Some investors in the cryptocurrency market aren’t concerned that the meltdown of the largest cryptocurrency exchange, FTX, will diminish institutional interest in cryptocurrencies despite the fact that FTX has filed for bankruptcy.
Grace Berkery, director of startup engagement at Mastercard, said at Benzinga’s Future of Crypto event, “I feel like once you get the momentum for an institution up and running, it’s hard to get them to turn their head and pivot.” “Therefore, if they enter, they will remain within the area.”
During a panel titled “Status of Venture Funding in Crypto and Web3,” Berkery stated that she does not believe institutions will shy away from the industry, but rather become more careful in their due diligence and who they partner with, as well as work with companies that have a proven track record and existing customers. As the competition heats up, companies will be judged less on their use of industry jargon and more on the value they actually bring to the table.
Mastercard is well-versed in the cryptocurrency industry, having supported it for years through investments and initiatives such as bridging banks to enable cryptocurrency trading for customers. It has also collaborated with Binance, Nexo, and Gemini to introduce cryptocurrency cards powered by Mastercard.
According to Berkery, “I think it’s an opportunity and time to reset.” Mastercard thinks the underlying technology has a lot of potential. Plenty of action is taking place in this area.
If you ask Berkery, there are “definitely” still opportunities for institutions to partner with crypto companies.
“We take a partnership-first approach,” Berkery said. “We’re not experts in the space. [We ask,] ‘How can we partner with you to bring what we know as a traditional financial institution and mix that with the web3 space?’”
Value-added services such as cybersecurity, fraud analytics, identity management, and others can “really help stabilise the market,” according to Berkery, and thus will be a major focus for traditional financial institutions over the next 12 months.
According to her, investors and institutions will keep focusing on utility NFTs and metaverse-based use cases, such as loyalty use cases and increased customer engagement, in order to reach out to traditional consumers.
“There are no ‘off limits’ options,” Berkery declared. “The key is to figure out how you can add value to these established businesses and organisations.”
In the cryptosphere, opinions vary on whether or not centralised institutions should be involved with digital assets. Institutional participation is seen by some as beneficial because it could increase the value of the crypto market as a whole, spur new use cases, and boost adoption. However, sceptics point out that relying on the same regulatory frameworks that traditional finance must adhere to could stifle decentralisation and innovation.
While a few banks have dabbled in cryptocurrency for the past few years, the last year to two years have seen a significant uptick in interest. After the FTX collapse, market participants told TechCrunch that institutional interest in decentralised finance hasn’t “wavered one inch,” even though crypto assets are trading at a significant discount to their all-time highs.
Only time will tell if established institutions will continue to enter the market at the same rapid pace as they have in the past.
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