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Institutional capital in crypto not scared about volatility, O’Shares ETFs chairman suggests

Institutional capital in crypto not scared about volatility, O'Shares ETFs chairman suggests
Justinas
Baltrusaitis
Updated: 13 Aug, 2021
3 mins read

Renowned investor and chairman of O’Shares ETFs Kevin O’Leary believes the slow adoption of cryptocurrencies by institutions is not linked to volatility as widely perceived. 

Speaking to CNBC, O’Leary opined compliance remains the main institutional concern. His sentiments come as regulators like the Securities Exchange Commission are increasing oversight on the cryptocurrency sector

He acknowledged that the regulatory environment is fast-changing, and institutions want to ensure their legal status is intact before jumping into digital currencies. O’Leary noted that most institutions still have issues with internal compliance teams, and moving into crypto might be a more significant risk. 

The Shark Tank added that if institutions can get around the compliance issue, the investment into assets like Bitcoin will run into trillions of dollars. 

“Real institutional capital is not scared about volatility, it’s not scared about disclosure issues–it is scared about compliance…I think the institutional interest is massive. There’s a trillion dollars of interest just in Bitcoin. If they could get around the compliance,” said O’Leary. 

Plan to increase crypto allocation

Initially, O’Leary indicated that he had solved his compliance challenges with cryptocurrencies hence he plans to increase investments into digital assets from 3% to 7% through crypto exchange FTX.

This follows O’Leary’s unveiling as the brand ambassador for FTX. 

Although 2021 recorded one of the highest crypto investments by institutions, in a previous interview, O’Leary indicated that the scale would tilt once issues around Bitcoin are resolved. He noted that when the asset’s value appreciates, more institutions will invest in Bitcoin.

Notably, the institutional entry into crypto inspired a sustained rally in the first half of the year. The rally culminated in Bitcoin hitting a record price of $64,800 in April.

Despite the shark tank citing volatility as a minor issue, cryptocurrency backers believe that the entry of institutions into the sector will stabilize prices. 

Slowed institutional investment

At the same time, institutional interest in Bitcoin slowed down in recent weeks due to an increased regulatory crackdown on the asset. For jurisdictions like China, the crackdown was due to the notion that Bitcoin can potentially destabilize the financial system.

Additionally, environmental concerns also contributed to Bitcoin’s price volatility mainly after vehicle manufacturer Tesla suspended payments through the asset.

However, Bitcoin appears to have shaken off the volatility by sustaining a short-term rally in recent days. Over the last seven days, Bitcoin has surged by almost 20% to trade at $45,423 by press time.

 

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Justinas Baltrusaitis
Author

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.

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