Institutional Interest in Cryptocurrency

During the recent Blockchain Africa Conference 2022, a compelling discussion unfolded on the shifting landscape of cryptocurrency investment. Moderated by Kristina Lucrezia Cornèr, the panel featured insights from Kalin Metodiev from Nexo and Dimitrios Kavvathas from Amber Group. The two experts highlighted promising avenues for institutional investors, emphasizing the remarkable growth witnessed in this sector, both in Africa and beyond.

Spotlight on Nexo and Amber Group

Nexo has been expanding its offerings, stepping into the institutional domain with custodial services and lending in collaboration with Fidelity Digital Assets. Meanwhile, Amber Group recently drew attention with a hefty $200 million investment from Singapore’s Temasek Holdings, tripling its valuation to a staggering $3 billion. These developments signify a warming embrace of cryptocurrency by long-time financial stalwarts.

The Volatility Dilemma

Both panelists acknowledged a critical issue: the inherent volatility of cryptocurrencies. Metodiev pointed out that while institutional onboarding is growing at an unprecedented pace, there’s still a lot of caution in the air. Institutional investors often regard the crypto market with skepticism, mostly because assessing the impact of cryptocurrencies within diversified portfolios remains complex due to price fluctuations.

Gendering More Than Just Crypto

Kavvathas raised a thought-provoking perspective, stating, “We can do more” with crypto than merely treating it as an additional asset class for liquidation-focused institutions. He surmised that while the interest is visibly increasing, the actual involvement still has a long road ahead to tread before it becomes significantly influential.

African Market: A Sea of Opportunities

According to Metodiev, Africa stands out as a burgeoning market. The continent is witnessing a significant uptick in crypto users, swelling by an impressive 2,500% in 2021! The rise in adoption of blockchain technology in Africa presents a treasure trove of potential, demanding the attention of institutional investors.

The Regulatory Wave

Yet, with great adoption comes the inevitable call for regulation. Metodiev cautioned about the need for policies, arguing against the idealistic notion that a wild west approach could continue indefinitely without governance, while Kavvathas concurred, affirming the importance of integrating crypto into regulatory frameworks despite the community’s mixed feelings about it.

Cryptocurrency and ESG Goals

Turning to a different note, the discussion touched on how cryptocurrency can align with environmental, social, and governance (ESG) frameworks. Metodiev mentioned that vocalizing commitments to ESG could encourage service providers to support these measures. Furthermore, Kavvathas showcased Amber Group’s initiative to collaborate with Moss Earth to tokenize Bitcoin carbon offsets, underlining the capacity of blockchain to contribute to climate-positive solutions.

Institutional Return Expectations

As the conversation wound down, Metodiev shed light on how institutional perspectives toward returns diverge from those of retail investors. For institutions, the allure isn’t just about chasing the wild highs of 70%–80% returns but rather finding stable, consistent gains of 7%–12% year-over-year amid the choppy waters of crypto.

Embracing Tokenomics for Sustainability

Finally, Kavvathas expressed a keen interest in the possibilities that tokenomics may present, especially in driving forward sustainable investment approaches. The discussions at the Blockchain Africa Conference 2022 left a lasting impression, charting a path for institutional investors toward the ever-evolving, promising realm of cryptocurrency.