The crypto market recovered from its June 2022 lows but remains well below its late-2021 highs. While the crypto winter scared off many retail investors, many of the world's largest businesses and asset managers continue to invest in the market. These actions could pave the way for a much larger and more robust crypto ecosystem.
Let's look at who's making the biggest moves in the summer of 2022 and what they could mean going forward.
The crypto winter may have sparked fear in many retail traders and investors, but financial institutions have been making big moves over the summer.
Crypto Payments Go Mainstream
Nearly 75% of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years, according to Deloitte, joining Starbucks, Overstock, Whole Foods, AMC, Quiznos, and many other businesses that already accept crypto. Over the past few months, several new retailers have begun taking crypto and running promotions.
For example, Chipotle began accepting cryptocurrency payments and launched its "Buy the Dip" promotion this summer. The national restaurant chain partnered with Flexa – a crypto payments solution – to accept 98 different cryptocurrencies while planning to give away more than $200,000 in crypto if customers sign up for its rewards program.
Gucci also became the first major retailer to begin accepting ApeCoin, an Ethereum-based token linked to the Bored Ape Yacht Club. In addition, the iconic fashion brand also launched a series of NFT collections, including the SUPERGUCCI collaboration with SUPERPLASTIC and the Gucci Grail collection targeting top owners of BYAC.
In addition to retailers, the State of Colorado will become the first state to accept cryptocurrency as payment for state taxes and fees this summer. Governor Jared Polis announced in February 2022 that the state is laying the groundwork to become a crypto and blockchain hub. The move comes as Arizona and California are considering similar actions.
JPMorgan Plans Move into DeFi
JPMorgan launched its Onyx project in 2020, becoming the first global bank to offer a blockchain-based platform for wholesale payment transactions. In May, Onyx Digital Assets began supporting trades of tokenized versions of BlackRock's money market fund shares, signaling its ambitious intentions in the decentralized finance (DeFi) realm.
Over time, the bank hopes to tokenize U.S. Treasuries, money market fund shares, and other assets that could become collateral in DeFi pools. By tokenizing trillions of dollars worth of conventional financial products, the Onyx blockchain could unlock the familiar benefits of decentralized trading, borrowing, and lending at an institutional scale.
The Onyx project also continues to attract others in the finance ecosystem. For instance, this summer, BNP Paribas started using digital tokens for short-term trading in fixed-income markets. And the bank is further exploring these potential applications with the Monetary Authority of Singapore, DBS Bank, and others as part of Project Guardian.
JPMorgan's Onyx project extends into the retail realm with its Onyx Lounge in Decentraland. While primarily a proof-of-concept at the moment, the bank aims to showcase that it can operate like a bank in the metaverse where users buy virtual plots of land in the form of NFTs and purchase items using Ethereum-backed cryptocurrencies.
Asset Managers Launch Offerings
Asset managers are feeling pressure from shareholders to build a presence in the crypto industry despite the recent downturn. For example, Blackrock, the world's biggest asset manager, launched a spot Bitcoin private trust for institutional clients and partnered with Coinbase to provide services to some of its clients this summer.
On the other side of the ocean, the British asset manager abrdn invested an undisclosed sum in becoming the largest shareholder in a major digital asset exchange. The Archax exchange provides access to blockchain-based digital assets and was the first digital securities exchange to receive approval from the Financial Conduct Authority.
These trends aren't exclusive to institutional clients either. For instance, Fidelity recently added Bitcoin to its retirement options, signaling a broader acceptance of digital assets in the finance and investing world. As a growing number of asset managers enter the space, there's even more pressure on the remaining companies to make a move.
Cryptocurrencies will play a growing role in institutional finance by enabling everything from DeFi lending to instantaneous settlements. As JPMorgan and other asset managers pilot programs, many large financial institutions will jump on board and begin exploring ways to leverage cryptocurrencies and the blockchain to unlock real benefits.
At the same time, retail investors will have easier access to crypto assets as asset managers add offerings, like crypto ETFs, to standard retirement plans. Crypto enthusiasts in the metaverse could also see traditional financial brands expand into these worlds, offering financial services to facilitate virtual land ownership, payment processing, and more.
Of course, a growing number of retailers and other organizations will add cryptocurrencies as a payment option. After all, about a quarter of Americans owned cryptocurrency in 2021, and that figure has been on the rise for several years. As crypto continues to go mainstream, these figures could rise even faster over the coming years.
The Bottom Line
The crypto winter may have retail investors pulling away from the market (at least temporarily), but many businesses and asset managers are actively building their presence. These actions could pave the way for cryptocurrencies to become an integral part of future capital markets and a valuable medium for institutions and large investors.
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