BlackRock’s Joseph Chalom: Institutional Interest in DeFi faces significant delays – Investor Bites

SNEAK PEEK

• BlackRock enters cryptocurrency market, plans spot Bitcoin ETF with SEC.
• Challenges for institutional investors in engaging with decentralized finance (DeFi).
• BlackRock’s strategic alliances head sees institutional adoption of DeFi as years away.

BlackRock, the world’s largest asset manager, has recently made an entry into the cryptocurrency market. With its registration with the SEC to introduce a spot Bitcoin ETF in the United States, investors have expressed their enthusiasm for this move. BlackRock’s impressive track record with the Commission has further boosted confidence in its foray into the crypto space.

However, while BlackRock takes this step, its head of strategic alliances, Joseph Chalom, acknowledges the challenges faced by institutional investors in engaging with Decentralized Finance (DeFi).

Chalom believes that the existing legal framework is not conducive to large institutional investors venturing into DeFi. He predicts that it will be “many, many, many years” before significant institutional interest arises in this domain. The heavily regulated world in which BlackRock and its clients operate creates a barrier for them to embrace DeFi fully.

Chalom suggests that future crypto enterprises, such as Coinbase, could bridge the gap between DeFi and more traditional forms of financing. Coinbase, a leading US-based exchange, offers wallets with institutional-grade security standards. This feature can potentially attract investors who seek a seamless connection between conventional and decentralized finance.

In the event that the SEC approves BlackRock’s spot Bitcoin ETF, it is noteworthy that the asset manager intends to utilize Coinbase as a cryptocurrency custodian. This strategic partnership demonstrates the growing collaboration between traditional financial institutions and established crypto platforms, bolstering the overall acceptance of cryptocurrencies.

Following BlackRock’s footsteps, other major financial institutions like Invesco, WisdomTree, and Valkyrie have resubmitted their applications for a Spot BTC ETF in the United States. This indicates a notable trend of established players recognizing the potential of cryptocurrencies and striving to offer investment products that cater to the growing demand. Such developments signal a significant shift in the perception of cryptocurrencies as they become increasingly integrated into the mainstream financial landscape.

Besides BlackRock’s entry into the cryptocurrency market, the overall market value of all cryptocurrencies has experienced substantial growth since the beginning of 2018. Bitcoin and other alternative cryptocurrencies have been leading this surge, attracting investors and generating substantial returns.

Hence, as regulatory barriers are addressed and established financial institutions actively participate in the crypto space, the bridge between DeFi and conventional finance will likely strengthen.

The role played by platforms like Coinbase in providing secure custody solutions will further contribute to the convergence of these two domains. Consequently, the integration of decentralized and traditional finance approaches has the potential to revolutionize the investment landscape, offering new opportunities and diversification for institutional investors and individuals alike.

Moreover, as more financial institutions follow the path set by BlackRock and seek approval for Bitcoin ETFs, the accessibility and acceptance of cryptocurrencies are expected to increase. These developments showcase the evolving nature of the financial industry, where innovation and adaptation to digital assets are becoming paramount.

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• Source: https://investorbites.com/blackrocks-joseph-chalom-institutional-interest-in-defi-faces-significant-delays/