On Monday, the crypto world experienced another entrance of a prominent hedge fund group. Brevan Howard announced its entry into the digital assets and crypto-trading space.
How Brevan is taking the Institutional Cryptocurrency Leap
One of the largest hedge fund groups in the world announced on Monday that it would create a new sector that will monitor its leap into the digital assets space. Brevan Howard, the group CEO, believes that there are arrays of opportunities available in this digital asset world. He mentioned that the new unit would have the “BH Digital” name.
In his effort to monitor their crypto leap, he is bringing Colleen Sullivan onboard. Colleen is the chief executive officer and co-founder of CMT Digital—a blockchain and cryptocurrency tech firm. Colleen will lead this private investment unit due to arrays of experience in the industry.
The increasing participation of institutional investors in the digital asset space exposes banks to pressure to offer crypto services. Brevan’s decision follows groups like Goldman Sachs, Bank of New York, and Renaissance Capital. He believes that the long-term opportunities existing in the digital assets space are limitless.
Due to the market boom happening over 18 months now, traditional firms seek to be strategic with cryptocurrency. As a result, hedge funds are now amplifying their cryptocurrency exposure. However, there is fierce competition between conventional investors and crypto specialists.
At the beginning of this year, Brevan announced that his group would invest part (about 1.5%) of its master fund in digital assets. This announcement made their unit creation speed up. Likewise, their technology experienced advancement while setting up for the significant crypto movement.
Colleen’s only task is to work with BH Digital and turn the department into a key player while providing institutional investors digital assets and trading services. Likewise, she will head the team looking into obtaining advanced and disruptive technologies that will help the firm expand its services in the crypto and digital assets space.
This move is becoming a macroeconomics trend in the crypto industry. More professional investors and hedge funds are diving into the crypto world despite the crypto market’s volatility. Stuart Cole, Head Macroeconomist at London-based Equiti Capital, said,
“What was initially seen as something of a fad now appears to be becoming a more permanent structure of the financial landscape, and this has started to see what were initially fringe financial instruments moving to become more mainstream and very much forcing the institutional interest we are now seeing.”
This is evident in the crypto market record, as indicated by Coinbase. Coinbase claimed that the market reached a turnover of $462 billion in three months. Whereas $317 billion were institutional investors’ funds, retail clients accrued the rest of the returns.
The Effect on Traditional Banking Sector
The increasing interest in the digital assets space makes investors mount continuous pressure on apex banks. They continuously seek approval for cryptocurrency transactions and keep pushing for regulations that will allow them to trade crypto. As a result, global banks feel left out in the race because they can’t compete with these early adopters.
On the other end, Standard Chartered is establishing itself as a pioneer in this trend. In June, they launched a cryptocurrency and exchange platform. This brokerage platform allows wealth managers to trade cryptocurrencies across Britain and the European Union.
Close to that is the Citigroup announcement. Last month, Citigroup proclaimed that they would consider bitcoin futures trades on Chicago’s popular institutional digital assets forum. However, they await the regulatory approval before initiation on the Chicago Mercantile Exchange (CME). This approval will grant them the autonomy to do that while avoiding legal sanctions.
Overall, this institutional adoption will force the global banks to push for cryptocurrency trading, develop strategies to keep institutional investors’ money safe, and initiate regulations that secure wealth management institution funds.
There is no lagging in the continuous adoption of cryptocurrency and digital assets across the globe. Groups and individuals keep giving reasons to adopt crypto as part of our daily transactions. This happens with institutional investors claiming their space, as Brevan Howard pushed.
The ripple effect will appear to be regulators creating policies that secure investors’ and groups’ funds. But more development will exist in the crypto space like El Salvador’s adoption.