According to Elliot Han, who leads Cantor Fitzgerald’s crypto, blockchain, and digital assets investment banking, institutional investors may have lost interest in crypto, but their interest is still there and may even be maturing. Han believes that those who have remained in crypto are exploring its different use cases, and there is a lot of excitement in this space right now. Han was speaking at Digital Assets Week, a conference in San Francisco, geared towards some of the biggest US financial institutions. Many companies are looking at crypto from different perspectives and angles, and Han believes that it is significant progress from the frenzy that existed in 2021, where people were merely looking at the profits they could make.
The Emergence of Tokenization
One of the most significant emerging topics in the market is the ability to “tokenize” real-world assets like gold on a blockchain. Many at the event made the case that this would give institutions the ability to provide more information and data to clients about their investments. Han believes that this is not the first time that the institutional world has shown interest in blockchain, as in 2015 and 2016, almost every bank in the US went through a test-and-learn phase with blockchain technology. However, this time, there is more maturity in the institutional world, attributed to regulation “slowly coming into place” and “more institutional players coming into the space.” This has resulted in more experimentation with many small investors like family offices and smaller venture capital funds coming into the market.
As for cryptocurrency itself, Han believes that “the investment aspect of it is still there,” but “the baseline is going to be tokenization.” He advises institutions to make some sort of allocation but warns against betting the farm on it, given the high level of volatility, regulatory uncertainty, and action left to be taken. Han believes that this will cause institutional investors to be cautious about these investments. However, he believes that many forward-thinking institutions are still getting involved, dipping their toes in and setting aside pockets of capital that make sense. They are looking to be involved, and Han believes that this interest will continue to mature.