The crypto market has taken the entire financial world by storm in the past couple of years. Developments are being made to expand the adoption of the crypto space at a very rapid pace. A large inflow of money has been seen in this space over the years giving it much attention all over the globe. But despite all the hype, the institutions and the general public usually hold back from entering and trusting this world? What is the major reason behind this behavior?
The connotation attached with the world of cryptos is largely negative. Its initial use-case was largely driven by its negative usage. Since this space is highly unregulated, negativities have found a way to seep into this world. Fraudulent and manipulative activities along with scams have become the norm. A lot of investors have lost a large amount of money owing to these scams. This is the reason why the institutional investors hold back from touching this market. Regulatory unclarity and other issues such as volatility, liquidity, custody etc. have made this space largely unattractive for the institutions.
But as we move into 2019, the focus is now shifting on developing this space on an official level. With that, demands for the establishment of a crypto-linked exchange-traded fund (ETF) and regulatory clarity have risen. So can a crypto-linked ETF and regulatory clarity help increase the inflow of institutional money into this space?
In order to get a perspective on this, BlockPublisher got in touch with the crypto analyst, Eric Thies. In reply to the question regarding which might be more significant for the crypto world, an ETF or regulatory clarity, Eric said:
Both would be equally important in my eyes as they each attract big money hedge funds and traditional players. Initially the ETF would cause more FOMO however.
Regulatory clarity and an ETF will likely help put a layer of trust for the institutional investors. An ETF has not been approved as of yet by the regulatory body in the charge, the United States Securities and Exchange Commission (SEC), owing to the prevalence of issues like manipulation, frauds, scams etc. Regulations will likely help curb out these negative elements giving more protection to the investors. They will likely help pave out a way for a crypto ETF.
It is being suggested by some in the game that an ETF will cause some strong ripple in the world of cryptos in the beginning. As per Eric, both ETF and regulatory clarity seem to carry equal importance in breaking down the wall that is in between the big money hedge funds, traditional players and the world of cryptos.