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Recent years have seen a surge in institutional interest in cryptocurrency adoption, but many barriers to entry still linger for new players. SKARB, however, is a unified trading ecosystem that’s hell-bent on easing the barriers to institutional adoption through its innovative digital asset management infrastructure.
The number of individuals and institutions that are either increasing their exposure to or looking to enter the crypto-currency market is rising. In fact, according to a recent Fidelity Digital Asset study, despite the recent crypto winter, institutional investors globally continue to get more involved in the asset class.
Data suggests that, although the technical qualities of blockchain and decentralized finance (DeFi) have been a draw–as well as the prospect of embracing digital collectibles in the form of NFTs–most investors are still very much in it for the money.
According to GlobalData’s 2022 Financial Services Consumer Survey, 77.4% of global respondents reported holding their cryptocurrency as a means of earning profits from it, while just 18.5% claimed to use crypto as a payment tool.
Institutional investors have been similarly bullish on buying into cryptocurrency in recent years. According to PWC’s 4th Annual Global Crypto Hedge Fund Report 2022, the assets under management (AUM) of crypto hedge funds surveyed amounted to $4.1 billion in 2021, representing an 8% increase on the year prior.
While more hedge funds are embracing cryptocurrency, there are still some concerns about how much they should immerse themselves into such a volatile environment. Around 57% of the surveyed hedge funds investing in crypto have less than 1% of total AUM placed in the sector.
Despite a general unwillingness to bet big on crypto, Visual Capitalist data appears to show that many institutional investors agree that there could potentially be significant revenue potential in play from investing in crypto.
This indicates that the hurdles to navigate for institutions are more diverse than traditional markets.
In the world of cryptocurrencies, the industry has been blighted by uncertainty and high-profile collapses of leading exchanges like FTX. It’s for this reason that SKARB has developed a unified terminal that collects multiple crypto exchanges within one single UX, paving the way for institutions to gain better access to liquidity while mitigating counterparty risk.
Let’s take a deeper look at SKARB’s mission to overcome the barriers between institutional investors and fully embracing cryptocurrency adoption:
Overcoming Crypto’s Hurdles
There are a number of challenges facing institutions that are actively interested in participating in the cryptocurrency market. Perhaps the largest revolves around the necessity of knowing whether there is sufficient market liquidity in order to execute trades in short order.
In terms of scale, investment allocations have simply been too large in comparison to market capitalization within the crypto sector.
To quantify this, CoinMarketCap data shows that the total cryptocurrency market capitalization at the time of writing stands at $1.15 trillion. However, the total global equities market stands at an estimated $125 trillion, representing more than ten-times the scale of crypto.
However, it’s worth highlighting that during the peak of the cryptocurrency bull run in 2021, the total market capitalization grew to almost $3 trillion, and with the continued growth of blockchain and DeFi applications, it’s reasonable to expect that with high potential upside comes greater market capitalization over time.
SKARB has sought to bring greater levels of accessibility to the market for liquidity-conscious institutions by establishing the centralized management of exchange accounts throughout a single platform.
Furthermore, SKARB’s multi-API feature provides the ability to add API keys from multiple accounts from one exchange.
This unified platform means that SKARB can offer the best possible trading options for institutions–helping them make more informed and effective decisions. The terminal’s fully customizable workspace means that investors can adapt their UX to suit their market ambitions and most trusted exchanges.
Because SKARB’s execution management system means that institutions can handle their every move within one single UX, it’s possible for firms to effectively audit themselves through access to all their trade reporting, a range of analytical tools and statistics in a single place.
Prioritizing Trust
It’s fair to say that the cryptocurrency market has been blighted by high-profile failures in recent months. The collapse of FTX along with reputable protocols like Celsius have dented faith in the industry and caused both institutional and retail investors to question whether it’s safe for significant investment in the short-term.
