There are more and more signs that traditional financial companies are embracing cryptocurrency and crypto technology. The cryptocurrency exchange Coinbase is listed, the Canadian financial authorities approve Bitcoin ETFs, the U.S. global custody bank Mellon has decided to deal with digital virtual assets such as BTC and ETH. The digital asset bank Anchorage recently completed the $80 million Series C financing behind Singapore Government fund; Positive progress such as these show that traditional financial entities are embracing cryptocurrency, and 2021 is evidently just the start of more to come.
However, this kind of “embrace” does not happen overnight. The attitude of traditional financial companies and regulatory authorities in some more “open-minded” countries changed from “exclusion” to “gradual acceptance”. From a regulatory perspective, “better oversee than over”-when the market has grown to a certain size, establishing a clearer regulatory framework works better than banning should always be the way to go. From a corporate perspective, when the regulatory environment is clear, companies engaging in cryptocurrency-related business activities comes naturally. Especially when companies realize that market demand of crypto is gaining momentum, which could become a way to expand their business and increase competitiveness in the industry, it is more logical for them to deploy such businesses.
In this regard, many financial companies worked this out long time ago. Venture capital/hedge funds/investment banks and asset management companies bear the brunt and become the first ones to try the “forbidden fruit”. Finally, the improvement of the cryptocurrency infrastructure has made it more convenient and compliant for traditional companies to purchase cryptocurrencies. After all, a compliant purchasing channel is the most fundamental requirement for traditional entities to enter the crypto realm. There are usually two ways to purchase:
1. Mainstream institutions directly purchase crypto assets or join the queue of crypto asset services, which is a mode for institutional investors to “adapt” to crypto assets;
2. Companies engaged in crypto assets directly package their business and become within the acceptable range of institutional investors, such as listing the business on the stock market or being merged by a listed company.
What if a crypto gets as big as Amazon
Apart from few crypto founders gaining the title of “richest person on earth” instead of Bezos or Musk, there are more lasting influences in this.
Crypto projects/companies will get more exit options. In the past crypto start-ups, issuing tokens has always been an important solution. Especially for those equity financing projects, it is really difficult to withdraw and can be solved by issuing Token, but there are many hidden dangers.
Small and medium-sized start-ups can also exit. Even if the size is not enough to be listed or acquired by a listed company, one can also choose to be acquired or merged by other entities, because the final path to listing is relatively clear.
Companies engaged in crypto-asset-related businesses will become an important industry in the equity market. In other words, it has become an important asset, connecting the equity market and the crypto market. At present, crypto start-ups can be briefly divided into Token-related and technology-related, and the category is relatively single.
More funds will participate in the financing of crypto enterprises. A large amount of funds will enter this track through the VC situation, because the exit channels are becoming more and more clear, mainstream funds are more interested in crypto start-ups, and PE will also participate. It will also become possible for large companies to split the blockchain part of the market. .
However, this also means that the blockchain business is being looked at with a magnifying glass. Going public is the step of mainstreaming. Crypto companies will be scrutinized more closely by mainstream institutions, all doubts, incomprehensions, and information asymmetry will be smoothed out, and they will also undergo the most acute inquiries.
At the same time, the allocation value of crypto assets may be transferred to listed companies. As more and more start-ups are engaged in crypto businesses, and the range of options and configurations for traditional companies increases, the attractiveness of native crypto assets to institutional investors may decrease. The competition in the public chain may be even more cruel.
