Despite a decline in interest for crypto products during Q1 due to industry uncertainties, institutional demand for digital assets remains unwavering. Reports tracking collective investment funds highlight robust interest in cryptocurrency-based products, reflecting a broader trend of traditional finance (TradFi) entities expanding their crypto portfolios.
Institutional Entities Maintain Strong Crypto Interest
March 2023's headlines were dominated by U.S. regulatory crackdowns on crypto firms, prompting some companies to seek friendlier jurisdictions. Surprisingly, this hasn’t deterred investors. Digital asset investment products continue attracting inflows, signaling sustained confidence in the crypto sector.
CoinShares Weekly Report: Digital asset products saw $33 million inflows despite a 2.5% drop in trading volume.
- Bitcoin (BTC) products recorded $8.8 million weekly inflows.
- Ripple (XRP) led altcoins with $800,000 inflows.
👉 Learn more about Ripple investments
TradFi Firms Actively Pursue Crypto Service Offerings
Banks and financial institutions are reigniting efforts to provide crypto services, driven by market recovery and institutional demand. Recent banking crises have accelerated this shift.
PostFinance Partners with Sygnum for Crypto Services
Swiss retail bank PostFinance announced a collaboration with Sygnum Bank to offer:
- Cryptocurrency trading and storage for 2.5 million clients.
- Staking services via Sygnum’s regulated B2B platform.
_Philipp Merkt, PostFinance CIO_: "Digital assets are integral to finance, and our clients demand access through trusted channels."
Blocknox Secures BaFin License for Crypto Custody
Germany’s Blocknox (a Boerse Stuttgart Digital subsidiary) received BaFin approval to launch institutional-grade crypto custody services, marking a milestone in EU crypto adoption.
Nasdaq to Launch BTC/ETH Custody by Q2 2023
Nasdaq confirmed plans to offer Bitcoin and Ethereum custody services by end of Q2, pending regulatory approval. This positions Nasdaq alongside TradFi giants bridging into crypto.
👉 Explore Ethereum investment strategies
Fidelity Investments Expands Crypto Research Team
Fidelity is hiring for leadership roles in crypto/DeFi token research, building on its 2018 crypto initiatives and recent retail offering, Fidelity Crypto.
Institutional Funds Accelerate Digital Asset Adoption
Hedge funds and asset managers are deepening crypto exposure:
- Ark Invest continues buying Coinbase and Block shares.
- MicroStrategy holds 140,000 BTC ($29,803 average purchase price).
ETF Interest Shows Resilience
BBH’s survey of 300 institutional investors revealed:
- 50% plan to add crypto ETFs to portfolios in 2023.
- 25% seek more digital asset exposure, indicating cautious optimism.
Asset Manager Highlights (March 2023):
| Provider | AUM (USD) | Growth |
|---|---|---|
| Grayscale | $23.6B | +23.6% |
| ProShares | $1.08B | - |
| 21Shares | $200M | +30% |
21Shares Launches Stacks (STX) ETP
The Swiss issuer debuted the first Stacks Stake ETP (ASTX), capitalizing on Bitcoin’s smart contract potential.
👉 Ultimate guide to Stacks investments
FAQs
Q: Why are TradFi firms expanding into crypto?
A: Rising institutional demand, diversification needs, and the quest for innovation in financial services drive adoption.
Q: How secure are crypto custody services from TradFi?
A: Regulated entities like Sygnum and Blocknox adhere to strict financial authority guidelines (e.g., BaFin, FINMA).
Q: What’s the outlook for crypto ETFs?
A: Interest persists, with products like Bitcoin futures ETFs (e.g., BITO) gaining traction. Spot ETF approvals could be a game-changer.
Q: Which crypto assets are institutions favoring?
A: Bitcoin (BTC) remains top choice, followed by Ethereum (ETH). Altcoins like XRP and STX see niche demand.
Q: How does regulation impact TradFi’s crypto moves?
A: Clearer frameworks (e.g., EU’s MiCA) encourage participation, while U.S. delays create opportunities for global competitors.
Q: What’s MicroStrategy’s Bitcoin strategy?
A: The firm consistently buys BTC during market dips, leveraging loans and equity sales to amass 140,000 BTC ($4.17B at current prices).