These collapses are often a byproduct of ‘crypto winter’, which is termed as an extended period of low or negative growth throughout the market. During this period, less-sustainable endeavors can collapse due to a loss of market sentiment or hype.
“The winters are the time when a lot of those applications fall away, and you can see which projects are actually long-term sustainable, like both in their models and in their teams and their people,” explained Vitalik Buterin, co-founder of Ethereum.
It’s this emphasis on sustainability that keeps investors interested in crypto. Michael Sonnenshein, CEO of Grayscale Investments, has spoken at length about how investors can see opportunities in the emergence of crypto winter, choosing to be optimistic about the market downturns experienced in 2022:
“Overall, behavior shows that they are not shying away from crypto based on a sustained period of lower pricing – even one that’s occurring during a highly challenging macro environment that’s impacting all types of investments. What we’ve been seeing during this crypto winter is that investors have remained steadfast in their conviction around cryptocurrency and its staying power and its future,” Sonnenshein said.
“Many have been using this period to buy the asset at a cheaper value and average down on their investments, while others have been diversifying, really taking stock of their portfolios, and searching for opportunities that they didn’t have in other environments.”
SKARB enables widespread change in this regard by empowering users to thrive using a single standardized platform that allows secure access to thousands of instruments across multiple exchanges.
SKARB also uses innovative account management that enables multiple users to view and interact with the same API’s bringing accountability and collaboration onto your trading desk while also safeguarding against the potential for rogue trading.
Through SKARB’s intuitive terminal for institutions, all players can benefit from the same API management accessibility and tools that span many different exchanges and market makers.
SKARB’s customer care for post-trade functions also shines through within its unified interface. Institutions can view their entire portfolio, trading activity, and risk monitoring in one window, while full order histories of all trading activity across exchanges with filters and sorting are also available.
In addition to this, the platform’s Trade Cost Analysis (TCA) tools can enable institutions to observe and understand how their trade performed in relation to the fractionalized marketplace.
Furthermore, the terminal’s fully-encrypted toolset will ensure that client funds will always ensure maximum user safety of data and funds, which can help to provide a fully transparent means of allowing institutions to audit themselves as they go.
These measures reflect SKARB’s commitment to emboldening institutions to gain the trust they need to take advantage of a cryptocurrency landscape that’s ripe for growth.
Where the case of FTX deeply impacted institutional trust in crypto, SKARB’s unique terminal provides the client with data to empower them to understand their counterparty risk – allowing them to better manage their exposures and avoid unnecessary risk.
Tapping Into the Future of Banking with SKARB
Recent years have seen widespread interest grow in cryptocurrency to the extent where banks are having to face up to significant transfers out of accounts and into cryptocurrency exchanges.
Crypto is fast evolving as an AUM and becoming a value drain for private banks. This has acted as an incentive for many private banks to scale their cryptocurrency capabilities in order to adapt to these shifting interests.
In the case of one private bank, Maerki Baumann, the institution opted to move into cryptocurrency in June 2020 in a bid to grow its younger client-base, of which just 5% were under 40 at the time.
These trends will continue as cryptocurrency becomes more universal. Institutional acceptance within the cryptocurrency landscape will form the cornerstone for future growth and greater stability within the ecosystem.
SKARB is helping institutional investors to accommodate crypto better by bridging the gap between traditional finance and cryptocurrencies. Through its consolidated platform, more investors can operate based in a trustworthy environment while countering the risks that had previously been posed by counterparties.
In introducing a terminal that wouldn’t look out of place at the forefront of TradFi, SKARB has enabled more firms to audit themselves more effectively and with more levels of transparency and analytics that institutions would be used to in traditional finance landscapes.
Through SKARB’s innovative terminal, institutions have unprecedented access to a comprehensive investment tool that wouldn’t look out of place at the forefront of traditional finance. In providing investors with more sustainable trading options, SKARB can pave the way for a more trustworthy, transparent, and functional landscape for all.
