Institutions in crypto are hedge funds, corporations offering financial services, technological companies, and family firms that pour significant amounts of money into the crypto industry. This requires various approaches and strategies, driven by the growing recognition of the potential benefits and opportunities within the crypto and blockchain space. In this article, we will consider some common approaches to crypto investments by institutions and businesses.
Where to Get Institutional Trading Tools?
Among dozens of retail trading exchanges for digital assets, there are also institutional-grade platforms that provide the necessary services for those VIP customers. For example, Coinbase Institutional, Binance corporate VIP accounts, and WhiteBIT institutional trading platform are just a few trusted exchanges for large-scale investments. Here is a brief list of tools they offer for high-net-worth investors:
- Order execution platforms
- Custody solutions
- Market data and institutional trading charts for analysis
- Liquidity aggregators
- Portfolio management systems
- Trading compliance and regulatory tools
- Institutional trading algorithms
- APIs and connectivity
- Risk disclosure software
- OTC desks.
How do Institutions Use Crypto?
Investors may just hold crypto long-term to capitalize on the next bull run. The most popular asset for “hodling” is Bitcoin. The biggest and first BTC-owning company is MicroStrategy – it owns 129,218 BTC. Tesla comes second with its 42,902 BTC.
Crypto derivatives are another popular way for investors to engage with this market. Some companies and institutions invest in security tokens, which represent ownership of real-world assets. Some invest in cryptocurrency mining operations to generate new coins.
Probably the most popular are DeFi investments – investors enter decentralized finance (DeFi) protocols and platforms, providing liquidity, earning interest, or participating in governance. DeFi offers a range of financial services that allow for receiving a fixed income: crypto loans, insurance, and interest-bearing accounts.
DeFi tools are also used by banks and financial entities. For example, Singapore’s central bank partnered with JPMorgan, DBS Bank, and others to launch a program where they create a liquidity pool for lending and borrowing purposes.
Another bank – prominent French investment bank SocGen applied to MakerDAO’s governance forum. The application suggests that the lending platform should consider accepting its on-chain digital-covered bonds (OFH tokens). These tokens were initially issued by the bank to secure a $42 million loan in the stablecoin DAI.
Institutional and corporate investment in crypto is driven by a combination of factors, including the potential for high returns, diversification, and the desire to leverage blockchain technology for operational improvements. The most common ways to engage with this market for today are long-term holding and the DeFi sector. Institutions attempt active steps in joining this space and utilizing its opportunities already today.