crypto custodial products and services along with lending services to institutional investors, has recently teamed up with Fidelity Investments’ crypto wing, known as Fidelity Digital Assets.
They discussed the ongoing institutional investing scenario within the blockchain and cryptocurrencies space, agreeing to the tremendous expansion in institutional onboarding. Metodiev notes that institutional investors might argue that the crypto market is too volatile, which means that the total effect of crypto relative to other assets in a portfolio is too challenging.
Kasvvathas believes there is much that can be done by adding crypto to the portfolios of large liquidity providers. According to him, while participation is increasing, it hasn’t yet reached the point where it can be considered meaningful. Metodiev also noted the importance of the African market and the growth of potential users on the continent due to the rapid adoption of blockchain technology.
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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