[ I N D E P T H | C R Y P T O ] as being something that they are concerned about , however , in the fullness of time as with all immature asset classes this will subside ,” says Tyrer .
The volatility means that long exposure is risky and this deters long-only investors . The price can shift 20-30 % following just one news story or social media post from infamous pot stirrer and billionaire Tesla chief executive Elon Musk .
“ That is a sign of the fact that it ' s still quite an immature space ,” says Stanislav Kostyukhin , commercial owner for the trader segment at Saxo Bank . “ I think that as time goes by and the infrastructure develops as we see more institutional flow , then the volatility should subside as well . The market has obviously grown in capitalisation and historically as market cap grows , it ’ s more difficult to shift the market and influence the price .”
Saxo Bank confirmed plans to launch a new cryptocurrency offering on 19 May enabling institutional and retail clients to trade Bitcoin , Ethereum and Litecoin against EUR , USD , and
“ Banks are some of the most heavily regulated institutions and so they naturally want to have that regulatory air cover before they enter the space .”
CHRIS TYRER , HEAD OF FIDELITY DIGITAL ASSETS EUROPE
JPY from a single margin account without a crypto wallet .
On the same day , Ethereum and several other digital assets saw their prices plummet , leading to a loss of more than $ 460 billion within 24 hours for crypto ’ s total market capitalisation .
What needs to change ? Amid the extreme volatility many firms unsurprisingly want to access the market using their existing sell-side bank and prime broker partners . However , the lack of regulation in place means some major financial institutions are reluctant to involve themselves .
“ Banks are some of the most heavily regulated institutions on the planet and so they naturally want to have that regulatory air cover before they enter the space ,” adds Fidelity Digital Asset ’ s Tyrer .
Fidelity Digital Assets was launched in 2018 in response to growing demand from institutional investors for a trusted platform provider to engage with cryptocurrencies . It marked a significant milestone in the uptake of cryptocurrencies for institutional investors . The digital asset arm of $ 7.2 trillion asset manager Fidelity Investments offers trading and custody of cryptocurrencies to institutional investors such as hedge funds , family offices and market intermediaries .
As it stands , however , regulators have little jurisdiction to supervise activity in the market because the digital assets being traded are not legally classified as either a currency or a commodity , which has prevented many of the largest banks from entering the space .
On 3 June , the UK ’ s Financial Conduct Authority ( FCA ) extended the end date of its Temporary Registrations Regime for crypto businesses to March next year allowing firms who had applied for registration and those whose applications are still being assessed to continue trading while it continues its “ robust assessment ” of the space .
A cryptocurrency hedge fund report from AIMA also found that 82 % of those surveyed cited regulatory uncertainty as the greatest barrier to investing . Infrastructure and service provider availability were other key barriers to entry , with custody being the area with most need for improvement .
New regulation on the horizon has the potential to encourage more investment from major institutions . In the US , the Office of the Comptroller of the Currency issued guidance letters in January this year which gave banks the green light to offer custody services for crypto assets
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