Cryptocurrency trading for institutional investors like hedge funds and pension funds is now possible in Germany, thanks to a partnership between German securities trading bank, VPE WertpapierhandelsBank AG, and Berlin fintech company solarisBank.
VPE is now the first securities trading bank to offer institutional cryptocurrency trading in Germany.
“Cryptocurrencies such as bitcoin, Litecoin, Ethereum and others have become a promising asset class in recent years,” Katharina Strenski, a rep for VPE, said in a .
“To date, trading digital tokens has been restricted to crypto exchanges and online market places. We are pleased to be the first German bank to offer our customers cryptocurrency trading services.”
Germany is allowing institutional investors to trade crypto. (Image: Pixabay)
VPE is regulated by Germany’s financial watchdog, BaFin. VPE’s cryptocurrency trading account is held in escrow by solarisBank, but customers can access their individual crypto wallets hosted by VPE.
Institutional Investors Are Intrigued
The move to enable institutional trading of cryptocurrencies in Germany spotlights the growing mainstream penetration of the budding digital asset class.
Unlike stocks, crypto trading is dominated by individual investors. But as the market has mushroomed during the past year — fueled largely by bitcoin’s meteoric price spikes — institutional investors have been clamoring to get in on the action.
“Until now, institutional investors have faced high entry barriers to ,” said VPE. “Our cryptocurrency trading services offer a much more convenient alternative.”
Market analysts say that institutional investors sitting on billions of dollars in assets will eventually hop on the crypto bandwagon, as BTCManager has reported.
“I do think it’s inevitable from a few angles,” said Ari Paul, the chief investment officer of crypto investment firm BlockTower Capital. Paul was the former portfolio manager of the University of Chicago, which has an endowment of $7.8 billion. He said university endowments and pension funds began researching crypto as investment vehicles starting in 2015.
They haven’t jumped in yet because no one wants to be the first to pull the trigger, but as soon as one does, the others will follow. Paul and other financial experts say it’s only a matter of time before institutional money starts pouring into crypto because has become too big to ignore.
bitcoin Bulls: Crypto Will Win
Ari Paul’s outlook echoed the sentiments of former JPMorgan banker Daniel Masters, who’s now the CEO of digital investment bank CoinShares. Masters said big banks have been sniping at cryptocurrency startups because by the rising newcomers, as BTCManager previously reported.
“There’s something of a trench warfare going on between what I call analogue financial services companies and digital financial services companies,” Masters said. “[Banks] have gone from dismissive to unified in their resistance. Why? Why is something they ridiculed three months ago now something they feel the need to unite against and try and kill?”
Masters and other former investment bankers say traditional finance has become so bogged down in regulations that the space has become dull and staid. In contrast, the decentralized, mostly unregulated crypto ecosystem is fresh, exciting, and innovative.
When all is said and done, Daniel Masters and others predict that the market will become “much bigger” than it is today.
Crypto evangelists say the virtual currency market will follow the path outlined in a quote often attributed to activist Mahatma Gandhi:
“First they ignore you. Then they laugh at you. Then they fight you, and then you win.”
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A couple of notable figures in the mainstream financial space are tipping bitcoin and blockchain technology to even greater heights. In an with CNBC, Gil Beyda, the Managing Director of Comcast Ventures made some positive comments about cryptocurrency and blockchain technology.
He began by saying irrespective of the , blockchain technology is here to stay. He then went on to reveal at length, some of the strides that Comcast is making in the market.
Beyda said that the recent surge in crypto prices is born out of the fact that people are beginning to come to terms with the fact that there is real value in . According to Beyda, this realization is now far removed from the sentiments of 2017 when it was mainly seen as a get-rich-quick scheme. This means the market is beginning to mature and investors are taking cryptocurrencies seriously. Comcast has and planned to invest in more blockchain projects in the future.
Still a Lot to Learn About Crypto and Blockchain
Beyda believes that despite the strides made so far, there is still a lot to learn. The Comcast chief said that proper are required especially in the ICO scene to bring some structure to the market. He reiterated the widely held belief that blockchain technology has the potential to disrupt many business processes. According to Beyda, the technology could revolutionize social media, e-commerce, content distribution, and even politics.
On the subject of crypto impact on traditional banking, Beyda believes that more impact will be made in the banking infrastructure of less developed nations than in developed nations like the U.S.
Now is the Time to Buy bitcoin
In a related development, Dan Morehead, the CEO of Pantera Capital believes now is the right time to . The recent back-to-back weekly gains recorded by the cryptocurrency has led some to believe that a significant is imminent.
Morehead expects that bitcoin will continue to recover and reach even greater heights in the next one year. He also gave an optimistic forecast that the total cryptocurrency market capitalization will reach between $4 trillion and $40 trillion within the next decade.
Mainstream Investments Streaming into Crypto
Speaking during an with Bloomberg, the hedge fund chief said that the company has about ten percent of its portfolio in bitcoin. He, however, said that the fund’s biggest crypto bet was in the Icon project. Morehead believes that the entry of hedge funds and other institutional investors will only serve to drive crypto prices higher.
According to Morehead, there is a shift in mainstream investor sentiment as cryptos are no longer viewed as “skanky.” The emergence of has also caught the attention of Wall Street firms who have begun to see cryptos as a viable investment vehicle.
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